1. LABOUR ISSUES IN THE 2014 BUDGET
Law 22/2013 of 23 December on the 2014 state budget (BOE 26-12-13)
1.1 Pensions
Article 37 of the 2014 Budget Law (“2014 BL”) provides for a 0.25% increase in state pensions and those paid to some civil servants and military personnel (clases pasivas). The following pensions will not be increased:
- pensions regulated under article 42 of Law 37/1988 that exceed EUR 2,554.49 per month; and
- pensions awarded to national road builders before 1 January 1985, except for those who only receive this pension.
Article 40 of the 2014 BL fixes the maximum monthly amount of state pensions at EUR 2,554.49 when a pensioner receives 14 payments per year. However, if a pensioner is entitled to receive more or less than 14 payments per year (including extraordinary payments), the monthly limit must be adjusted so that an annual limit of EUR 35,762.86 is not exceeded.
The 2014 BL also sets out the minimum state contributory pensions. Articles 44 and 45 regulate supplements for those who receive a maximum basic pension of EUR 7,080.73 in 2014.
The 2014 BL sets the non-contributory retirement and disability pensions at an annual rate of EUR 5,122.60. It also establishes an annual supplement of EUR 525 for pensioners who do not own their home and live in rented accommodation that does not belong to a relative.
Finally, from 1 January 2014, pensions paid out under the compulsory retirement and incapacity insurance (no longer available), will be EUR 5,667.20 per annum.
1.2 Social security benefits
Additional provision 24 of the 2014 BL increases some of the benefits for relatives, regulated in section two of chapter IX of title II of Royal Legislative Decree 1/1994 of 20 June, which approves the Social Security Law (“SSL”).
1.3 Social security contributions
Title VIII of the 2014 BL regulates the contribution bases and rates for social security contributions for 2014.
1.3.1 Maximum and minimum contribution bases
From 1 January 2014, the maximum contribution bases for all groups in the social security system (regardless of whether or not they are self-employed workers or employees) will be EUR 3,597 per month, which is 5% more than 2013.
From 1 January 2014, the minimum contribution bases for the General Social Security Scheme (applicable to employees) will increase in line with the national minimum wage and will therefore be the same as the 2013 bases.
In the Special Self-Employed Workers Scheme, the minimum monthly contribution base for 2014 will be EUR 875.70. Limits are placed on the contribution bases for self-employed workers aged 47 or more.
1.3.2 Reduction in social security contributions for employees changing posts during pregnancy, breastfeeding or occupational illness.
Additional provision 78 of the 2014 BL establishes that whenever a worker must change her post due to risks posed during pregnancy or breastfeeding, the company’s social security contributions for common contingencies for that employee will be reduced by 50% for as long as she holds the different post. The same reduction will apply when an employee must change posts because of an occupational illness.
1.4 Official interest rate
The official interest rate will be the same as 2013 until 31 December 2014, that is, 4%. The late payment interest rate referred to in the General Taxation Law and the General Subsidies Law will be 5%.
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1.5 IPREM
The National Indicator of Earnings (“IPREM”) for 2014 will be as follows:
- Daily IPREM: EUR 17.75.
- Monthly IPREM: EUR 532.51.
- Annual IPREM: EUR 6,390.13.
Whenever a reference to the national minimum wage is replaced with the IPREM, the reference amount will be EUR 7,455.14 per annum, except in those cases where special (extraordinary) payments are expressly excluded, in which case the annual amount will be EUR 6,390.13.
1.6 Legislative modifications
1.6.1 Elimination of the FOGASA contribution to severance payments
Final provision 5 of the 2014 BL eliminates article 44.8 of the Statute of Workers (“SW”), which established the obligation of the Wages Guarantee Fund (“FOGASA”) to pay eight days of salary per year of service as part of the statutory severance payments for collective dismissals, individual objective dismissals and contract terminations pursuant to article 64 of the Insolvency Law in companies with less than 25 employees.
1.6.2 Mutual funds for accidents at work and occupational illnesses
The 2014 BL extends companies’ and self-employed workers’ membership of mutual funds for accidents at work and occupational illnesses until the entry into force of a new law that updates their regulation. Until then, membership of such funds can only be terminated early if there are irregularities in the services provided by the fund, the fund has insufficient financial resources or precautionary measures are adopted pursuant to article 74.1 of the SSL.
The Draft Mutual Funds Bill was debated by the Council of Ministers on 20 December and in 2014 the Bill will be debated in Parliament.
1.6.3 Modifications to the processing and management of temporary and permanent incapacity
Final provision 4 of the 2014 BL modifies the regulation on the duration and end of a temporary incapacity. It also alters the consequences for employees with a temporary incapacity who fail to attend medical check-ups. The law now allows for benefits to be temporarily suspended before they are stopped in order to determine why the employee failed to attend the check-up.
