1. EXTRAORDINARY AID FOR WORKERS AFFECTED BY CORPORATE RESTRUCTURING PROCESSES
Royal Decree 3/2014 of 10 January, establishing the special rules for granting aid before ordinary retirement in the social security system to workers affected by corporate restructuring processes
The purpose of Royal Decree 3/2014 of 10 January (“RD 3/2014”) is to provide financial assistance to workers who are close to retirement and dismissed during corporate restructuring processes. RD 3/2014 reduces the discretion of public authorities to decide whether or not this aid should be granted and mitigates the negative consequences of corporate restructuring processes.
Royal Decree 908/2013 of 22 November, which was analysed in Labour Law Newsletter no. 98, and RD 3/2014 are comprised in the set of rules governing the granting of public aid to workers affected by corporate restructuring processes.
Some of the most significant aspects of RD 3/2014 are described below:
1.1 Procedure to grant the aid
For reasons of urgency and public interest, RD 3/2014 states that the aid will be granted directly to the beneficiaries.
The aid is intended for workers whose employment contracts are terminated according to article 51 and 52 of the Statute of Workers (“SW”), who meet the following requirements:
- They are four years or less away from their real or legal retirement age.
- They satisfy the contribution period requirement which entitles them to the standard social security pension, under the contribution regime, upon reaching the legal retirement age.
- They prove that they have a length of services in the company or group of companies of at least two years when the aid is applied for. The length of services of part-time and permanent seasonal workers is calculated from the date they joined the company to the date of their departure.
- They are registered as jobseekers with the State Employment Service and their unemployment benefits have run out.
- They are not ineligible to receive the aid.
- In the case of employees affected by collective dismissals the term to have access to the aid system must not exceed four years from the notification of the agreement reached in the consultation period to the relevant labour authority.
1.3 The aid
The aid consists of a monthly economic benefit and the corresponding social security contributions while receiving the benefit. The aid is provided during a maximum term of four years and, in any event, until the worker reaches the legal retirement age established in article 161.1.a) and in transitory provision twenty of the General Social Security Law.
The beneficiaries of the aid will be considered registered in the Social Security’s general contribution scheme (Régimen General de la Seguridad Social). However, they are not covered by the Social Security and are excluded from all benefits for work-related accidents and occupational illnesses that are not considered pensions.
1.4 Procedure to determine whether workers are eligible to receive the aid
- Employees affected by a collective dismissal: the company and the employee representatives may jointly submit the applications for aid for eligible employees to the competent body within 15 days following the communication to the relevant labour authority of the agreement reached in the consultation period.
- Employees dismissed according to article 52.c) of the SW: the application will be submitted by the company and the employee representatives (if any) within the notice period provided for in article 53.1.c) of the SW, or within the following 15 days if the notice period is not respected.
The application must contain a report setting out the reasons why the aid is requested, the number of beneficiary workers, the financial cost and the dismissal documents (article 6 of RD 3/2014).
1.5 Procedure to receive the aid
Once the application has been accepted, the company must submit another application for those workers who meet the relevant requirements and thus are eligible to receive the aid. The company must also provide the competent authority with the documents listed in article 7 of RD 3/2014.
1.6 Expiry and suspension
The aid will expire and be suspended (i) when the period for which it was granted elapses; (ii) if the beneficiary dies and; (iii) if the beneficiary becomes a retired pensioner or if he/she is declared to have a total or absolute permanent disability or a severe disability after the aid was granted. On the contrary, if the beneficiary starts paid work after the aid is granted, the benefit will be suspended until he/she ceases employment or his/her unemployment benefits run out.
The aid, which includes social security contributions, will be funded by the applicant companies (60%) and by the budget of the State or of the autonomous regions (40%).
For more detailed information about how companies contribute financially to this type of aid, see articles 13 and 17 of RD 3/2014.
2. NEW CONTRIBUTION RULES FOR 2014
Order ESS/106/2014 of 31 January developing the regulations on social security contributions for unemployment, protection for ceasing a business activity, the Salary Guarantee Fund and on-the-job training, established in Law 22/2013 of 23 December on the 2014 budget
Order ESS/106/2014 (“Order”) of 31 January, published on 1 February 2014 in Spain’s Official State Gazette, reflects the social security contribution bases and rates set forth in Law 22/2013 of 23 December on the 2014 budget, adapts them to part-time contracts and sets out the contribution rules for 2014.
