February 2013

LABOUR LAW


 1. Royal decree-law 3/2013 amending the rules on fees for filing court proceedings and ACCESSING legal aid

Royal Decree-Law 3/2013 of 22 February amends the fees payable for filing court proceedings and the rules on access to the legal aid system. The Royal Decree aims to: (i) lower very high fees in specific cases; and (ii) adapt Law 1/1996 on legal aid to Law 10/2012 of 20 November, which, amongst other measures, regulates certain fees payable for filing court proceedings.

 2. Measures to support entrepreneurs, stimulate growth and create Employment

Royal Decree-Law 4/2013 of 22 February on measures to support entrepreneurs, stimulate growth and create employment, aims to continue with the package of structural measures implemented by the Spanish government. Its focus is to enhance flexibility in the labour market so that salaries and other remuneration can be adjusted to make the Spanish economy more competitive. Several measures have been implemented to achieve this objective.

 3. THE MECHANISM TO OFFSET AND ABSORB SALARY SUPPLEMENTS DOES NOT APPLY WHEN THEY HAVE BEEN AGREED INDIVIDUALLY AND ARE PROTECTED BY THE APPLICABLE COLLECTIVE BARGAINING AGREEMENT BECAUSE THEY ENTAIL A MORE BENEFICIAL CONDITION

The Supreme Court has held that the application of the mechanism to offset and absorb a personal salary supplement as a means of offsetting increases of other salary items was unlawful, especially when the supplement is payable under the applicable collective bargaining agreement.

 4. AN EMPLOYEE WHO IS FOUND TO HAVE A PERMANENT DISABILITY AFTER BEING DISMISSED IS ENTITLED TO RECEIVE COMPENSATION FOR BOTH CONCEPTS AND CANNOT BE READMITTED BY THE COMPANY

The Supreme Court has held that an employee may simultaneously receive compensation for an unfair dismissal and permanent disability benefit. It also held that the company could not readmit the employee rather than pay the compensation.

 5. COLLECTIVE BARGAINING AGREEMENT PROVISION REQUIRING THE UNINTERRUPTED PROVISION OF SERVICES FOR EMPLOYEES TO ACCRUE SALARY SUPPLEMENTS DOES NOT CONSTITUTE DISCRIMINATION BETWEEN TEMPORARY AND PERMANENT EMPLOYEES

The Supreme Court addressed two issues in this case: (i) whether the requirement in a collective bargaining agreement stating that employees must have worked for a period of time without interruption to be entitled to a length of service salary supplement and bonus constitutes discrimination between temporary and permanent employees, which is forbidden by article 15.6 of the Statute of Workers; and (ii) whether the judgment under appeal breached the right to collective bargaining by stating that the collective bargaining provisions were unlawful.

 6. NOTIFICATION TO AN EMPLOYEE WITH AN INTERIM EMPLOYMENT CONTRACT OF THE ELIMINATION OF THE UNDERLYING POST

The failure of a company to personally notify a temporary employee of the elimination of his post altogether is an unfair dismissal.

 7. A HEART ATTACK SUFFERED BY AN EMPLOYEE IN HIS WORKPLACE, BEFORE COMMENCING WORK AND AFTER SIGNING IN, IS A WORK ACCIDENT IF THE TIME BETWEEN SIGNING IN AND ACTUALLY COMMENCING WORK IS ESSENTIAL FOR THE EMPLOYEE TO BE ABLE TO WORK PROPERLY

The Supreme Court held that the time between an employee signing in and actually starting work is working time, provided that the employee needs that time to correctly perform his or her tasks. As a result, a heart attack suffered by an employee during that time period must be considered a work accident.

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1. Royal decree-law 3/2013 amending the rules on fees for filing court proceedings and ACCESSING legal aid

Royal Decree-Law 3/2013 of 22 February amending the rules on fees for filing court proceedings and accessing legal aid

Following the entry into force of Law 10/2012, and even though fees should not hinder any right, the implementation of its provisions has highlighted certain situations in which fees are too high.

Law 10/2012 has been amended to remedy the problem of excess fees. These amendments are introduced by Royal Decree-Law 3/2013, which, at the same time, keeps the fees payable for filing court proceedings in line with some of the measures included in the Draft Legal Aid Bill.

Given that Law 10/2012 and the Draft Legal Aid Bill require different parliamentary procedures, it became necessary to enact a legal provision to prevent potential difficulties and contradictions when applying these laws.

