The amendment of article 109 of the General Social Security Law prompted the General Treasury of the Social Security to issue a resolution published on 15 May, which extends the term to make contributions for new salary items included in the contribution base of the General Social Security Scheme.
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The Labour Chamber of the Supreme Court (“SC”) dismissed an appeal lodged by a company against the judgment of the Labour Chamber of the High Court of Justice of Catalonia dated 23 May 2012 that declared the company’s collective redundancy null on the grounds that an ad hoc committee cannot be considered as a valid type of employee representation for the purposes of article 124 of the Law Regulating the Labour Courts.
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In its judgment of 26 March 2014, the Supreme Court rejected a cassation appeal against the judgment of the National Court (“NC)” dated 16 July 2012. The Supreme Court clarified that professional athletes are entitled to a severance payment when their employers terminate their contracts, even though permanent contracts are prohibited in professional sport.
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The Supreme Court declared a collective redundancy carried out in a company shortly prior to it being transferred to another entity to be void, despite the existence of objective reasons for carrying out the redundancies. The Supreme Court found that the transfer itself was fraudulent because the two companies had reached an agreement aimed at evading the consequences of a transfer of undertaking.
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In its judgment dated 28 March 2014, the NC declared a public authority’s collective redundancy procedure void on the basis of its failure to adhere to the principles of equality, merit and capability when selecting which employees would be made redundant. The employees’ immediate reinstatement was ordered.
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The Labour Chamber of the High Court of Justice of Andalusia on its judgment dated 23 January 2014, estimates the appeal against a judgment on collective dismissal. It declares that the Collective Bargain Agreement for the employees of the City Council of Bailen will cease to be in force with retroactive effects from 8 July 2013.
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1. EXTENDED TERM TO MAKE SOCIAL SECURITY CONTRIBUTIONS FOR NEW SALARY ITEMS
Resolution, dated 6 May 2014, of the Judgment of the Supreme Court dated 29 January 2014, General Treasury of the Social Security, by which it is authorized a new extension of the term to make social security contributions for the new salary items included in the contribution base of the General Social Security Scheme, as a consequence of the amendment of article 109 of the General Social Security Law, as approved by the Royal Legislative Decree 1/1994, 20 June, pursuant to the final disposition number 3 of Royal Decree 16/2003, of 20 December
The resolution of the General Treasury of the Social Security, dated 6 May 2014, has extended until 31 July 2014 the term to make social security contributions for new salary items relating to the period from December 2013 to May 2014. These contributions will not be subject to any surcharges or interest for late payment.
2. legal capacity of EMPLOYEE representative comMittees to challenge collective REDUNDANCIES
Judgment of the Supreme Court dated 29 January 2014
The Supreme Court dismissed an appeal lodged by a company against a judgment that declared the company’s collective redundancy to be null. The collective redundancy took place in March 2012 and affected 20 of the 41 employees of a workplace in Barcelona.
The judgment ruled on three issues that had been widely debated as a result of the 2012 labour reform, namely: (i) the legal capacity of ad hoc committees; (ii) the need to sue all the companies of a group if a dismissal is to be challenged on the grounds that there are irregularities in the group; and (iii) the purpose of the Labour Inspectorate report issued during a collective redundancy procedure.
The SC held that ad hoc committees are extraordinary and subsidiary to employee representatives or ordinary trade unions. In addition, they are specialised, as they may only negotiate company proposals under articles 41 and 51 of the Statute of Workers. That said, ad hoc committees may also bring an action before the labour courts, even though article 124.1 of the Law Regulating the Labour Courts (LRJS) does not stipulate this expressly.
The company also argued that for an irregularity in a group of companies to be a ground for the dismissal to be null, all the companies in the group must be sued. The SC considered that it would have only been necessary to issue a claim against all of the companies of the group if the intention had been to jointly sue all of them.
Finally, the judgment analyses the purpose of Labour Inspectorate reports following the 2012 labour reform. The SC held that the Labour Inspectorate’s role is to issue a report on a situation that is subsequently evaluated by judges. It is simply another means of evidence, has no binding effect, and its existence does not exclude the analysis of any other evidence.