1.6.4 Retirement pension entitlement of unemployed workers
Final provision 4.6 of the 2014 BL states that for workers over the age of 55 who are receiving unemployment benefits pursuant to article 215(1)(3) of the SSL and who reach an age that entitles them to receive a contributory retirement pension, payment of the retirement pension will be backdated to the date they reached the retirement age. The retirement pension application should be filed within three months of the unemployment benefit entitlement coming to an end. If it is not, the retirement pension will be backdated for a maximum of three months from the date the application is filed.
1.6.5 Loss of residence and eligibility to receive social security benefits
Final provision 4.7 of the 2014 BL introduces a new additional provision to the SSL. In order to be eligible for and to maintain social security benefits that require residence in Spain, the beneficiary cannot spend more than 90 days a year abroad (unless justified on health grounds). This provision does not apply to unemployment benefits.
1.6.6 Unemployment benefits for ex-offenders
Final provision 4.8 of the 2014 BL introduces a new additional provision to the SSL that establishes new requirements to be met by ex-offenders who were sentenced for crimes under article 36.2 of the Criminal Code (essentially, terrorism and sexual abuse of children under 13) and who wish to claim unemployment benefits. These requisites are essentially that they must apologise to their victims, pay them compensation and show that they have no links to their past criminal activities.
1.6.7 Paternity leave
The entry into force of Law 9/2009, increasing paternity leave to four weeks, is delayed until 1 January 2015. Until then, fathers will be entitled to 13 days’ leave.
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2. MEASURES TO ENCOURAGE STABLE EMPLOYMENT
Royal Decree-Law 16/2013 of 20 December on measures to promote the stable employment of workers and to improve their employability (BOE 21-12-13)
Amongst other provisions, Royal Decree-Law 16/2013 (“RDL 16/2013”) provides that part-time employees can now only work overtime in extraordinary circumstances. The social security contributions for unemployment that must be paid for part-time employees with fixed-term contracts are reduced by 1%. Moreover, the new employment contracts “in support of entrepreneurs” can now be part-time as well as full-time.
RDL 16/2013 also provides that businesses using temporary employment agencies will be entitled to reductions in the social security contributions they pay for employees who are taken on a permanent basis after starting with temporary contracts.
RDL 16/2013 extends the right to reduced working time to legal guardians who care for children until they reach 12 years of age.
RDL 16/2013 also provides that social security contributions must now be made for nursery school vouchers, travel allowances, food allowances and insurance premiums. Employers must now inform the social security authorities of all salary components, regardless of whether or not social security contributions are made for them.
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3. SUSTAINABILITY FACTOR AND PENSION SYSTEM REVALUATION INDEX
Law 23/2013 of 23 December regulating the sustainability factor and the pension system revaluation index (BOE 26-12-13)
The sustainability factor is an additional parameter used to determine the initial value of new state retirement pensions. It adapts the amount of a retirement pension to the pensioner’s life expectancy using the formula established in article 4 of Law 23/2013 of 23 December (“Law 23/2013”). In order to allow future pensioners to adapt to the change, it will not be applied until 2019.
The revaluation index replaces the consumer price index (“CPI”) as the readjustment index for state contributory pensions. The formula, established in article 7 of Law 23/2013, adjusts pensions taking into consideration monetary inflows and outflows of the social security system. Law 23/2013 establishes that this adjustment (applicable to all state pensions) will range between a minimum annual pension increase of 0.25%, and a maximum increase equivalent to the annual CPI + 0.5%.
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4. NATIONAL MINIMUM WAGE FOR 2014
Royal Decree 1046/2013 of 27 December establishing the national minimum wage for 2014 (BOE 30-12-13)
Royal Decree 1046/2013 establishes the national minimum wage (“NMW”) for 2014, which applies to permanent, temporary, casual and domestic workers.
The NMW for 2014 remains at EUR 9,034.20 per year, EUR 645.30 per month or EUR 21.51 per day. This cannot be reduced by remuneration in kind or the wage supplements set out in article 26.3 of the Statute of Workers. Likewise, guaranteed salary increases over time considered productivity bonuses or incentives cannot be used to reduce the NNW. Temporary employees and casual workers who work in the same business for less than 120 days per year cannot earn a salary of less than EUR 30.57 per day. Domestic staff must be paid a minimum of EUR 5.05 per hour worked.
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5. 2014 STATE PENSION INCREASE
Royal Decree 1045/2013 of 27 December on state pensions and other social security benefits for 2014 (BOE 30-12-13)
Pursuant to the 2014 Budget Law (“2014 BL”), Royal Decree 1045/2013 foresees a general 0.25% increase in state pensions so that the maximum state pension will be EUR 2,554.49 per month or EUR 35,762.86 per annum.
The 0.25% increase also applies to the minimum contributory and non-contributory state pensions and the pensions paid out under the compulsory retirement and incapacity insurance (which is no longer available). The non-contributory retirement and disability pensions are set at EUR 5,122.60 per annum.