Royal Decree-Law 3/2013 amends Law 10/2012 in order to reduce fees in certain cases and even do away with them in others, depending on the nature of the proceedings.

The following measures must be highlighted:

  • Only one fee will need to be paid when various actions are filed in one claim under various legal rights.
  • Several important amendments have been introduced in the contentious-administrative jurisdiction, such as: (i) fees will only be payable for lodging contentious-administrative appeals, not the initial claims; (ii) civil servants acting in defence of their statutory rights will be entitled to a 60% discount in their appeal fees; and (iii) when contentious-administrative appeals are lodged to challenge punitive resolutions, such fees cannot exceed 50% of the sanction imposed.
  • A specific scale is introduced for natural persons, which will be lower than the rate applicable to legal persons.
  • If the receipt of payment of a fee is not filed at each stage of the proceedings, a ten-day term will be granted to remedy the omission.

The amendments made to Law 1/1996 on legal aid focus on: (i) widening the range of parties entitled to legal aid; and (ii) replacing the national minimum wage with the national indicator of earnings (IPREM) to establish the economic requirements to have access to legal aid.

Lastly, the first additional provision of Royal Decree-Law 3/2013 regularises the situation created as a consequence of cancelling the extraordinary pay of senior executives and public sector workers as foreseen in Law 20/2012 of 13 July on measures to guarantee budgetary stability and encourage competitiveness. The additional provision states that their social security contributions for April 2013 will be reduced by the same amount that was contributed in December 2012 for the cancelled extraordinary pay.

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2. Measures to support entrepreneurs, stimulate growth and create Employment

Royal Decree-Law 4/2013 of 22 February on measures to support entrepreneurs, stimulate growth and create employment

Measures have been implemented in Spain to deal with the economic and financial imbalance of recent years. Since early 2012, there have been several structural reforms designed to:

1.Regain macroeconomic stability.

2. Create solid and solvent financial institutions.

3. Enhance flexibility in the labour market so that salaries and other remuneration can be adjusted to maximise competitiveness.

In order to reinforce the third of these objectives, Royal Decree-Law 4/2013 sets out several measures that develop the Entrepreneurship and Employment of Young People Strategy.

This Strategy seeks to reduce unemployment among young people, either by getting them into the labour market or encouraging them to become self-employed. Its objectives include improving the employability of young people, increasing the quality and stability of jobs, and promoting entrepreneurship among young people, focusing on ensuring that they have adequate basic education and training.

The first measure fosters entrepreneurship and self-employment among workers under 30, and to this end amends the General Social Security Law and Law 45/2002 of 12 December on urgent measures to reform the unemployment protection system and improve employability as follows:

  • Additional Provision 35 of the General Social Security Law allows self-employed workers under 30 who are registered in the Special Regime for Self-Employed Workers (“RETA”) for the first time, or who have not been registered in the RETA during the previous five years, to apply allowances and reductions to their social security contributions for common contingencies (except for temporary disability). These reductions range from 30% to 80% and the shortfall will be made up from the budgets of the State Employment Service and the General Treasury of the Social Security.
  • Additional Provision 11 of Law 45/2002 similarly allows self-employed workers under 35 with a degree of disability of 33% or more and who are registered in the RETA for first time or have not been registered in the RETA during the previous five years, to apply a reduction in their social security contributions for common contingencies. This reduction will be of 80% for the 12 months after their inclusion in the RETA and a reduction of 50% for the subsequent four years. Again, the shortfall will be made up from the budgets of the State Employment Service and the General Treasury of the Social Security.
  • Article 228.6 of the General Social Security Law establishes that unemployed workers receiving unemployment benefits may continue to do so while working if they start their own business as self-employed workers. This will be possible for 270 days for workers under 30 who have no employees working for them.
  • Temporary Provision 4 of Law 45/2002 extends the possibility of taking unemployment benefits as a lump sum payment to groups such as claimants who wish to start their own business as self-employed workers and do not suffer from a degree of disability of 33% or more, as well as claimants under 30 who use the benefits to invest in the share capital of a company.

