1. PRECLUSION OF SEPARATE ENFORCEMENT ACTIONS AGAINST THE ESTATE ONCE LIQUIDATION OF THE ARRANGEMENT WITH CREDITORS HAS BEGUN
Judgment of the Civil Chamber of the Supreme Court dated 12 December 2014
The Supreme Court (“SC”) analysed an appeal lodged by the General Social Security Treasury (“GSST”) alleging that article 84.4 of the Insolvency Law grants the administration decision-making powers, allowing them to take administrative actions that are separate and independent from an arrangement with creditors. Therefore, the involvement of the arrangement judge would not be necessary and the administration would not be subject to the judicially-approved liquidation plan. On that basis, the GSST ordered the seizure of the bank accounts and credit rights of the insolvent company worth more than EUR 1,500,000.
The SC carried out a systematic interpretation of article 84.4 and other provisions of the Insolvency Law, including article 8.3 establishing the exclusive authority of the judge overseeing the arrangement to supervise all actions against the goods and rights contained in the estate of the insolvent entity, regardless of the authority that may have ordered it. That analysis led the SC to conclude that, once the liquidation phase has begun, there must be a single, universal execution against the insolvent debtor’s estate to guarantee payment of credits in accordance with the payment priority regulations.
Therefore, no administrative charges or separate executions are permitted once the liquidation phase has begun. For those reasons, the SC overturned the judgment by the appellate court, reinstating the first instance judgment holding that the GSST could not seize the goods or rights of the insolvent debtor included in the estate once the liquidation phase had begun, voiding the seizures and ordering the GSST to return all assets collected.
2. RECORDING A SUPERIOR WHILE BEING SANCTIONED DOES NOT BREACH HIS OR HER RIGHTS
Judgment of the Labour Chamber of the Supreme Court dated 20 November 2014
The Spanish Supreme Court (“SC”) held that an employee who recorded her superior outside their workplace (specifically, at the entrance to the building) while he was sanctioning her did not violate the superior’s right to privacy or the secrecy of his communications.
The employee claims that she recorded the conversation with her boss because she was scared of him after he had harassed her, offended her verbally and in writing, and because she was certain that something was going to happen to her.
The SC held that the recording was lawful, and therefore did not violate the superior’s right to privacy, for the following reasons:
The Spanish Constitution and the case law of the Constitutional Court protect the private, personal and family life of individuals, which, on occasion, can be extended to their work life.
The behaviour of the defendant was not an illegitimate invasion of the claimant’s privacy because the recorded conversation did not relate to the superior’s personal life.
Even though the conversation took place at the entrance to the workplace, the superior was acting as a representative of the company and therefore not in a private capacity, so his personal privacy was not at issue.
The SC also held that there was no violation of the superior’s constitutional right to respect for the privacy of his communications because this right protects against the intervention of third parties and, in this case, it was one of the parties to the conversation who recorded it.
On this basis, the SC dismissed the appeal.
3. THE CONDITIONS OF AN EXPIRED COLLECTIVE BARGAINING AGREEMENT CONTINUE TO APPLY AS THEY FORM PART OF THE EMPLOYMENT CONTRACT
Judgment of the Supreme Court dated 17 December 2014
Law 3/2012 of 6 July on urgent measures to reform the labour market changes the wording of article 86, which states that if one year elapses after a renewal proposal (denuncia) for the collective bargaining agreement (“CBA”) without a new CBA having being agreed, the CBA of a wider scope applies until a new one is agreed. However, no explanation is provided for when there is no CBA of a wider scope. The interpretation of this article was much disputed. In its decision, the Supreme Court (“SC”) took a conservative approach regarding the conditions of a CBA holding that they had become part of the employment contract.
The scenario is as follows: (a) the company’s CBA has expired; (b) a renewal proposal (denuncia) has been put forward; (c) the one-year term set out in article 86.3 of the Statute of Workers (“SW”) has elapsed; (d) there is no applicable CBA of a wider scope; and (e) the day after the CBA expired, the company applied the remuneration established for the national minimum wage.
The employees filed a collective claim arguing that this entailed a substantial change of working conditions. Instead of the salary established in the CBA, they were receiving the national minimum wage. The employees claimed that although the CBA had expired, its conditions still applied.
