Law 14/2013 of 27 September 2013 on support for entrepreneurs and
their internationalisation is a multidisciplinary law that introduces
the concept of “entrepreneur” into the Spanish legal system. This Law
creates an institutional and regulatory framework that encourages
entrepreneurial activities and their internationalisation. It also
significantly amends existing legislation. This summary focuses on
labour aspects.
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In this case, the European Court of Justice analysed which law
applies to the contract of an employee transferred to another Member
State for work. The Court interprets the criteria set out in the
Convention on the law applicable to contractual obligations (Rome I).
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In this case, the Labour Chamber of the Supreme Court (“SC”)
analysed whether an employee was entitled to compensation for not
receiving sufficient notice of his employer’s decision to terminate his
employment contract (when provision was made for this in his employment
contract) as well as compensation for unfair dismissal.
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In this case the National Court analysed a claim in which the
claimants sought to have their collective dismissal declared void,
arguing that it was fraudulent as the employer did not observe the
appropriate legal process. In particular, the discussion focused on the
meaning of the expression “any other grounds for termination” contained
in article 51.1 of the Statute of Workers.
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1. LAW 14/2013 OF 27 SEPTEMBER ON SUPPORT FOR ENTREPRENEURS AND
THEIR INTERNATIONALISATION
Law 14/2013 of 27 September 2013 on support for entrepreneurs
and their internationalisation
On 27 September 2013, Spain’s Official State Gazette published Law
14/2013 on support for entrepreneurs and their internationalisation (the
“Law”). This multidisciplinary law aims to create an
institutional and regulatory framework that encourages entrepreneurial
activities and their internationalisation. These measures are considered
as the tools needed to face the economic downturn and youth unemployment.
The Law also makes significant amendments to existing legislation,
including the Insolvency Law, the Corporate Income Tax Law, the Personal
Income Tax Law and the Public Procurement Law.
The Law has changed the social security contributions of some self-employed
workers. These changes can be summarised as follows:
- Article 28 of the Law temporarily reduces the
contribution bases applicable to self-employed workers (“RETA
workers”) who perform various activities. It distinguishes
between self-employed workers who register as RETA workers with Social
Security for the first time and who perform various activities, and
employees who perform various activities on a part-time basis.
- Article 29 of the Law introduces a 35th
additional provision to the General Social Security Law, which
provides for a 30% to 80% reduction in contribution bases during an
18-month period. This reduction applies to self-employed workers over
30 years of age who register with Social Security for the first time
or who had not been registered during the previous five years.
- Finally, article 30 of the Law amends the 11th
additional provision of Law 45/2002 of 12 December on urgent measures
to change the unemployment protection system and improve employability.
The amendment introduces reductions and discounts to the common
contingencies base during a five-year period for self-employed workers
who have a disability level of at least 33%.
2. CONFLICT OF LAWS IN CASES OF GEOGRAPHICAL MOBILITY WITHIN THE EU:
THE “MOST CLOSELY CONNECTED” Criterion
Judgment of the European Court of Justice dated 12 September 2013
In a request for a preliminary ruling on the law applicable to the
employment contract of an employee whose employer had unilaterally
changed her place of work, the European Court of Justice (“ECJ”)
took into account the following circumstances: 1) the employee had
worked for the same employer without interruption in the Netherlands for
a long time; 2) her employer was subject to German law, her remuneration
was paid in German Marks (prior to the introduction of the Euro), her
pension arrangements were made with a German pension provider, she
continued to reside in Germany, where she paid her social security
contributions, her employment contract referred to mandatory provisions
of German law, and the employer reimbursed the employee’s travel costs
to the Netherlands; and 3) Dutch law is more protective of the rights of
employees who are transferred to another place of work by their employer
than German law.
The ECJ stated that article 6 of the 1980 Rome Convention on the law
applicable to contractual obligations (the “Rome Convention”)
lays down special conflict rules relating to individual employment
contracts and that such rules are exceptions to the general rules laid
down in articles 3 and 4 of that Convention concerning, respectively,
the freedom to choose the applicable law and the criteria to determine
such law if the parties have not made a choice of law. This is to ensure
that the party to the contract that, from a socio-economic perspective,
is considered weaker is adequately protected. Therefore, article 6(2) of
the Rome Convention identifies the specific connecting factors that make
it possible to determine which law applies to the contract when the
parties have not made a choice of law. These factors are, firstly, the
country in which the employee “habitually carries out his work” (article
6(2)(a) of the Rome Convention), or failing this, “the place of business
through which the employee was engaged” (article 6(2)(b) of the Rome
Convention). These criteria are based on the need for predictability as
to the approach adopted in relation to the mechanism used to determine
the law applicable to an individual employment contract in the absence
of choice.
