Article 86.3 of the Statute of Workers, as amended by Law 3/2012 on urgent measures to reform the labour market (“Law 3/2012”) establishes that expired collective bargaining agreements will only be enforceable for the year following its expiry. As a consequence of the expiry, a higher-level collective bargaining agreement, where one exists, will be applied.
Collective bargaining agreements which expired prior to the entry into force of Law 3/2012 of 8 July will no longer be applicable as of 8 July 2013.
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Order ESS/982/2013 of 20 May regulates the procedure for employers to communicate collective dismissals, contract suspensions and reductions in working hours to the management entity for unemployment benefits.
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Royal Decree 1707/2011 of 18 November, which regulates university students’ work placements, has been declared null by the Contentious-Administrative Chamber of the Supreme Court because the correct enactment procedure was not followed. As a consequence, the whole procedure must be restarted from the very beginning.
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The Supreme Court upheld a claim filed by an employee demanding her dismissal be declared null on the basis that the employer refused her immediate reinstatement after paternal leave. Under the Statute of Workers, such a reinstatement does not depend on the availability of a vacancy.
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An e-mail from an employer days before a strike informing its employees about the possible negative consequences that the strike could bring about for the company’s employment and commercial relationships was held to be a violation of the right to strike and the right to freedom of association.
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Employee representatives’ right to remain in a company is a guarantee, and not a privilege, which is extended to the members of the workers’ committee. A collective dismissal that infringes the right to remain will be declared null as it breaches the fundamental right to freedom of association.
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The Labour Chamber of the National Court held that an acquiring company’s substantial modification of its acquired company employees’ working conditions (a unilateral reduction of their variable remuneration for meeting annual targets) was null because the acquiring company had not followed the applicable procedure set out in article 41 of the Statute of Workers.
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It was held that collective proceedings were appropriate in order to file a claim alleging the company’s breach of the Equality Plan and that there had been a partial breach of the same due to the employer’s failure to adopt proper measures to avoid inequalities between men and women.
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1. ONE YEAR DEADLINE FOR RENEWING EXPIRED COLLECTIVE BARGAINING AGREEMENTS ENDS ON 8 JULY 2013
Law 3/2012, which amends article 86.3 of the Statute of Workers (the “SW”), established a one-year limit on the applicability of collective bargaining agreements following the expiry of the temporary term.
Prior to the amendment, article 86.3 generally established that, upon the expiry of the term of a collective bargaining agreement, it continued to be enforceable until a new agreement was reached.
After the amendment, unless otherwise agreed, an expired collective bargaining agreement will only be enforceable for the year following its expiry.
Temporarily, by way of exception, Law 3/2012 established that the enforceability of collective bargaining agreements expiring before Law 3/2012 entered into force would extend until 8 July 2013.
Article 86.3 of the SW only establishes that, once the temporary term of a collective bargaining agreement has expired, and it is no longer enforceable, a higher-level collective bargaining agreement will be applied, where one exists.
In contrast, if no applicable higher-level collective bargaining agreement exists, the consequences of having no collective bargaining agreement in place and the employees’ working conditions are not clearly defined.
Views vary on the legislative reform and its effects, giving rise to a great deal of uncertainty.
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2. EMPLOYERS’ COMMUNICATION OF COLLECTIVE DISMISSALS, CONTRACT SUSPENSIONS AND REDUCTIONS IN WORKING HOURS TO THE MANAGEMENT ENTITY FOR UNEMPLOYMENT BENEFITS
Order ESS/982/2013 of 20 May regulating the procedure for employers to communicate collective dismissals, contract suspensions and reductions in working hours to the management entity for unemployment benefits.
Article 22 of Royal Decree 625/1985 of 2 April developing Law 31/1984 of 2 August on unemployment protection (“Royal Decree 625/1985”) sets out the minimum information that employers must provide the management entity for unemployment benefits in the event of collective dismissals, contract suspensions or reductions in working hours.