The SC took a conservative approach and held that the rights and obligations of the parties according to the expired CBA still applied because they became part of the contractual bond established between the parties. The SC held that although the CBA had expired, its conditions became part of the employment contract.
The SC decided that the CBA’s conditions became part of the contract from the moment it was signed or in other words from the start of the employment relationship. Therefore, the SC rejected the argument that once the CBA expired, and in the absence of a CBA of a wider scope, the employer could automatically apply the law (the Statute of Workers and other national legislation in force) and, in this particular case, the national minimum wage instead of the salary set out in the CBA.
This conclusion was reached as: (i) otherwise it would give rise to “undesirable consequences”, (ii) the legislator refers to the CBA on very important issues; and (iii) this could give rise to a “substantial change of the legal framework”.
The SC stated that in these cases, the established conditions could be changed following the substantial change of working conditions procedure established under article 41 of the SW. Furthermore, new employees joining the company would lack an applicable CBA and, therefore, the conditions of that CBA would not apply to them (potentially giving rise, nonetheless, to double salary scales and issues of discrimination, which the SC did not expand on). Four dissenting opinions were issued.
The first was that a “third route” must be considered, one that gives rise to “contractual equilibrium”. Violating the employees’ right to dignity must be avoided and the salary established in the CBA must be maintained.
The second opinion supported the application of the terms and conditions of the expired CBA, but only as regards to salary.
The third opinion was that “the CBA no longer applies once it expires as this was intention of the legislator”.
The final opinion rejected the “conservative” approach as no possible interpretation could give rise to the result set out in the ruling.
4. THE LIMITATION PERIOD FOR A DISMISSAL ACTION FOR RECURRENT SEASONAL WORKERS STARTS TO RUN WHEN THE WORKER BECOMES AWARE THAT HE OR SHE WILL NOT BE TAKEN ON AGAIN FOR THE FOLLOWING SEASON
Judgment of the Labour Chamber of the Supreme Court dated 21 July 2014
The Supreme Court analysed whether within the scope of a recurrent seasonal employment relationship, declared as such in this case by a first instance decision, a worker is dismissed from the moment he or she is last discharged or when he or she is not called upon for work again and, whether as a consequence of this the limitation period to make a dismissal claim has expired. The employment relationship in question was for cleaning services during the summer period.
The first instance court held that the successive temporary employment contracts under which the worker had been hired were, in fact, a recurrent seasonal employment contract, since the rendering of services took place from July to September in 2007, 2008, 2009 and 2010.
However, the first instance judge considered that the limitation period to make a dismissal claim had expired because the claimant exercised her right to make such claim at the beginning of the following season, once she realised that she had not been called to work again, rather than at the end of her pervious seasonal contract.
The High Court of Justice of the Islas Baleares revoked the first instance decision, as it considered that the limitation period of the dismissal claim started when the next season started, that is, when the worker became aware of the employer’s breach of its duty to call her up to work again as a recurrent seasonal employee and not when the previous season ended.
The Supreme Court dismissed the employer’s appeal on the grounds that there was no contradiction between a decision that the employer had put forward as conflicting and the appealed decision. In the allegedly conflicting decision, the employee had in fact received written communication of her dismissal at the end of the season, and she was no longer registered with the Social Security or paid any remuneration.
5. SEVERANCE PAYMENT IS DUE WHEN READMITTING AN UNFAIRLY DISMISSED EMPLOYEE IS NOT POSSIBLE
Judgment of the Labour Chamber of the Supreme Court dated 21 July 2014
The Supreme Court (“SC”) dismissed the appeal by a city council against the decision of the High Court of Justice of Andalucía, which granted an employee the right to receive a severance payment for unfair dismissal and back pay.
The employee was first dismissed and then readmitted by the city council. However, on the day he was due back to work, the city council informed the employee about the termination of his employment contract on the grounds that the cause giving rise to the contract no longer existed.
The SC held that there had to be a contradiction for the appeal to succeed. Nevertheless, the SC stated that had it analysed the merits of the case, it would have reached the same conclusion as in its most recent case law. The reasoning provided in such case law was that when readmitting an employee is not possible, the only other option available at law must be fulfilled, which is to make a severance payment.
