Royal Decree 28/2012 of 30 November, on measures to consolidate and
guarantee the social security system develops Law 28/2003 of 29
September, which regulates the Social Security Reserve Fund, in order to
adapt this Law to the current economic crisis in Spain. The Royal Decree
introduces a series of measures designed to make the management of the
Social Security system’s reserves more flexible.
Law 13/2012 of 26 December, on measures to prevent illegal employment
and Social Security fraud, sets out a package of measures aimed at
guaranteeing the budgetary stability and financial sustainability of
public authorities. Regularisation measures have been introduced on
illegal employment, failure to register with the Social Security and
claiming undue subsidies or rebates in employers’ Social Security
The Supreme Court held that the back pay owed to a worker with a
permanent seasonal contract whose dismissal had been deemed unfair,
should accrue until the notification date of the judgment. The only
exception to this rule is the early termination of the season or
activity that originated the contract, in which case the back pay owed
will be limited to the end date of the season in question.
The Supreme Court held that a revocation of the appointment of
members of a company’s works council also applied to its substitute
The Supreme Court analysed the consequences on the receipt of
unemployment benefit in a case when a worker had not been present in the
country. The worker had travelled abroad for a short period of time and
this did not imply a change of residence. As a consequence, the absence
of the worker in the country gave rise to the suspension of unemployment
The rendering of services is an essential condition to accrue holiday
entitlement. Workers are not entitled to holiday leave for the period of
time between their dismissal and reinstatement dates because no work is
actually performed during that period of time.
1. ROYAL DECREE ON MEASURES TO
CONSOLIDATE AND GUARANTEE THE SOCIAL SECURITY SYSTEM
Royal Decree 28/2012 of 30 November, on
measures to consolidate and guarantee the Social Security system
Royal Decree 28/2012 develops Law 28/2003 of 29 September on the
Social Security Reserve Fund. The main purpose of this legislative
development is to adapt certain aspects of that Law to the economic
crisis that is affecting Spain. The crisis has had a significant impact
on public accounts and in particular on the Social Security system,
which has seen a dramatic increase in its deficit. The Spanish
government has passed this Royal Decree as a response to the need to
make the management of the Social Security’s reserves more flexible.
The main measures that have been implemented are:
1. The establishment
of special rules for the disposal of the Social Security Reserve Fund’s
assets. As a general rule, no more than 3% of these assets can be used,
however, this limit will not apply in 2012, 2013 and 2014.
2. The granting of
credits to guarantee the Public Employment Service’s obligations. The
main purpose of this measure is to reduce the negative effects of the
fall in contributions during 2012, and to settle payment obligations
outstanding from previous financial years.
3. The suspension,
during financial years 2012 and 2013, of the pension benefits update
envisaged in the General Social Security Law. This notwithstanding: a) a
general 1% increase in Social Security pension benefits; and b) a 1%
increase, in addition to the increase foreseen in the General State
Budget, for those pension benefits that do not exceed EUR 1,000 per
month or EUR 14,000 per year will be applied in 2013.
MEASURES TO PREVENT ILLEGAL EMPLOYMENT AND SOCIAL SECURITY FRAUD
Law 13/2006 of 26
December, on measures to prevent illegal employment and social security
Given the severity of the economic crisis,
it is essential to guarantee the budgetary stability and financial
sustainability of public authorities. Law 13/2006 of 26 December was
enacted to respond to this need with the following objectives:
i. To regularise illegal employment;
ii. To prevent fraud collecting unemployment
iii. To avoid fraud, especially the failure
to register with the Social Security; and
iv. To do away with undue subsidies and
rebates in employers’ Social Security contributions.
In line with these objectives, certain
employment regulations have been amended. The following are particularly
Royal Legislative Decree 1/1995 of 24
March, which approves the revised Statute of Workers (“SW”)
The principal employer’s term for liability
in social security matters has been extended for works or services
subcontracted out. Article 42 of the SW now establishes a three-year
term for liability as from the termination date of the works or services.
Royal Legislative Decree 1/1994 of 20
June, which approves the revised General Social Security Law
- Article 31.4: sanctions for infringements
will be reduced by half if the infringing party agrees with the amount
owed to Social Security and satisfies payment within the term
established. The sanction can only be reduced in those cases where the
amount of the sanction assessment is lower than the amount owed to
- Article 230: a new obligation has been
introduced on the suspension of contracts and the reduction of working
hours set out in article 47 of the SW. The employer must now inform
employees of any changes to the working calendar and schedule in
Law 42/1997 of 14 November, which regulates labour and Social
- Article 14.2: the time limits on
inspections and the suspension of terms have been amended. An
inspection may now last up to nine months. This period will be
extended for a further nine months if: (i) the inspection is highly
complex; (ii) the party being inspected obstructs access to or
conceals information; or (iii) international administrative
cooperation is required.