This communication must be sent by electronic means before the collective measure is implemented and once it has been notified to the labour authorities. The employer must send the information after the consultation period has finished and in the case of collective dismissals by public authorities, once the corresponding viability report has been issued by the relevant entity.
This communication is mandatory for employers that operate in Spain with a tax identification code which the Social Security has allocated a contribution account to.
The communication must contain the following:
- The employer’s company name, its contribution account code, its tax identification code and its registered office.
- A list of the workplaces affected by the collective measure, specifying their contribution account codes, their tax identification code and their registered offices.
- Information as to whether the employer operates in the private or public sector and, in the latter case, whether it is considered a public authority.
- The reason for the collective measure, indicating whether it entails a collective dismissal, a contract suspension or a reduction in working hours, and its territorial scope of application.
- A list of the employees affected by the collective measure and an indication as to whether or not the consultation period ended with an agreement.
- The identity of the employer’s legal representative.
- In the case of contract suspensions or reductions in working hours, the employer must prepare a schedule for each employee indicating the precise dates these measures will begin and end.
- If the collective dismissal affects employees over the age of 50, an indication of whether the company is obliged to pay the contributions established in Royal Decree 1484/2012 of 29 October on financial contributions to be made by profitable companies that carry out collective redundancies affecting workers aged 50 or above.
- The date on which the collective measure to be implemented is communicated to the labour authorities, the resolution of the labour authorities in the case of collective measures due to force majeure or, where applicable, the date of the insolvency proceedings’ resolution.
- The date of the report on the viability of the collective measure issued by the relevant public authority.
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3. ROYAL DECREE 1707/2011 OF 18 NOVEMBER ON UNIVERSITY STUDENTS’ WORK PLACEMENTS DECLARED NULL
Judgment of the Contentious-Administrative Chamber of the Supreme Court dated 21 May 2013
The Contentious-Administrative Chamber of the Supreme Court (the “SC”) has declared Royal Decree 1707/2011 of 18 November on university students’ work placements (the “Royal Decree”) null on the basis of a fundamental defect in its enactment procedure.
Law 50/1997 of 27 November on the government, expressly requires that the Council of State issue an opinion on draft regulations when they are enacted to develop another law.
If, once the Council of State has issued its opinion on the draft regulation, substantial amendments are made to it, the SC takes the view that the Council of State must issue another opinion on the new draft.
In this case, although the Council of State reviewed the first draft, it did not do so when a first additional provision was subsequently added. The first additional provision stipulates that university students on work placements do not need to be registered with the Social Security or make social security contributions.
The SC held that the amendment should have been reviewed by the Council of State and, as a result of the failure to do so, the Royal Decree must be declared null and the enactment procedure restarted in order for the Council of State to issue an opinion on the first additional provision.
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4. EMPLOYER’S REFUSAL TO IMMEDIATELY REINSTATE AN EMPLOYEE FOLLOWING PARENTAL LEAVE WILL BE DECLARED A NULL DISMISSAL
Judgment of the Labour Chamber of the Supreme Court dated 21 October 2013
A request for reinstatement by an employee who had been on parental leave for the previous two years was rejected by her employer. The employee filed a claim requesting that the company’s refusal be declared a null dismissal.
The company challenged the claim alleging the absence of grounds on which to base the claim for dismissal as well as the argument that reinstatement could only occur if there were vacancies in the company, which there were not.
The SC rejected the procedural exceptions alleged by the company, basing its holding on the constitutional doctrine regarding measures to help reconcile work and family life.
The ruling cited article 46.3 of the SW to determine that, after a parental leave, the employee has the right to immediate reinstatement in the company. The reinstatement could be in the same work post (if the parental leave did not exceed one year) or in a similar work post (if the parental leave exceeded one year): the reinstatement does not depend on the availability of vacancies.