This is the case regardless of whether the employee returns after an event that precludes his or her return to work (e.g. a disability), or his or her dismissal is due to organisational, technical or production reasons.
6. PART-TIME EMPLOYEES MUST WORK THE SAME NUMBER OF DAYS AS FULL-TIME EMPLOYEES
Judgment of the National Court dated 2 December 2014
In a judgment dated 2 December 2014, the National Court (“NC”) analysed a collective claim brought by a trade union. The trade union argued that part-time employees or employees with a reduced timetable should be allowed to work their annual hours in the number of days proportionate to their reduced timetable and not in the same number of days as full-time employees.
The NC stated that part-time employees, employees with a reduced timetable for legal guardianship or those with a reduced timetable for “other reasons” are not a generic collective of workers but rather employees whose situation is different.
With regard to part-time employees, the NC held that the company followed the applicable collective bargaining agreement and that no legal or collective regulations establish that these employees may perform their working hours in a number of days proportionate to their part-time status.
This also applies to employees with legal guardianship, since there is no proof of any agreement establishing a special regime for these employees.
The NC did not deal with the question of employees with a reduced timetable “for other reasons” as neither the law, a collective bargaining agreement or any other source of law obliges the company to reduce the number of working days in proportion to the specific working hours of these employees.
7. THE EXPIRY OF A COLLECTIVE BARGAINING AGREEMENT DOES NOT ENTITLE AN EMPLOYER TO MODIFY THE LABOUR CONDITIONS ESTABLISHED IN THE EMPLOYMENT CONTRACTS
Judgment of the High Court of Justice of the Basque Country dated 29 July 2014
The High Court of Justice of the Basque Country (“HCBC”) upheld the judgment of a first instance court that in turn upheld a claim filed by an employee representative in a company that had changed its employees’ working conditions after the applicable collective bargaining agreement (“CBA”) expired and a renewal proposal (denuncia) was put forward. The company had sent the employees two communications in which it announced new working conditions that would apply after more than a year had passed since the CBA had expired without a new one being approved.
The HCBC analysed two issues: (i) the right of the employees to enjoy working conditions that were established in a CBA that was no longer in force, and (ii) whether the communications from the company were a substantial change of working conditions.
Regarding the first issue, the HCBC assumed that it was not the legislator’s intention for employment relationships to be regulated by employment legislation and employment contracts alone once applicable collective bargaining agreements expired. It also noted that nowhere in the law is it stated that when there is no applicable collective bargaining agreement with a wider scope, the employer can unilaterally change the terms of the employment relationship in all those aspects not already governed by the law or the employment contract. Nor is it stated that the desire to avoid collective bargaining agreements being unchangeable entitles employers to regulate what was previously regulated by the collective bargaining agreement, since that would be contrary to the general principle that the fulfilment of a contract cannot be left solely to the discretion of one party.
Avoiding the issue of whether the CBA’s conditions had become part of the employment contract, the HCBC analysed if the company’s decision was a substantial change of working conditions that had been carried out without following the procedure established by the Statute of Workers. It held that in this case there had been a substantial change because the company did more than just state that the CBA had expired, it also determined what the new conditions would be. Secondly, the HCBC highlighted that the conditions that the company sought to impose did not create rights for the employees beyond the period of their application, and therefore were essentially mere favours that the company offered the employees. Finally, the HCBC considered that the company had overlooked the possibility that employment contracts may establish more favourable conditions than those stipulated in a collective bargaining agreement.
In conclusion, as the conditions set out in the communications affected essential aspects of the employment contract, the HCBC held that the defendant company had unilaterally and unlawfully changed its employees’ working conditions and eliminated those which derived from their employment contracts, and as such dismissed the company’s appeal and upheld the first instance judgment.
8. A DISMISSAL IS UNFAIR WHEN THE DISMISSAL LETTER DOES NOT MEET THE LEGAL REQUIREMENTS
Judgment of the High Court of Justice of Castilla-La Mancha dated 10 July 2014
The High Court of Castilla-La Mancha (the “HCJ”) declared unfair the dismissal of an employee who was verbally dismissed after receiving a text message on the employee’s phone, with instructions to go to work the following day precisely for that purpose and who received a certified letter 20 days later officially notifying the worker of the dismissal, effective as from the date the employee was notified of the dismissal because the position was being eliminated. The employee had entered into an employment contract with the public authority in 1995 to occupy the position “until it was occupied following one of the procedures established in article 16 of the Collective Bargaining Agreement within the Public Employment Offer System”.
