1. IN BUSINESS TRANSFERS, A CONTESTED COLLECTIVE BARGAINING AGREEMENT REMAINS IN FORCE UNTIL A NEW ONE IS APPROVED
Judgment of the European Court of Justice dated 11 September 2014
The issue focused on the interpretation of Article 3.3 of Directive 2001/23/EC on the approximation of laws of the Member States relating to the maintenance of the rights of workers in the event of transfers of undertakings, businesses or parts of undertakings or businesses. This Article states that transferees must maintain the working conditions established in a collective bargaining agreement (“CBA”) under the same terms applicable to the transferor until the CBA expires or another CBA is approved.
In this regard, the European Court of Justice held that working conditions established in a CBA which had been contested, but which remained in force until another CBA came into force or the employees reached individual agreements, fell within the scope of this provision. Working conditions established in these kinds of CBAs may not be excluded, because the purpose of the Directive is to prevent employees involved in these transfers from being in a worse situation merely due to the fact that the transfer has taken place.
Consequently, the Court held that working conditions established in a CBA, even if it has been contested, are still effective until a new CBA is approved, or until the employees reach individual agreements.
2. A DISMISSAL LETTER GIVEN TO ONLY ONE OF TWO EMPLOYEE REPRESENTATIVES IS VALID
Judgment of the Labour Chamber of the Supreme Court dated 11 June 2014
The dispute at hand related to a worker who was made redundant for economic reasons pursuant to article 52.c) of the Statute of Workers (“SW”). Article 53.1c) SW states that in this type of redundancy an employer must give a copy of the redundancy notice to the employee representatives. However, experts have pointed out that there is a drafting error in this article as it should refer to the redundancy letter and not to the redundancy notice.
The Supreme Court declared the redundancy to be valid because the essential purpose of the law had been met, namely, that the employee representatives had been informed of the redundancy. Therefore, delivering a copy of the redundancy letter to both employee representatives was not considered a requirement.
3. A FINAL JUDGMENT DECLARING UNFAIR DISMISSAL CANNOT BE CHALLENGED IF A CRIMINAL COURT SUBSEQUENTLY CONVICTS THE EMPLOYEE ON THE GROUNDS LEADING TO THE DISMISSAL
Judgment of the Supreme Court dated 24 April 2014
The Supreme Court (“SC”) heard an appeal lodged against a judgment which had declared the dismissal of an employee for disciplinary reasons to be unfair; on the grounds that the employer, now the claimant in the case, had failed to properly evidence that his injuries were caused by the employee. Criminal proceedings subsequently led to the employee being convicted for assault.
The employer challenged the judgment of the Labour Chamber of the High Court of Justice of Andalusia in accordance with article 86.3 of the Labour Court Regulations (“LCR”) which authorizes the review of a labour court judgment when a criminal court is faced with the same facts and grants an acquittal based on the non-existence of the alleged offence or the employee’s non-participation.
The SC held that in accordance with article 86.3 of the LCR, for a review to take place, the following elements were necessary: (i) factual discrepancies between the judgment of the labour court and that of the criminal court; (ii) the criminal verdict being an acquittal; and (iii) the acquittal being based on the non-existence of the offence or the non-participation of the defendant.
In this case, the review of the unfair dismissal judgment was not open to review as only one of the requirements was met.
4. LACK OF EMPLOYEE REPRESENTATIVES IN WORKPLACES DOES NOT SUSPEND CONSULTATION PERIOD
Judgment of the Supreme Court dated 1 April 2014
The Supreme Court (“SC”) analysed the validity of a collective measure taken by a company to modify its variable remuneration (bonus) system. This led to a collective dispute in which the employees sought to have the measure annulled and their right to continue receiving bonuses according to the system applicable until 2009 declared.
The appealed judgment held that the company had not followed any of the procedures to appoint employee representatives laid down by article 41.4 of the Statute of Workers, so in some of its workplaces there was no committee to represent employees during consultation periods.
The company appealed, arguing that it had not obstructed the appointment of a committee, and that article 41.4 of the Statute of Workers establishes a right of the employees, but not an obligation on the company to inform them that they must appoint ad hoc committees. What is more, the company not only informed the employees in its workplaces where no employee representatives had been appointed that a consultation period was about to start and that they had a right to appoint representatives, but it also gave them access to the information to be considered during the consultation period through the company’s intranet.
The SC concluded that the company did not intend to obstruct the appointment of employee representatives in any of its workplaces. In fact, representatives were appointed in two of them while employees from other workplaces did not appoint anybody because they did not want to, contrary to advice from the company.
The SC held that, as the consultation period finished without reaching an agreement, the valid constitution of a commission was merely a formal requirement that could not undermine the entire process because the employees had failed to take action. If the consultation period had finished having reached an agreement, the fulfilment of the requirement to set up a committee as required by law would have been absolutely essential, as otherwise the process would have been void.
In view of the above, the SC upheld the appeal and held that the consultation period was valid, although there was one dissenting opinion.
5. NON-EXISTENCE OF A GROUP OF COMPANIES FOR LABOUR LAW PURPOSES
Judgment of the Labour Chamber of the Supreme Court dated 28 January 2014
The Supreme Court (the “SC”) analysed an appeal lodged against the judgment of the High Court of Justice of the Basque Country that declared a collective redundancy void for infringing the right of freedom of trade union activity, holding two companies jointly and severally liable based on the finding that they constituted a group of companies for labour law purposes.
The employer was wholly owned by another company that formed part of the same group of companies as the co-defendant (the "Group"). The Group managed its liquidity risk through credit facilities in order to allow the employer to avoid resorting to external financing. The Group provided the employer with a monetary sum recorded as an equity loan in order to prevent it from incurring a legal cause of dissolution.