The second measure, which is of a labour nature, aims to foster the integration of young people in “social enterprises” (empresas de la economía social) and incentivise the hiring of young unemployed workers. These measures will be in force until unemployment levels in Spain fall below 15% and include:

  • Incentives to encourage part-time work including training. Companies and self-employed workers that enter into training employment contracts with unemployed workers under 30, subject to certain requirements, may apply a reduction of between 75% and 100% in the worker’s social security contributions for common contingencies. In order to benefit from this measure, companies must not have dismissed any employee unfairly during the six months prior to the hiring, and must maintain existing levels of employment during a period of time equivalent to the term of the employment contract entered into.
  • Employment of young workers by self-employed workers and microenterprises for an indefinite period of time. Companies and self-employed workers with nine or less employees that hire an unemployed worker under 30 under a permanent employment contract, whether on a full or part time basis, may apply a reduction of 100% in the social security contributions they must make for common contingencies during the first 12 months. To benefit from this measure, the worker cannot have previously worked for the company and the company must not have dismissed any worker unfairly during the six months prior to hiring the new worker.
  • Incentives to encourage employment in projects for young entrepreneurs. Self-employed workers under 30 who have no employees and who hire an unemployed worker over 45 for the first time after the entry into force of this Law will be entitled to apply a reduction of 100% in the company’s social security contributions for common contingencies. The new worker must be employed for at least 18 months without interruption.

Finally, measures to improve recruitment are also foreseen to make access to job vacancies easier. To this end, the Public Employment Service will have to register every job offer and application, and ensure that all interested parties are informed of them.

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3. THE MECHANISM TO OFFSET OR ABSORB SALARY SUPPLEMENTS DOES NOT APPLY WHEN THEY HAVE BEEN AGREED INDIVIDUALLY AND ARE PROTECTED BY THE APPLICABLE COLLECTIVE BARGAINING AGREEMENT BECAUSE THEY ENTAIL A MORE BENEFICIAL CONDITION

Judgment of the Labour Chamber of the Supreme Court dated 19 April 2012

The Supreme Court (“SC”) analysed the use of the mechanism to offset and absorb salary increases as a means for companies to neutralise increases of other salary items imposed by the applicable collective bargaining agreement.

In this case, apart from the salary items established under the collective bargaining agreement, the claimants received a “personal salary supplement” pursuant to individual agreements with their employer. This supplement, which by law is considered a more beneficial condition, was being systematically reduced by the company as the employees earned other salary supplements, such as increases for length of service or promotion. It was thus necessary to decide whether such reduction through the mechanism to offset and absorb salary items was lawful.

The SC held that the purpose of the mechanism to offset and absorb salary items is to prevent an overlap of salary increases under various regulations, and thus the mechanism can only be applied to similar salary supplements.

Therefore, the SC concluded that the company had unlawfully used the mechanism to offset and absorb salary items because the personal salary supplement was not sufficiently similar to the length of service and promotion supplements.

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4. AN EMPLOYEE WHO IS FOUND TO HAVE A PERMANENT DISABILITY AFTER BEING DISMISSED IS ENTITLED TO RECEIVE COMPENSATION FOR BOTH CONCEPTS AND CANNOT BE READMITTED BY THE COMPANY

Judgment of the Labour Chamber of the Supreme Court dated 20 September 2012

An employee challenged the legality of his dismissal and in an appeal judgment issued on 13 November 2007 the dismissal was held unfair. On 14 November the employee began to receive permanent disability benefit.

This judgment was upheld on appeal in cassation and the case was remitted to the first instance court for enforcement of the judgment. The first instance judge required the company to deposit the total compensation due. The company lodged an appeal against this requirement, later arguing that it had opted to readmit the employee instead of making the severance payment; both appeals were rejected.

The company lodged an appeal in cassation against the ruling rejecting the previous appeal, arguing that: (i) the employee was not entitled to compensation for unfair dismissal as he had been declared permanently disabled; and (ii) compensation for the termination of a contract is only due when the termination is attributable to the employer; this was not the case at hand.

With regard to the compatibility of the two payments, the Supreme Court (“SC”) held that as they do not relate to the same damage, there is no legal obstacle to the simultaneous receipt of both of them.

In relation to the possibility of the company readmitting the employee, the SC held that, while the judgments were not contradictory, meaning that the appeal in cassation could not succeed, readmission was impossible as the employee was no longer able to work for the company in the same conditions as he had previously.

