1. SUBSIDIES FOR SMALL AND MEDIUM-SIZED COMPANIES AND OTHER ENTITIES THAT IMPLEMENT EQUITY PLANS FOR 2014
The Secretary of State for Social Services and Equality issued a resolution to regulate the granting of public subsidies to small and medium-sized companies of between 30 and 250 employees that draw up and implement gender equality plans for the first time.
These subsidies are granted to: (i) companies; (ii) cooperatives; (iii) jointly-owned companies; (iv) associations; and (v) foundations.
In order to be eligible for the subsidy, the gender equality plans must cover the matters set out in the resolution, such as, access to employment on equal conditions, equal salaries, the adoption of measures to balance professional and personal life and harassment prevention protocols.
Eligible entities must also guarantee the involvement of employee representatives in the drawing up and implementation of the gender equality plans.
Entities are only eligible for one subsidy of a maximum EUR 10,000, which will be allocated to cover expenses arising from the drawing up and implementation of the plans.
All applications for the subsidy must be presented to the General Registry of the Department of Health, Social Services and Equality by 10 June 2014.
2. AD HOC COMMITTEES MAY CONTEST THE VALIDITY OF COLLECTIVE REDUNDANCIES
Judgment of the Supreme Court dated 18 March 2014
In this case, a company of the civil engineering sector started a consultation period for the adoption of a collective redundancy on production grounds on 13 February 2012. Some employees set up an ad hoc negotiation committee since the company had no employee representatives. After several meetings, the consultation period ended without an agreement being reached.
However, the ad hoc committee filed a claim against the Labour Inspectorate’s statement on the basis that it had not received any information about (i) which employees would be affected by the collective redundancy or (ii) the company’s group of companies.
Moreover, the ad hoc committee filed a complaint before the High Court of Justice Catalonia (the “HCJ”) challenging the collective redundancy. The HJC upheld the complaint and declared that the collective redundancy was void.
The company appealed the decision to the Supreme Court (the “SC”) on the basis that the ad hoc committee did not have standing to act because it was not an employee representative pursuant to article 124 of the Labour Procedure Law.
The SC considered that the ad hoc committee fell within the concept of employee representative because, according to several provisions of the Statute of Workers, these committees have authority to negotiate and sign collective agreements.
The company also argued that in order for a collective redundancy to be declared null, all companies of the group must be sued (required joinder of parties). However, the SC held that all companies of the group only need to be joined if the claimant is seeking that all companies of the group be held jointly and severally liable.
Therefore, the SC dismissed the appeal and confirmed the decision of the HCJ declaring the collective redundancy null on the basis that the company did not provide employees with the mandatory economic information of all companies of the group.
3. THE SUPREME COURT UPHOLDS THE UNLAWFULNESS OF THE COLLECTIVE REDUNDANCY CARRIED OUT IN TELEMADRID
Judgment of the Supreme Court dated 26 March 2014
On 5 February 2012, Ente Público Radio Televisión Madrid, Televisión Autonómica de Madrid S.A. and Radio Autonómica de Madrid S.A. (the “Entities”) started the process of making 925 of their 1,161 employees redundant on the grounds of budget shortfalls. The consultation period ended without agreement on 4 January 2013.
The CCOO, UGT and CGT trade unions filed a complaint with the High Court of Justice of Madrid challenging the validity of the collective redundancy. On 9 April 2013, the High Court of Madrid declared the collective redundancy null.
The trade unions and the Entities appealed the decision to the Supreme Court (the “SC”).
Firstly, the unions argued that the Entities should be considered as part of the public administration and therefore governed by public law in accordance with article 3.2(d) of the Public Contracts Law, which is important to determine the procedure they must follow to carry out a collective redundancy. The Entities appealed, alleging that they are public entities but not governed by public law.
The SC agreed with the Entities, concluding that they were in fact companies operating in the public sector, but not part of the public administration. Therefore, in order to carry out a collective redundancy, the Entities had to follow the general procedure under Royal Decree-Law 1483/2012 and not the specific procedure for public authorities.
Secondly, the SC analysed whether a group of companies could carry out a collective redundancy. The unions sought the nullity of the collective redundancy on the basis of their argument that the Entities and other companies did not form a group of companies for labour purposes. Therefore, each company should have carried out its own collective redundancy. In contrast, the Entities argued that they form part of a group of companies and that the collective redundancy was therefore carried out lawfully.
In accordance with prior decisions (e.g., judgment of 19 December 2013), the SC stated that the following circumstances are sufficient to find that the Entities formed part of a group of companies for labour purposes: (i) common budget; (ii) a common domicile; (iii) joint financing; (iv) the same sole director; and (v) the same collective bargaining agreement. Therefore, the SC held that the group could carry out a joint collective redundancy.
Lastly, the unions alleged the existence of formal defects during the collective redundancy procedure, including the failure to provide legally–required information. However, the SC found that the Entities had provided all the information established in article 4.4 of Royal Decree-Law 1483/2012 in the consultation period and dismissed the argument.
Regarding the grounds for the collective redundancy, the Entities argued that they were highly indebted as a result of reduced public funding. The unions claimed that the budget shortfall had not been evidenced.
Finally, the SC concluded that the Entities did not justify the proportionality and reasonableness of the measures taken. Thus, the SC understood that the negative economic situation of the Entities was not sufficient to justify the dismissal of 925 employees of a workforce of 1,161. The SC confirmed the decision of the High Court of Justice of Madrid and declared the collective redundancy to be unlawful for the failure to prove a legal basis.