The SC addressed two questions: (i) the existence of a group of companies for labour law purposes; and (ii) the legality of the collective dismissal.
In connection with the extension of liability, the judgment under appeal had held that a group existed on the grounds that: (1) both companies belonged to the same Group; (2) both companies carried out the same activities; (3) it was found that there was an external appearance of unitary management from the dominant entity towards the subordinate company; and (4) there was a commingling of assets derived from the fact that the liquidity risk of the employer was managed by the Group through credit facilities, although in order to avoid accounting imbalances, those amounts were recorded as equity loans. Nevertheless, the Court stated that the indistinct provision of services across the various companies of the Group had not been evidenced, although it also stated that this the requirement should have exceptions given that, otherwise, it would be impossible to establish the existence of an international group if only one company were located in Spain.
Nevertheless, the SC held that none of the elements to which the appealed judgment referred was in itself sufficient in order to establish the existence of joint and several liability.
The SC stated that special attention must be paid to the specific way of financing the employer in order to assess a potential commingling of assets, acknowledging that agreements allowing the creditor to turn debt into equity, thereby converting the lender into an additional shareholder, are customary. Nevertheless, the SC stated that no financing method is capable of converting a lender and borrower into a group of companies for labour law purposes.
Consequently, the SC held that no such group of companies existed, upholding the appeal lodged by both companies and overruling the holding regarding joint and several liability, yet upholding the rest of the ruling.
The SC also rejected the immediate enforcement of its decision overturning the challenged judgment on the grounds that judgments regarding the nullity of a collective dismissal are declarative in nature.
Four judges wrote a dissenting opinion.
6. A SUBSTANTIAL MODIFICATION OF WORKING CONDITIONS DEEMED VOID DUE TO A FRAUDULENT ABUSE OF LAW
Judgment of the Labour Chamber of the National Court dated 14 July 2014
In the context of a transfer of employees from one company to another, the National Court (“NC”) analysed the validity of an agreement entered into by the transferring company and the employee representatives, according to which the employees to be transferred would be subject to a different collective bargaining agreement and their working day, schedule or wages would be changed.
The NC held that the agreement was void on the following grounds:
(i) Article 44.9 of the Statute of Workers (“SW”) does not modify the conditions established in paragraphs 3 and 4 of article 44 of the SW, because only the workers of the transferring company and receiving company are subject to this rule, and not the employees transferred. Therefore, this provision cannot be used to modify the rights of the employees transferred.
(ii) Article 5 of Directive 2001/23/EC, invoked by the transferring company, does not apply because it only allows the modification of working conditions of those employees who are to be transferred in the following cases: (i) when the transferring company is involved in insolvency proceedings; or (ii) when the receiving company is in a situation of serious economic crisis, provided that this situation is declared by a public authority and that such a possibility exists under the national legislation in force on 17 July 1998. In this case, the transferring company was not involved in insolvency proceedings. With regard to the second element of (ii), according to the drafting of article 44 of the SW, the NC held that the national legislator had not made use of the prerogative granted by the abovementioned Directive. In addition, the situation of economic crisis was not declared by a public authority and furthermore, this was not possible before 17 July 1998.
The NC upheld the claim on the basis that the agreement was reached fraudulently.
7. THE FAILURE TO MAKE SALARY PAYMENTS DOES NOT JUSTIFY AN EMPLOYEE’S ABSENCE FROM WORK
Judgment of the Labour Chamber of the High Court of Justice of Asturias dated 25 April 2014
In this case, the High Court of Justice of Asturias analysed the legality of the disciplinary dismissal of an employee on the grounds of an unjustified absence from work in accordance with article 54.1a) of the Statute of Workers (“SW”).
After a period of sick leave, the employee failed to return to work until six days after he was told he was fit to return. The employee finally returned to work only after receiving a telephone call from his employer. Upon his return, he refused to sign the dismissal letter that was given to him.
On the date of the dismissal, the company owed the employee his last five months of salary as well as an extraordinary payment and temporary disability benefits.
The court concluded that, according to the applicable bargaining agreement, the employee’s absence from work exceeded the maximum number of days after which an unjustified absence is considered a serious misconduct. In addition, the employee did not put forward any valid argument to mitigate the seriousness of his misconduct. The judge considered that the employer’s failure to pay the employee’s wages would have justified a claim for the termination of his contract with a compensation equivalent to an unfair dismissal, as set out in article 50 SW, but such failure did not nullify the legal effects of an unjustified absence.
As a result of the above, the High Court of Justice of Asturias court upheld the first instance judgment confirming the legality of the dismissal.
8. A REDUCTION IN WORKING HOURS DOES NOT MEAN THAT EMPLOYEES CAN CHANGE THEIR SHIFTS
Judgment of Labour Court number 29 of Madrid dated 18 September 2014
The Court dismissed a claim brought by an employee who worked morning and afternoon shifts, and had reduced her working hours in order to care for her child who was under 12 years of age.
The company had refused the employee’s request to change her existing rotating morning and afternoon shifts to fixed morning shifts on the basis that there were no vacancies.
The Labour Court declared that the company’s refusal was justified for the following reasons:
(i) an employee may choose his or her timetable and when the reduced working hours will be applied provided that both fall within his or her ordinary working day, unless the company is considered to have made an arbitrary decision. In this case, the refusal was justified because the employee’s request was incompatible with the company’s rotating shift system. Agreeing to the employee’s proposal would have forced the company to make substantial modifications to other employees’ working conditions given that the company always had more customers in the afternoon; and
(ii) the claimant did not prove that her husband worked the same shift, or that he had asked for a modification of his own working day. Therefore, any obstacle to a balanced division of both the husband and wife’s responsibilities had not been proven.