3. applicability of SEVERANCE PAYMENTs UNDER ARTICLE 49.1.C) OF THE STATUTE OF WORKERS to SPECIAL employment RELATIONSHIPS
Judgment of the Supreme Court dated 26 March 2014
The judgment analyses whether a specific provision established in a supplementary regulation, such as article 49.1.c) of the Statute of Workers, applies to professional athletes.
The basic premise on which the Supreme Court’s decision is based is that professional athletes must be employed on fixed-term contracts. However, the Supreme Court considers that the severance payment established for the termination of temporary contracts under article 49.1.c) of the Statute of Workers may still apply to the special employment relationship of professional athletes, but only when it is the employer that decides not to renew the contract and not when it is the parties by mutual agreement or the professional athlete that decides not to renew the contract.
4. COLLECTIVE redundancy carried out PRIOR TO A COMPANY transfer void
Judgment of the Supreme Court dated 18 February 2014
The Supreme Court heard a cassation appeal lodged against the judgment of the Labour Chamber of the High Court of Justice of Andalusia, dated 11 October 2012, that had held the collective redundancy to be lawful.
Overruling the Andalusian court, the SC determined that a transfer of undertaking had taken place given that the transferee company immediately acquired all the assets of the transferor company except for its employees (who had been previously dismissed, without justification, and in a clear abuse of law). The SC held that the companies had acted fraudulently in their scheming to avoid the transferee having to take on the employees. The SC concluded that, in light of the manner and timing of the redundancies, the transferor dismissed its employees through a collective redundancy to facilitate a transfer without human resources that benefitted the transferee company.
The SC consequently held that a fraudulent company transfer had occurred by agreement between the two companies, with the intention of avoiding the provisions of article 44 of the Statute of Workers. The companies were jointly ordered to reinstate the employees.
5. Public authority collective redundaNcies MUST RESPECT the principles of equality, merit and capaBILITY
Judgment of the National Court dated 28 March 2014
The National Court (“NC”) declared a public authority’s collective redundancy void on three grounds: (i) failure to deliver compulsory accounting records during the consultation period, (ii) failure to provide specific reasons in the dismissal notice given to the employee representatives; and (iii) non-compliance with the constitutional principles of equality, merit and capability when selecting the employees who were to be made redundant.
Regarding the third issue, the NC held that, pursuant to article 23.2 of the Spanish Constitution, the fundamental right to equality applies both to the process of being selected for a public post and to losing such a post. Therefore, the selection criteria used in redundancies must abide by the constitutional principles of equality, merit and capability. In addition, the criteria must be sufficiently precise to allow them to be applied directly and to exclude any arbitrariness, which requires a maximum degree of specificity.
6. Enforceability of collective bargain agreements after a month of its APPLICATION TO REVIEW
Judgment of the Labour Chamber of the High Court of Andalusia dated 23 January 2014
The contentious issue focuses on the interpretation of Article 86.3 of the Workers Statute as amended by Law 3/2012, in relation to the Transitional Provision number Fourth of the same Law. If an application was made to review a collective bargaining agreement before Law 3/2012 entered into force, the collective bargaining agreement continued in force for one more year after the application, and thereafter the corresponding sector-wide collective bargain agreement was applied, unless the parties “had agreed otherwise” (which gave them more time to negotiate a new collective bargaining agreement).
In analysing when it should be considered that the parties “had agreed otherwise”, the judgment points out that the issue is “whether the legislature is only referring to agreements reached after the labour reform, or those reached after or simultaneously to an application to review or the end of the initial term of the collective bargaining agreement.”
The judgment holds that any agreement to the contrary must be an express pact that clearly and voluntarily excludes the application of Law 3/2012. As such, the provisions of Law 3/2012 on the limited extended application of collective bargaining agreements cannot be excluded by a pact reached many years before Law 3/2012 entered into force. To give effect to these pre-existing pacts would imply an incongruous interpretation of Law 3/2012.
Consequently, the judgment declares that the decision of the City Council was adopted in compliance with the new regulation and acquits the City Council. This judgment has an opposite opinion to others, among which we shall mention the judgment of the NC dated 23 July 2013 [click here for our Newsletter on this judgment].