On 27 August 2014 a resolution of the Spanish Public Employment Service was published in Spain’s Official Gazette announcing the national public subsidies programme for training for people in work.
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The draft bill amending, among others, Law 35/2006 of 28 November on personal income tax was approved by the Council of Ministers on 1 August 2014 and is currently pending parliamentary approval. This draft bill includes new developments in labour law with regard to the previous draft of 23 June 2014.
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The Supreme Court’s judgment of 28 April 2014 analysed the legality of terminating the employment relationship of temporary employees rendering services under temporary employment contracts to perform a specific work or service. The company’s alleged basis for the termination was the slowdown of the general works in connection with which they had been hired.
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In a judgment dated 17 February 2014, the Supreme Court analysed an appeal lodged by the General Workers Union against the judgment of the High Court of Justice of Andalusia, dated 21 February 2013, in which the nullity of a collective redundancy was rejected.
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The High Court of Justice of Catalonia declared abusive a clause in a loan contract that provided for the early termination of the loan and the subsequent payment of the outstanding capital if the borrower’s employment relationship with the granting bank was terminated.
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The High Court of Justice of Castilla-La Mancha analysed the private use of company cars to determine whether or not this use should be considered salary for the purpose of calculating severance payments.
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1. PUBLIC SUBSIDIES FOR TRAINING PROGRAMMES
Resolution of the Spanish Public Employment Service dated 19 August 2014 announcing the start of the period to apply for the 2014 public subsidies for national training programmes aimed at people in work, pursuant to Order TAS/718/2008 of 7 March
On 27 August 2014, a resolution of the Spanish Public Employment Service was published in Spain’s Official Gazette announcing the national public subsidies programme for training for people in work.
The period to submit applications ended 20 calendar days after the publication of this resolution in the Official Gazette and the subsidies will be granted by competitive tendering.
The training programmes eligible for financing are those that are aimed at more than one sector (targeting, among others, self-employed workers, employees and those working in the social economy), just one sector and those related to professional certificates. The types of entities that are entitled to public subsidies vary according to the training programmes they offer, and are principally business organisations, national trade unions, confederations, federations and organisations representing the social economy, professional associations of self-employed workers and training centres or entities.
The training programmes will be funded from the Spanish Public Employment Service’s budget and the subsidies granted will be a monetary amount that will vary depending on the characteristics of the training programme, its technical assessment of the training programme and the maximum amount of the cost of the programme that can be subsidised.
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2. DRAFT BILL TO AMEND PERSONAL INCOME TAX LAW
Draft bill amending Law 35/2006 of 28 November on personal income tax, the Consolidated Law on Non-Residents Income Tax and other tax regulations
On 1 August 2014 the Council of Ministers approved the draft bill amending, among others, Law 35/2006 of 28 November on personal income tax. The draft bill, which is still pending parliamentary approval, includes new developments in labour law with regard to the draft that was summarized in our Labour Newsletter no. 103 of 2014.
In particular, there has been a significant change in the taxation of statutory severance payments. As opposed to the previous version of the draft bill that stated that the exempted amount was limited to a maximum of EUR 2,000 per year of employment, the new version of the draft bill has increased the exempted amount up to a maximum of EUR 180,000. It has also established that this measure will be applicable as from 1 August 2014.
Moreover, the draft bill includes the possibility to apply a 30% reduction to the non-exempt amount of the severance payment. This applies not only to severance payments allocated to a single tax period but also to those that are received in instalments over several years. The previous draft bill did not provide for this possibility.
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3. TERMINATION OF TEMPORARY EMPLOYMENT CONTRACTS TO PERFORM A SPECIFIC WORK OR SERVICE
Judgment of the Supreme Court dated 28 April 2014
The Supreme Court (“SC”) upheld the appeal for the unification of doctrine against the ruling of the High Court of Justice of Andalusia that declared the unfairness dismissal of temporary employees rendering services under temporary employment contracts to perform a specific work or service. The SC analysed if the termination due to a slowdown in the activity for which they were hired was legally valid.
The legal question to be resolved by the SC involved works that did not end on a specific day, but ended gradually. The SC stated that contracts related to large works in which many employees are hired to perform different tasks cannot be expected to remain valid until the works end in full.
In view of the above, and in accordance with established case law, the SC held the gradual termination of works to be a valid cause to terminate employment contracts for a specific work or service. In other words, unless fraud is proven, these types of employment contracts can be terminated as they become unnecessary in view of the degree of completion of the works.
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4. NULLITY OF THE COLLECTIVE REDUNDANCY OF A PUBLIC BODY
Judgment of the Supreme Court of 17 February 2014
In a judgment dated 17 February 2014, the SC analysed an appeal lodged by the General Workers Union against the judgment of the High Court of Justice of Andalusia, dated 21 February 2013, in which the nullity of a collective redundancy was rejected.
The appellants sought the nullity of the collective redundancy carried out by the Consorcio de la Unidad Territorial de Empleo, Desarrollo Local y Tecnológico Sierra de Cazorla (the “Consortium”); a body in which the Andalusian Employment Service and other local authorities hold an interest. The causes for the collective redundancy were alleged to be in accordance with article 52 sections (e) and (c) of the Statute of Workers and were based on a shortfall in the budget allocation and economic grounds. This affected the entire staff of the Consortium.
Under the autonomous regulations, in the event of the Consortium’s termination or liquidation the Andalusian Employment Service should have subrogated to all the Consortium’s employment relationships. To avoid the subrogation, the Consortium received an extraordinary budget allocation to settle the employees’ severance payments.
The SC declared that dismissing employees, rather than liquidating the Consortium, for the sole purpose of avoiding the subrogation is a misuse of power and a fraud on the law. It was further held that this strategy generated higher costs due to the collective redundancy. Consequently, the SC declared the nullity of the collective redundancy and the defendants were held joint and severally liable.
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5. LOAN GRANTED TO AN EMPLOYEE UNDER PARTICULARLY FAVOURABLE CONDITIONS
Judgment of the High Court of Justice of Catalonia dated 15 April 2014
In this case a loan granted by a bank to one of its employees was terminated when his employment relationship with the bank was terminated. The bank granted the employee a loan with particularly favourable conditions subject to their employment relationship remaining in force. The loan contract included a clause that established that the employee would have to return any outstanding capital if his employment contract with the bank was terminated. When the company wrongfully terminated his employment contract, the bank requested him to pay the outstanding capital.
The judgement argued, in line with established case law, that the loan contract is a standard-form contract and that the clause in question is abusive and contrary to the law because it gives the bank discretion to terminate not only the employment contract but also the loan contract. The High Court of Justice of Catalonia held that a wrongful dismissal is not a cause of termination of the loan contract and, therefore, both parties were still bound by the terms and conditions of the loan contract, which could not be terminated early by the bank.
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6. PRIVATE USE OF COMPANY CAR AND SEVERANCE PAYMENT
Judgment of the High Court of Justice of Castilla-La Mancha dated 14 March 2014
The High Court of Justice of Castilla-La Mancha (“HCJ”) analysed the private use of company cars by employees to determine whether or not this use should be considered salary to calculate severance payments.
Although the appealed judgment stated that the employee used the company car for private purposes on weekends and holidays, the HCJ, in line with established case law, considered this use insufficient to be considered salary. The HCJ also stated that there was a general lack of evidence that made it difficult for it to discard other alternatives such as accepted use by the company, the employee’s availability during holiday periods or the breach of contract by the employee.
The HCJ upheld the appeal lodged by the company and excluded the private use of the company car from the severance payment.
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1. PUBLIC SUBSIDIES FOR TRAINING PROGRAMMES