The maximum term that an inspection may be suspended for is five
months; unless the suspension is due to the party being inspected or
parties dependent on the latter.
Royal Legislative Decree 5/2000 of 4 August, which approves the
revised Social Security Infringements and Sanctions Law (the “SISL”)
- Article 21.4: late communication of data,
certificates and statements to the authorities constitutes a minor
- Article 21.5: non-communication to the
managing body of any modification in the documents of association or
adhesion for the coverage of occupational and common contingencies
constitutes a minor infringement.
- Article 22.3: company insolvency, events
of force majeure or a payment deferral request prior to the
inspection constitute exceptions to the non-payment of contributions.
- Article 22.6: specifies the documents
that must be provided to the employee to avoid a serious infringement.
These consist of the documents required for the application and
processing of benefits and include the company certificate. The
failure to provide the company certificate to individuals operating
through electronic, computer or telematic submission systems
constitutes a serious infringement.
- Article 22.9 has been removed. Failure to
pay contributions on behalf of the Social Security in a timely manner
for the correct amount no longer constitutes a serious infringement.
- The following cases provided in article
22, sections 12, 13 and 14, constitute serious infringements:
i. The non-registration
and contribution, within the prescribed period, of the salaries accrued
during the proceedings and the annual leave not taken before the
termination of the employment contract.
ii. The failure to
inform the unemployment benefits’ managing body of modifications to the
calendar or working hours in the event of the suspension of contracts or
reductions in working-hours.
registration with the Social Security, the failure to offer positions to
employees, applicants or beneficiaries of pensions or recipients of
Social Security benefits on a regular basis which makes salaried
- Article 23. 1 f): the infringement not
only refers to the documents relating to contributions, but to any
other documents which may give rise to reductions or fraudulent
payment of Social Security contributions or related bonuses.
- Article 23.1 i): non-compliance with the
obligation to enter into a special bargaining agreement in the cases
set out in article 51.9 of the SW constitutes a very serious
- Article 23. 1 j): hiring employees
affected by a suspension of their contract or reduction in working
hours -which has been communicated to the labour authority- during the
period of suspension or reduced working hours constitutes a very
- Article 23.1 k): failure to pay the
Social Security contributions deducted from employees or applying
undue deductions after the legal term has elapsed constitute very
- Article 39.2: in the event of
infringements under articles 22.3 and 23.1 b) of the SISL, a minimum
level sanction will be imposed when the unpaid amount, including
surcharges and interests, does not exceed EUR 10,000. If the unpaid
amount is between EUR 10,001 and EUR 25,000 a medium level sanction
will be imposed. If the threshold of EUR 25,000 a maximum level
sanction will be imposed.
- Article 40.1. d) 3: a sanction is
established for the cases set out in article 23.1(k) of the SISL. The
minimum level sanction will be 100.01 to 115% of the unpaid
contributions deducted from the employees or the excess deductions,
including surcharges, interests and expenses. The medium level
sanction will be 115.01 to 130%, and the maximum level sanction will
be 130.01 to 150%.
- Article 40.1 e): in the event of multiple
infringements under articles 22.2 and 23.1 a) of the SISL, the
sanction applicable in an inspection will increase: (i) by 20% if
there are two employees, beneficiaries or applicants; (ii) by 30% if
there are three, (iii) by 40% if there are four and; (iv) by 50% if
there are five or more employees, beneficiaries or applicants.
- Article 46: as regards employers’
ancillary sanctions concerning the infringements set out in articles
15.3, 16 and 23 of the SISL, the loss of subsidies and benefits will
be proportionate to the number of affected employees. This loss will
firstly affect the highest subsidies and benefits and secondly those
concerning lower amounts at the time when the infringement was
committed. The exclusion period for such benefits can reach a maximum
of two years, effective as of the date of the resolution imposing the
- Article 46 bis: the exclusion period for
the benefits set out in this article is extended and now ranges from
six months to two years.
- Article 48.1 concerns the power to
sanction within the scope of the Central State Administration. This
power resides with the Labour and Social Security Inspectorate and:
(i) the regional authority - for sanctions of up to EUR 31,000 (ii)
the Director General - for sanctions of up to EUR 62,500; (iii) the
head of the Labour and Social Security Ministry - for sanctions of up
to EUR 125,000; and (iv) the Council of Ministers - for sanctions of
up to EUR 125,001.