4. “BREAKFAST BREAK” CONSIDERED A BENEFICIAL CONDITION UNDER SPECIFIC CIRCUMSTANCES
Judgment of the National Court dated 5 May 2014
An audit company had three workplaces (Barcelona, Madrid and Valladolid) in which employees were entitled to a rest period of 15 to 20 minutes every morning (referred to as the tiempo de bocadillo or “breakfast break”). For years the break was regarded as effective working time since the employees did not make up for it by working overtime.
On 7 February 2014, the company notified the employees that the "breakfast break" was not considered as effective working time and that they therefore had to work overtime to make up for it.
The CCOO and UGT trade unions filed a complaint with the National Court on the basis of a substantial modification of collective employment conditions.
The unions claimed that: (i) the consideration of the "breakfast break" as effective working time is a more beneficial condition that cannot be unilaterally withdrawn by the company in accordance with the Statute of Workers; and (ii) the communication of 7 February therefore constituted a substantial modification of collective employment conditions that should have been carried out in accordance with the procedure established in article 41 of the Statute of Workers.
The company argued that the "breakfast break" was never considered effective working time and if the employees had never had to make up the corresponding time previously it was merely because the company tolerated that circumstance.
The National Court declared the company’s decision null on the basis that it considered the "breakfast break" to indeed be a more beneficial condition given that it was established several years prior to the company’s decision and was tolerated by the company. As a more beneficial condition, the company could not unilaterally modify it.
5. FRAUDULENT TERMINATIONS OF TEMPORARY CONTRACTS MUST BE TAKEN INTO ACCOUNT WHEN CALCULATING WHETHER THE THRESHOLDS TO CARRY OUT A COLLECTIVE REDUNDANCY HAVE BEEN MET
Judgment of the National Court dated 14 May 2014
The case at hand involved a contact centre with seven workplaces and over 1,500 employees in seven autonomous communities. Between 1 December 2013 and 18 February 2014 there were: (i) 28 disciplinary dismissals, 26 of which were referred to conciliation and classified as unfair dismissal, leading to severance payments; (ii) three dismissals based on objective grounds, which were also referred to conciliation and classified as unfair; (iii) 67 terminations of temporary contracts due to the expiry of the contractual term; (iv) 25 terminations of contracts for a specific project or service due to a reduction in activity; (v) 14 resignations; and (vi) seven unpaid leaves.
The union, COMFIA-CCOO, filed a complaint in connection with the collective redundancies. It requested the nullity of the disciplinary dismissals on the basis that the number exceeded the thresholds under article 51.1 of the Statute of Workers (“SW”) and the company was therefore obliged to follow the collective redundancy procedure.
In this regard, the National Court (“NC”) stated that, to determine whether the thresholds had been exceeded in the case at hand, every objective dismissal within 90 days of the final dismissal had to be taken into account. Furthermore, every dismissal for any cause not inherent to the individual employee had to be taken into account.
The NC considered the essential question to be resolved was whether the termination of the temporary contracts for a specific project or service due to a reduction of the activity had to be taken into account if the specific project or service did not end at the time of the dismissals. The NC held that the terminations did have to be taken into account given that, otherwise, the collective redundancy procedure would remain at the companies’ discretion.
Finally, the NC declared the nullity of the dismissal due to the omission of the consultation period; the collective redundancy procedure should have been followed as the number of dismissals exceeded the thresholds established in article 51.1 of the SW.
6. THE NATIONAL COURT HOLDS THAT DISMISSALS PLANNED FOR 2015 AND 2016 IN PANRICO’S COLLECTIVE REDUNDANCY ARE NOT JUSTIFIED
Judgment of the National Court dated 16 May 2014
On 23 October 2013, the company Panrico, S.A.U. started the consultation period for a collective redundancy procedure to affect several workplaces in different autonomous communities.
After mediation with the Labour Inspectorate, a provisional agreement was signed by the majority of the employee representatives’ committee. However, the provisional agreement was not ratified by the workers’ assembly. Nevertheless, on 25 November 2013, an agreement was reached between the company and eight of the 13 members of the employee representatives’ committee.
The parties agreed on the dismissal of 745 employees between 2013 (312); 2014 (277); 2015 (79); and 2016 (77) on economic and productive grounds. The compensation payment was deferred and paid in 18 monthly instalments as a consequence of the company’s economic situation.
The economic grounds were based on economic losses in the preceding three years and a progressive and persistent decrease in sales and revenue in the previous three quarters.
The productive grounds were based on: (i) a decrease in sales; (ii) the move towards cheaper products in consumption; and (iii) the loss of the white-label business to one of the company’s direct competitors.
These factors resulted in excess capacity and staff.
On 23 December 2013, the union, CCOO, filed a complaint against the collective redundancy procedure in Panrico based primarily on the following reasons.
First, the union requested the nullity of the dismissals in view of the fact that the company had not suffered economic problems to justify deferring the compensation payment. The claimants supported this allegation by stating that the company paid EUR 30 million in 2013 to repay its debts, thus jeopardising the company’s economic situation.
The National Court (“NC”) held that the decision to defer the compensation payment was unlawful as the company failed to demonstrate that its economic situation was not the result of its repayment of debt.
Secondly, the claimants sought the nullity of the dismissals on the grounds that the dismissals would be carried out over a four-year period.
The NC held that the dismissals planned for 2015 and 2016 were unjustified given that there were no current grounds for dismissal. Therefore, at the time of the collective redundancy procedure, it was impossible to make an extrapolated economic forecast.
The NC declared: (i) that the company failed to justify its decision to defer the compensation payment over 18 monthly instalments on the basis of the company’s economic situation; and (ii) ordered the company not to carry out the dismissals planned for 2015 and 2016.