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5. AN EMPLOYER WHO INFORMS ITS EMPLOYEES OF THE POSSIBLE NEGATIVE IMPACT OF A STRIKE VIOLATES THE RIGHT TO STRIKE AND THE RIGHT TO FREEDOM OF ASSOCIATION
Judgment of the Labour Chamber of the Supreme Court dated 12 February 2013
A few days before a planned strike, the chief executive officer of the group sent an e-mail to the employees of those companies of the group planning to take strike action. The e-mail set out the possible negative consequences for the group if the strike were to take place and referred to the negative publicity that the employee representatives were creating.
The e-mail referred to the possible loss of clients and the possible termination of employment contracts for workers rendering services to such clients.
In response to the e-mail, the trade union federation filed a claim for the protection of fundamental rights against the companies of the group whose employees had planned to take strike action. The trade union federation considered that the employees’ right to strike and the right to freedom of association had been violated and requested that the companies immediately cease this form of conduct, and that the companies notify each of their employees of the court order allowing the trade union federation’s claim.
The claim was upheld at first instance by the Labour Chamber of the National Court. This decision was appealed by the co-respondent companies. In their appeal the co-respondents alleged that the employee representatives had violated: (i) the right to freedom of expression, which must be adapted to the employer/employee relationship; (ii) their duty to act in good faith, which obliges the employee representatives to comply with the obligations established in their employment contracts and; (iii) their right to publicise the strike, which does not include the possibility of transferring information that could be detrimental commercially.
The SC held that freedom of expression includes criticising another party, even if this may cause unpleasantness to the latter. It also explained that the existence of an employment contract does not mean that employees must tolerate any unjustified limitation on their rights and public freedoms. In light of the above, the chamber upheld the first instance resolution declaring the violation of the workers’ fundamental rights.
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6. COLLECTIVE DISMISSAL NULL IF IT BREACHES EMPLOYEE REPRESENTATIVES’ PREFERENTIAL RIGHT TO REMAIN IN THE COMPANY
Judgment of the Labour Chamber of the National Court dated 12 June 2013
This judgment involved a claim filed by trade union federations against a collective dismissal plan to dismiss 476 employees in two workplaces. The claim was filed against the company carrying out the collective dismissal and the parent company of its group.
The National Court (“NC”) first considered the parent company’s argument that there was no cause of action against it because it had not participated in the consultation period and had never employed any of the employees affected by the collective dismissal. The claimants in turn argued that the dismissal decision was taken by the group of companies and therefore the group should be held liable.
The NC upheld the parent company’s argument because the group did not constitute a group of companies for labour purposes. If a group of companies had existed for labour purposes, all of the companies would be declared jointly and severally liable for the obligations assumed by any other company of the group as the whole group is considered to act as a single company.
The claimants also argued that the fundamental right to freedom of association of the employee representatives in both workplaces had been breached as the company had not respected their preferential right to be kept on in redundancy situations. The NC considered two different situations: (i) whether the employee representatives have the right to be kept on when all the employees they represent are to be dismissed; and (ii) the limits on their preferential right to be kept on.
In this case, even though the activity in one of the workplaces was to end as a consequence of the collective dismissal, the company gave the employee representatives the option to take up the same or similar posts to those they already held, but in the workplace that was to remain open. This right to be kept on would mean that the employees occupying the posts to which the employee representatives were assigned would have to be dismissed, even though their dismissal was not originally planned.
The NC held that, although the employee representatives do not have the right to be kept on when all the employees they represent are to be dismissed, the acknowledgement of that right by the employer means it must fulfil all the applicable legal requirements.
In this regard, the NC held that the employee representatives’ right to remain in the company must be considered a guarantee, not a privilege. The guarantee allows them to negotiate the conditions of the collective dismissal without they themselves being under the pressure of knowing that they are also going to be dismissed.
As such, the NC held that the right to remain and the right to freedom of association had been breached and, as a consequence, the collective dismissal was declared null. The right given to the representatives to occupy the posts of other employees (which, if exercised, would mean the other employees would lose their jobs) did not fulfil the statutory requirements.