The Order establishes that from 1 January 2014, the maximum monthly contribution base in the Social Security’s general contribution scheme (Régimen General de la Seguridad Social) will be EUR 3,597. The minimum monthly contribution base for work-related accidents and professional illnesses will be EUR 753. The minimum contribution bases for common contingencies will vary depending on the professional category. In 2014, the minimum monthly base for engineers and university graduates will be EUR 1,051.50, and EUR 753 for administrative staff. The contribution rates are the same as those of 2013.
The minimum monthly contribution bases for self-employed workers will be EUR 875.70 and the maximum will be EUR 3,597. However, from 1 January 2014, the monthly contribution base for those aged 48 years or more will range from EUR 944.40 to EUR 1,926.60. The monthly contribution base will range from EUR 875.70 to EUR 1,926.60 if a self-employed worker is 45 years of age or more and had to register with the Social Security as a result of becoming the owner of his or her deceased spouse’s business.
3. EXTENSION OF THE DEADLINE TO CONTRIBUTE FOR NEW ITEMS IN THE CONTRIBUTION BASE
Resolution of the General Treasury of the Social Security of 23 January 2014 extending the deadline to contribute for new items in the contribution base of the General Social Security Scheme (published in Spain’s Official State Gazette on 31 January 2014)
On 27 December 2013 the General Treasury of the Social Security (“GTSS”) issued a newsletter to clarify doubts following the recent amendments to article 109 of the General Social Security Law (“GSSL”) introduced by final provision 3 of Royal Decree-Law of 20 December on measures to promote the stable employment of workers and to improve their employability.
The newsletter made reference to the GSSL’s resolution allowing businesses to contribute for new items in the contribution base without surcharges until 31 March 2014. The resolution of 23 January 2014 has now extended the deadline until 31 May 2014, thus enabling businesses to regularise their situation, easing procedures and facilitating the updating of employees’ payrolls. This also means that “the new items in the contribution base may be the subject of supplementary settlement and payment, without the accrual of surcharges or interest, until 31 May 2014.”
The amendments to article 109 of the GSSL came into force on 22 December 2013. Unlike the previous wording of article 109, a closed list is set out of items excluded from the contribution base. These are: (i) employees’ travel expenses for journeys outside the regular workplace; (ii) living and accommodation expenses; (iii) compensation in the event of demise and compensation for transfers, suspensions and dismissals; (iv) social security benefits and their increases; (v) allocations for training expenses if training is required for the post; (vi) overtime.
As of 22 December 2013, urban transport and distance allowances, increases of social security benefits other than temporary incapacity, restaurant vouchers, share allotments by a company or another company of its group, all form part of the contribution base.
4. VIOLATION OF THE RIGHT TO A DEFENCE
Judgment of the Constitutional Court dated 16 December 2013
The Second Chamber of the Constitutional Court (“CC”) analysed potential infringements of the right to privacy and personal image, the right to effective judicial review and the right to due process with all guarantees of a worker who was dismissed for stealing money from a cash register based on recordings made by a workplace safety camera.
The labour court dismissed the claim and declared the dismissal to be fair, holding that: (i) the right to privacy was not violated as it had been sufficiently proved that the room in which the cameras were placed (with their presence adequately indicated) was not used as a changing room; and (ii) excerpts from the recording revealed how the envelopes containing money were removed.
Nevertheless, during the examination of evidence, the magistrate rejected taking into consideration the full recording, in which, as stated by the claimant, the room was actually shown to be a changing room. Furthermore, questions posed by the claimant’s lawyer were also rejected.
The claimant appealed, alleging violations of her right to privacy and personal image as well as of her right to due process with all guarantees. The High Court of Justice of Madrid dismissed her appeal completely. The Supreme Court refused to admit a cassation appeal to unify case law, as no contradictory resolution was found. In view of the circumstances, the claimant lodged an appeal with the CC alleging violations of articles 18.1, 24.1 and 24.2 of the Spanish Constitution.
Having accepted the appeal’s constitutional importance, the CC analysed the various fundamental rights that the claimant alleged were infringed.