3. BACK PAY IN AN UNFAIR
DISMISSAL OF A WORKER WITH A PERMANENT SEASONAL CONTRACT
Judgment of the Labour Chamber of the
Supreme Court dated 24 September 2011
The Supreme Court (“SC”)
analysed back pay in employment contracts with permanent seasonal
The main issue at stake was determining the correct accrual period
for calculating back pay. The SC considered two divergent values: (i)
salary accrued from the dismissal date until the notification date of
the judgment; and (ii) salary that would have accrued during the periods
in which the worker would have rendered services had he/she not been
The SC’s case law on the termination of temporary contracts
establishes the general approach that back pay should be calculated as
accrued up to the termination date of the contract. Taking this approach
as a reference, the SC applied this solution by analogy to workers with
permanent seasonal contracts whose dismissal had been declared unfair.
Although permanent seasonal contracts fall under the scope of indefinite
contracts, the SC justified the analogy based on the fact that the
contract’s nature is in fact temporary, terminating when the season or
activity on which it is based ends.
The SC also made reference to the compensatory nature of back pay,
which purpose is to compensate for the losses suffered by the employee.
Based on those considerations, the SC held that the calculation of
back pay should be made based on the amounts accrued up to the
notification of the judgment, with a sole exception: the early
termination of the season or activity on which the contract was based.
In that event, the amount owed will be that which would have accrued up
to the time when the season ends.
4. REVOCATION OF THE
APPOINTMENT OF MEMBERS OF WORKS COUNCILS
Judgment of the Labour Chamber of the
Supreme Court, dated 2 October 2012
The main issue in this case was whether the revocation of the
appointment of members of a company’s works council, who were members of
a particular trade union, affected the works council’s members only and
not its substitute members.
The Supreme Court (“SC”)
examined the scope of the revocation powers regulated in article 67.3 of
the Statute of Workers (“SW”)
and in Royal Decree 1844/1994 of 9 September, which approves the
Regulation on the appointment of workers’ representative bodies in
companies. The SC stated that the revocation affected both members and
substitutes, provided the agenda of the revocation meeting included them
The doubt arose in relation to cases where it is not determined
whether the revocation of appointments also affects the substitute
members of a company’s works council. The SC was clear on this point by
concluding that the revocation of an appointment must include the
substitute members of the representatives in question. It held that the
revocation foreseen in article 67.3 SW is based on a loss of trust
deriving from the acts of workers’ representatives. This mistrust also
applies to the substitutes as given their position it is understood that
they share the very same ideology and approach as the members.
5. REQUIREMENTS FOR ENTITLEMENT
TO UNEMPLOYMENT BENEFIT
Judgment of the Labour Chamber of the
Supreme Court dated 18 October 2012
The Supreme Court (“SC”)
analysed the consequences of being abroad on the entitlement to
The worker left the country for 22 days without notifying this
absence to the employment authorities. The Public Employment Service
initiated the sanctioning proceedings as a result of the non-compliance
with the legal requirements for obtaining the unemployment contribution.
To resolve this cassation appeal, the SC applied the temporary limits
set out in Royal Decree 625/1985 of April 2, which supplements Law
31/1984 of August 2, on unemployment protection and Basic Law 4/2000 of
January 11, on rights and liberties of foreign nationals in Spain and
their social integration (“Law on
Foreigners”), respectively. According to these rules,
the change of residence to a foreign country is grounds for termination
of the right to collect unemployment benefit. However, any trip abroad
for a period of less than 15 days will not give rise to the termination
of benefits. Furthermore, a change of residence is deemed to have taken
place after 90 days of residence abroad.
The case addressed an intermediate scenario given that that the 15-day
limit as stipulated by the regulations had been exceeded but the trip
could not be categorised as a change of residence per se. The
SC applied a literal interpretation of the concept of residence provided
by the Law on Foreigners. Although it is true that the 15-day period had
been exceeded, it was a short absence and consequently, a change of
residence was not deemed to have taken place. Because of this the
unemployment benefit was to be suspended but not terminated as the
Public Employment Service had claimed.
6. HOLIDAYS AFTER REINSTATEMENT
Judgment of the High Court of Justice of
Extremadura (Labour Chamber), dated 28 February 2012
In this case, the High Court of Justice of Extremadura (“HCJE”)
analysed the holiday entitlement of workers that were reinstated after
their dismissal was declared null.
The workers in question, once reinstated, requested their holiday
leave corresponding to the period between their dismissal and
reinstatement, or alternatively economic compensation. When the company
rejected the request, the workers filed a claim based on an infringement
of article 38.1 of the SW.
The HCJE followed Supreme Court case law, according to which, the
rendering of services is an essential condition for the granting of
holidays, which are considered a period of rest from work. Therefore, no
right to holidays arises from the date of dismissal until reinstatement
because no work is performed during that period of time.
As regards the request for economic compensation instead of holidays,
the HCJE held that: (i) holidays cannot be replaced by economic
compensation; and (ii) back pay has a compensatory nature to the extent
that it covers a worker’s loss and lost profit. As the workers received
the relevant back pay, they were not entitled to any other compensation.