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7. A MERGER BY ABSORPTION DOES NOT ENTITLE THE ACQUIRING COMPANY TO UNILATERALLY MODIFY THE ACQUIRED COMPANY’S VARIABLE REMUNERATION SYSTEM
Judgment of the Labour Chamber of the National Court dated 20 May 2013
Following the merger of a bank (the “Acquiring Company”) by absorbing another bank (the “Acquired Company”), the trade union federation filed a collective claim for the nullity or, subsidiarily, the unfairness of the measure adopted by the Acquiring Company, which consisted of unilaterally reducing the variable remuneration set for the Acquired Company employees (to meet annual targets) by up to 10%.
The trade union federation (the claimant) alleged that the changes adopted by the Acquiring Company constituted a substantial modification of the employees’ working conditions, and therefore had to be declared null as the applicable legal procedure to carry out this modification had not been complied with.
The Acquiring Company responded to the claim by alleging that: (i) the judicial proceedings filed by the claimant were inadequate on the grounds that each employee’s individual circumstances had to be analysed in order to determine whether he/she had a right to the variable remuneration set for the targets; (ii) the targets that the Acquired Company had set for its employees to accrue the variable remuneration no longer existed as a result of the merger and were therefore impossible to achieve and; (iii) the modification was not substantial because the variable remuneration was too low.
The Court analysed the adequacy of the judicial proceedings filed by the claimant and explained that these proceedings are intended for those situations affecting a group of workers with a common interest, which cannot be judged individually.
In light of the above, the Court decided that the proceedings followed were adequate given that the variable remuneration system of a group of workers had been modified.
The NC also declared that the Acquiring Company had substantially modified the employees’ working conditions because the modification affected their salaries and their remuneration system. Under article 41.1.d) of the SW these are deemed to be substantial modifications. The Acquiring Company’s modification was therefore declared null on the basis that the legal proceedings for the substantial modification of the employees’ working conditions had not been followed.
The Court concluded by stating that individual enforcement proceedings would have to be filed by the affected workers in order to enforce the judicial resolution, even though collective proceedings allow the request for a ruling. To avoid such multiple individual proceedings to enforce judgments, the claimant should have requested a judgment against the Acquiring Company in its claim.
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8. A COMPANY’S BREACH OF ITS EQUALITY PLAN
Judgment of the Labour Chamber of the National Court dated 17 January 2013
The Labour Chamber of the NC heard the claim which had been filed by minority unions in collective proceedings, as a consequence of a general breach of the Equality Plan (“EP”) and the regulation of the Equality Plan Commission.
The company and the trade union federation opposed the claim, alleging that the claim was too vague and did not specify the aspects of the EP which had been breached. In addition, the defendant denied that the alleged individual infringements of the EP had taken place
The NC referred to Basic Law 3/2007 of 22 March on effective equality for women and men. The NC emphasized the company’s obligation to respect equality at work between men and women. The obligation for companies with over 250 workers to establish an EP was also noted.
The NC did not find that there had been any overall breach of the EP in the case. It then analyzed each individual infringement alleged by the claimants. The NC concluded that the company had breached two specific aspects of the EP.
Firstly, the company did not fulfil its obligation to provide an analysis on the company’s salary structure, in order to rectify the differences in remuneration between men and women. This constituted a significant infringement, because equality regarding salary structure is considered essential in achieving the objectives set regarding equality.
Secondly, a single criterion for employees regarding uniform was not established. In this regard, it was held that male middle management at the company did not wear a uniform, but that female middle management did. Notwithstanding the above, it was also held that progress in this area had been achieved in comparison with previous years, given that the same basic uniform was worn by other employees.
Consequently, the NC held that the company had breached its obligations under the EP. It ordered the company to comply with those sections of the EP which had been breached.
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1. ONE YEAR DEADLINE FOR RENEWING EXPIRED COLLECTIVE BARGAINING AGREEMENTS ENDS ON 8 JULY 2013