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5. COLLECTIVE BARGAINING AGREEMENT PROVISION REQUIRING THE UNINTERRUPTED PROVISION OF SERVICES FOR EMPLOYEES TO ACCRUE SALARY SUPPLEMENTS DOES NOT CONSTITUTE DISCRIMINATION BETWEEN TEMPORARY AND PERMANENT EMPLOYEES

Judgment of the Labour Chamber of the Supreme Court dated 25 September 2012

The judgment of the Supreme Court (“SC”) refers to a company practice, established in the applicable collective bargaining agreement, which consisted in only taking into account uninterrupted periods of work for the company to calculate a length of service supplement and bonus. Some employees claimed their right to have their length of service calculated from the moment they started working for the company, regardless of whether there were any interruptions.

The company filed a collective dispute claim before the labour courts requesting: (i) that its practice of only taking into account uninterrupted periods of work be declared lawful; and (ii) that the appealed judgment be declared in breach of the right to collective bargaining. The claim was rejected by the court of first instance and the court of appeal confirmed the former’s judgment. The company then filed a cassation appeal against the court of appeal’s judgment.

Article 15.6 of the Statute of Workers prohibits any unjustified discriminatory treatment between permanent and temporary employees. The company claimed that the appealed judgment had violated this article because no discrimination had taken place.

The SC held that although discriminatory treatment between temporary and permanent employees is prohibited, due to the different nature of their employment contracts, one cannot assume that temporary and permanent employees should have equal rights because the different contracting regulations prevent it.

The SC held that there was no discriminatory treatment, since the period of uninterrupted work was required of both permanent and temporary employees. In other words, if the employment relationship is interrupted, temporary and permanent employees are treated equally.

The second issue under discussion concerned the alleged breach of the right to collective bargaining in the judgment under appeal. The SC stated that this issue cannot be decided through a collective dispute claim. The SC held that the employees’ interests regarding company practice were not in any way general. The “general interest” requirement was not fulfilled and therefore a collective dispute claim was not the appropriate procedure to be followed to settle this matter.

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6. NOTIFICATION TO AN EMPLOYEE WITH AN INTERIM EMPLOYMENT CONTRACT OF THE ELIMINATION OF THE UNDERLYING POST

Judgment of the Labour Chamber of the Supreme Court dated 27 September 2012

The Supreme Court (“SC”) analysed whether an interim employment contract is terminated automatically upon the elimination of the post it covers or if, on the contrary, each of the temporary employees must be individually notified for their interim employment contracts to be terminated.

The SC analysed article 49.1.c) of the Statute of Workers and its secondary legislation, which require one party to give prior notice of the termination of fixed-term contracts. Article 49 does not require that the notice be given in writing; any means may be used.

On the grounds that the company failed to individually notify the temporary employee that the post he occupied was to be eliminated, the SC held the dismissal to be unfair.

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7. A HEART ATTACK SUFFERED BY AN EMPLOYEE IN HIS WORKPLACE, BEFORE COMMENCING WORK AND AFTER SIGNING IN, IS A WORK ACCIDENT IF THE TIME BETWEEN SIGNING IN AND ACTUALLY COMMENCING WORK IS ESSENTIAL FOR THE EMPLOYEE TO BE ABLE TO WORK PROPERLY

Judgment of the Labour Chamber of the Supreme Court dated 4 October 2012

The issue addressed by the Supreme Court (“SC”) was whether or not the time before an employee actually starts working each day should be considered as working time. It analysed its doctrine on what should be considered as working time and applied it to the specific circumstances of this case.

In the past the SC had held that accidents suffered in the workplace prior to the start of the working day were not a work accident. However, that doctrine was based on situations in which the worker who had the accident had not signed in at the workplace before the accident took place. As a consequence, it was held that this doctrine could be modified according to the specific circumstances of any given case.

Taking into consideration this doctrine, the SC found that there were three essential circumstances in this case that meant that the heart attack should be deemed a work accident: (i) the heart attack took place after the employee had signed in at the workplace; (ii) the employee was in the locker room collecting the personal protective equipment he needed to perform his tasks properly; and (iii) the employee received a bonus for punctuality, so he had to equip himself with the appropriate equipment before commencing work.

Consequently, the employee had to spend time equipping himself with the appropriate personal protective equipment and, for that reason, this period had to be considered as working time. As he had the heart attack during working time and in the workplace, it must be considered a work accident.

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The information contained in this Newsletter is of a general nature and does not constitute legal advice