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6. DISCRIMINATORY COLLECTIVE BARGAINING AGREEMENT PROVISIONS BASED ON SEXUAL ORIENTATION
Judgment of the European Court of Justice dated 12 December 2013
The European Court of Justice (“ECJ”) analysed whether a provision of a French company’s collective bargaining agreement that granted certain benefits, such as special leave and an extraordinary payment, to employees who got married was discriminatory and therefore contrary to Directive 2000/78/EC of the Council of Europe of 27 November 2000 establishing a general framework for equal treatment in employment and occupation.
In this case the employee, who had entered into a civil partnership arrangement with his same-sex partner, was refused the benefits on the grounds that under the company’s collective bargaining agreement, such benefits were only granted to employees who got married. The ECJ held that the situation of those who marry and those of the same sex who cannot legally marry, and therefore enter into a civil partnership agreement, was the same for the purpose of granting the benefits in question.
Therefore, this provision was held to discriminate against the company’s homosexual employees who entered into civil partnership arrangements and could not legally marry.
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7. FAILURE TO COMPLY WITH A REQUEST FOR MASS INFORMATION DOES NOT IMPLY THE NULLITY OF A COLLECTIVE REDUNDANCY PROCEDURE IF THE INFORMATION PROVIDED MEETS THE LEGAL REQUIREMENTS
Judgment of the National Court of 28 October 2013
During the consultation period of a collective redundancy procedure, the trade union claimed that the procedure was null based on an abuse of process and the absence of certain information it had requested from the employer, which had thwarted the purpose of the consultation period.
The National Court (“NC”) did not consider there to have been an abuse of process. It stated that employee representatives must be provided with sufficient information to be able to carry out a duly informed negotiation process. If a legally required document is not provided, this does not necessarily imply the nullity of the collective redundancy procedure. However, the failure to provide documents that impedes the purpose of the negotiation process will imply the nullity of the collective redundancy procedure. The NC stated that the purpose of a negotiation process is not reached by requesting documentation in an overwhelming and indiscriminate manner, but that during the consultation period reasons must be given for requesting documents not required by law, which would force a company to explain why it deems a request unreasonable.
The NC found that the company had in fact provided all the documentation required by law, as well as the extensive documentation requested in the first consultation meeting. The NC thus held that the extensive documentation was adequate and rejected the claim.
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8. INTERPRETATION OF THE REQUIREMENTS TO IDENTIFY A GROUP OF COMPANIES FOR LABOUR PURPOSES
Judgment of the National Court dated 10 December 2013
As part of a collective redundancy procedure, the National Court (“NC”) analysed whether a group of companies for labour purposes existed between the companies of a corporate group. The National Court applied the criteria to determine a group of companies for labour purposes in the following way:
- a single external appearance and single management body: despite being a typical feature of this type of group, and despite being present in this case, the NC held that the mere presence of a single management body did not, in itself, evidence its existence;
- Mixed workforce: the NC held this to exist when the same work is performed by a group of workers.
- Mixed assets: the NC held that owning 100% of the shares of a subsidiary did not constitute, per se, evidence of a group of companies for labour purposes. The NC also held that a group of companies for labour purposes could not be declared to exist merely because employees from different companies of the corporate group worked in the same workplace.
- Single group account: in this case another company of the corporate group paid the workers who were affected by the collective redundancy. The NC held that this was not fraudulent and could not be considered as evidence of the existence of a group of companies for labour purposes as the payment had been made following a court order.
Therefore, the NC rejected the claim that a group of companies existed for labour purposes. See Newsletter 95 which further refers to this area; in particular the Supreme Court judgment dated 27 May 2013.
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9. TERMINATING PERMANENT EMPLOYMENT CONTRACTS “IN SUPPORT OF ENTREPRENEURS” DURING THE ONE-YEAR TRIAL PERIOD WITHOUT COMPENSATING THE EMPLOYEE VIOLATES THE EUROPEAN SOCIAL CHARTER
Judgment of Labour Court number 2 of Barcelona dated 19 December 2013
This judgment addresses the one-year trial period foreseen in permanent employment contracts “in support of entrepreneurs”.
Labour Court number 2 of Barcelona (the “Court”) held that the applicable trial period was that established in article 3.3 of the Statute of Workers and not that under the collective bargaining agreement in question.
On the other hand, the Court held that the legislation establishing the one-year trial period in permanent employment contracts “in support of entrepreneurs” contravenes Article 4.4 of the European Social Charter of 1961 and its interpretation by the European Committee of Social Rights, as it fails to include a notice period or compensation for the termination of a contract during the trial period. A one-year trial period for unskilled workers, in this case one who moved tyres from one place to another, was considered unjustified and excessive in order to evaluate the worker’s capacity to carry out his job.
The Court also held that the law establishing the one-year trial period in permanent employment contracts “in support of entrepreneurs” effectively converts these contracts into temporary employment contracts. Given that grounds for entering into temporary employment contracts must always be given (unlike permanent contracts), and this is not done in these contracts, the Court held they infringe Spanish law.
For all the aforementioned reasons, the dismissal was declared unfair.
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1. LABOUR ISSUES IN THE 2014 BUDGET