The CC first addressed a potential violation of the right to privacy and personal image as a result of the security camera recordings. The CC stated that it lacked competence to rule on the matter as it could not dispute the facts as established by the lower courts. Consequently, the CC held that it had to “base its decision on the facts declared proven by the appealed judgments.”
The CC then examined a potential violation of the right to a defence and the right to effective judicial review resulting from the failure to consider portions of the recordings that the claimant alleged would have supported her right. The CC highlighted that the “intertwined relationship of the right to provide means of proof with (…) the right to effective judicial review (…) and the right to a defence, are inseparable.” The CC also stated that the claimant must certify that: (i) the piece of evidence that was not admitted was essential for her defence; and (ii) the final court ruling could have been in her favour had the piece of evidence been admitted and examined.
In light of all the above, the CC determined that exhibiting the recordings was an important means of proof for verifying the claimant’s allegations and concluded that denying the claimant that possibility had prevented her from proving a violation of her right to privacy and the room’s actual use.
Consequently, the CC held that there was a violation of the right to use means of proof as well as of the right to due process with all guarantees, therefore overturning the judgments of the labour court and the High Court of Justice of Madrid.
5. LEGISLATION TAKES PRECEDENCE OVER COLLECTIVE BARGAINING AGREEMENT
Judgment of the National Court of 20 January 2014
In this judgment, the Labour Chamber of the National Court (“NC”) analysed a salary reduction imposed on the employees of a public sector company, as a consequence of provisions on pay freezes set out in various national budget laws being breached.
A report of the Social Security’s internal audit body (Intervención General de la Seguridad Social) considered that the salary increases applied pursuant to the collective bargaining agreement applicable to the employees in 2010, 2011 and 2012 were unlawful. In order to avoid the employees having to return the amounts they had unduly received, the company began a consultation period with a view to making substantial modifications to the employees’ remuneration. The trade union representatives argued that this process should be declared void due to various formal and procedural defects.
The NC held that “if there is a contradiction between the provisions of the collective bargaining agreement in relation to remuneration and those contained in legislation on budget matters, it will be resolved in favour of the latter.” In other words, legislation takes precedence over collective bargaining agreements.
Consequently, the negotiation process that the company had proposed, despite being constructive in terms of allowing employee participation, was unnecessary as legislation (specifically, laws (Leyes)) can be enforced without following the procedure laid out in articles 41 and 82.3 of the Statue of Workers.
6. THE NATURE OF A BUSINESS IN A COLLECTIVE DISMISSAL
Judgment of the High Court of Justice of Cataluña dated 27 November 2013
In a judgment dated 27 November 2013, the High Court of Justice of Cataluña (“HCJC”) analysed the differences between public sector entities and public authorities, in order to determine which process should be followed in a collective dismissal. The key issue was determining the nature of the defendant’s business in order to ascertain whether it was correct to use the collective procedure under article 51 of the Statute of Workers (“SW”), which entailed the dismissal of 44 workers and the adoption of other measures aimed at alleviating the pressure of economic and production-based causes for collective dismissal.
In this regard, if the business is considered to be a public sector entity, the collective dismissal must follow the procedure set out in articles 51 and 52.c) of the SW. On the other hand, if the business is considered to be a public authority, Additional Provision 20 (“AP 20”) is applicable.
AP 20 introduces modifications to the traditional causes which can give rise to collective dismissals. On the one hand, it contains its own definition of an economic cause for collective dismissal, specifically: “a situation of sudden and on-going budgetary shortfall which prevents financing the relevant public services.” On the other hand, this provision does not include the production-based cause as a justification for the termination of employment contracts.
After analysing article 3 of Royal Legislative Decree 3/2011 approving the consolidated text of the Law on Public Sector Contracts, the court held that the defendant was an entity that was wholly owned by the regional government of Catalonia and therefore, it was not deemed to be a public authority. In this regard, the judgment cited established case law which recognises that “these types of entities, which are created for the general interest, do not operate as “public authorities”, and merely because they are subject to regulations regarding budget, accounting, financial control and hiring, does not mean that they are deemed to be public authorities; these entities are in fact subject to private law.”
In conclusion, the HCJC held that the procedure followed by the defendant’s business in order to terminate the employment contracts, applying article 51 of the SW, was compliant with the law.