There is, however, a third criterion to determine which law applies
to employment contracts: the law of the country with which that contract
is most closely connected. The ECJ states that, since the main purpose
of article 6 of the Rome Convention is to guarantee adequate protection
for employees and certainty as to the applicable law, this provision
ensures that the law applied to the employment contract is the
law of the country with which that contract is most closely connected.
This interpretation does not automatically result in the
application of the law that is most favourable for the employee.
In other words: where a contract is more closely connected with a Member
State other than that in which the work is habitually carried out, the
law of the Member State where the work is carried out must be
disregarded in favour of the law of the Member State with which the
contract is most closely connected.
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3. COMPATIBILITY OF COMPENSATION FOR UNFAIR DISMISSAL AND
COMPENSATION FOR BREACHING A PRIOR NOTICE REQUIREMENT
Judgment of the Labour Chamber of the Supreme Court dated 15 July
2013
In this case, the Labour Chamber of the Supreme Court (“SC”)
analysed whether an employee was entitled to compensation for his
employer’s failure to give sufficient notice of its decision to
voluntarily dismiss the employee (when provision was made for this in
his employee’s contract) as well as compensation for unfair dismissal.
The SC clarified that contractual provisions pursuant to which
compensation must be paid for an employee’s failure to give sufficient
notice of his or her decision to voluntarily terminate his or her
employment contract or for an employer’s voluntary dismissal of the
employer, are completely lawful as the statutory compensation
rules merely set minimum standards.
The SC also held that compensation for failing to give
sufficient notice of termination is compatible with compensation for an
unfair dismissal. If this were not the case, the employer could
have easily avoided having to pay the compensation for not giving
sufficient notice by giving a false reason or no reason for dismissing
the employee, thus resulting in an unfair dismissal. The unfair
dismissal would have in turn led to the involuntarily dismissal of the
employee and averted the need to give notice.
4. NUMERICAL requirement IN COLLECTIVE REDUNDANCY proceedings:
MEANING OF “reasons not related to the individual workers concerned”
Judgment of the Labour Chamber of the National Court dated 4
September 2013
In this case the National Court (“NC”) analysed a
claim in which the claimants sought to have their collective redundancy
declared void.
In order to be deemed lawful, a collective redundancy in Spain (as
regulated by article 51 of the Statute of Workers, “SW”)
must fulfil three requirements: 1) the numerical requirement: a specific
number or percentage of employees must be made redundant; 2) the causal
requirement: it must be based on economic, technical, organisational or
production grounds; 3) the temporal requirement: the redundancies taken
into account for the purposes of the numerical requirement must occur
within a ninety-day reference period.
The NC addressed two important questions that arise in every
collective redundancy procedure:
- In line with the Supreme Court’s case law, the first day of the
strict time limit in which to exercise a claim against a fraudulent
collective redundancy (dies a quo) (i.e., one in which
although all the requirements for a collective redundancy were met,
the corresponding procedure was not followed and the employer chose to
make individual or multiple employees redundant for reasons not
related to them as individuals) or the last day for the new period
recount (dies ad quem) is the day after the last
redundancy.
- The NC highlighted that the Spanish collective dismissal
proceedings are based on EU Council Directive 98/59/EC of 20 July 1998
on the approximation of the laws of the Member States relating to
collective redundancies. For that reason: a) the numerical requirement
must take into account every dismissal in the reference period that
the employer makes for one or more reasons not related to the
individual workers concerned. As stated in the Directive:
“Whereas, in order to calculate the number of redundancies provided
for in the definition of collective redundancies within the meaning of
this Directive, other forms of termination of employment contracts on
the initiative of the employer should be equated to redundancies,
provided that there are at least five redundancies”. Consequently,
every unfair dismissal for misconduct must be counted as these
dismissals disguise the real reasons for them: economic, technical,
organisational or production grounds. b) The NC applied a literal
interpretation of the expression “reasons not related to the
individual workers concerned”, which was more restrictive than that
applied by the ECJ. According to the NC, this expression means the
termination of the contractual employment relationship should not be
based on the employee’s ability but on the functioning of the company.
For that reason it is mandatory to include every dismissal based on
economic, technical, organisational or production grounds during the
reference period (article 54 c), SW), but no other Spanish objective
dismissal grounds are relevant (i.e., those contained in article 52
a), b) or d), related to objective dismissals based on ineptitude,
failure to adapt, and periodic absences from work).
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1.
LAW 14/2013 OF 27 SEPTEMBER ON SUPPORT FOR ENTREPRENEURS AND THEIR
INTERNATIONALISATION