The HCJ considered that the public authority infringed, firstly, the obligation to notify the employee of the dismissal in writing and setting out the reasons and date on which it was to become effective. This is not merely a formal requirement, its purpose is twofold: (i) to allow an employee to defend him or herself by giving him or her the chance to contest the veracity or extent of the reasons provided and (ii) to bind the company to a judicial procedure, whereby it cannot allege further or different reasons than those set out in the dismissal letter.
The HCJ emphasised the importance of the dismissal letter being adequate: proving its existence and delivery is not sufficient; however, due to the employee’s need to defend him or herself from the dismissal decision, the reasons for the dismissal must be precise and not abstract or vague in order to avoid procedural inequality.
Moreover, the written notification of the dismissal did not prove that the job position to be eliminated was that of the claimant (since the authority referred to an order from the Department of Presidency and Public Authorities), nor was the measure justified.
Therefore, the HCJ considered that the employer failed to prove that the position had been filled while the claimant’s employment contract was in force, which would have been a valid reason for termination.
The HCJ upheld the first instance decision and declared the dismissal unfair.
9. LEAVE ON PERSONAL GROUNDS AND OTHER TYPES OF LEAVE CAN BE TREATED DIFFERENTLY
Judgment of the High Court of Justice of Catalonia dated 10 September 2014
The High Court of Justice of Catalonia (“HCJC”) decided that the defendant company had not dismissed an employee unfairly on her return from leave on personal grounds.
The HCJC stated that the company’s obligation to offer a post to employees returning from leave on personal grounds in their same professional category or in a similar one had been fulfilled, since the company offered the claimant a post similar to hers, but located in a different city.
The HCJC reiterated that the only thing an employee retains is a priority right to reentry when a post of the same or a similar category becomes available, unless the applicable collective bargaining agreement states otherwise. The right is subject to there being a vacant post in the company.
The HCJC referred to the different legal treatment for leave on voluntary grounds and mandatory leave and suspension of employment. As the causes are different (the former due to the employee’s personal or professional interest and the latter specific qualified reasons for the impediment, incompatibility or difficulty to work), the conditions of the return to work should also be different.
Regarding leave on voluntary grounds, the employer is not obliged to maintain the employee’s post, the obligation is limited to offering a post in an equivalent or similar professional category when a vacancy arises.
In line with Spanish Supreme Court case law, the HCJC held that the application to re-enter the company must be considered pursuant to the legal system and the company must fulfill its obligation to offer available posts, which then thus extinguishes the employee’s right.
The HCJC dismissed the appeal and confirmed the first instance decision.
10. THE COMPANY’S DECISION TO NO LONGER DISTRIBUTE CHRISTMAS HAMPERS IS PERMITTED IF NOT REQUIRED UNDER AN APPLICABLE COLLECTIVE BARGAINING AGREEMENT OR COLLECTIVE AGREEMENT
Judgment of the High Court of Justice of Asturias dated 27 June 2014
This case involved the absorption of a company that had been providing Christmas hampers to employees for 40 years. The following year, the company delivered Christmas hampers to employees whose right was recognised in the collective bargaining agreement applicable to them. No other employees received Christmas hampers.
The High Court of Justice of Asturias (the “HCJ”) concluded that delivering Christmas hampers was not a more favourable condition but rather a courtesy provided by the company and its elimination was therefore not a substantial change in working conditions. As such, the company could eliminate the practice at any time. The HCJ emphasised the distinction within the company, noting that some employees were entitled to receive the Christmas hamper, as recognised in the applicable collective bargaining agreement.
The HCJ did not consider that it had been proved that the company intended to give its employees a more favourable benefit than those set out contractually. The HCJ stated that it is not sufficient that the benefit was received for an extended duration. The HCJ referred to Supreme Court case law that distinguishes a courtesy from a more favourable condition on the grounds of regularity, persistent provision and duration through time to the extent that persistence in time is indicative of the company’s intent to recognise the benefit. As a consequence, the HCJ held that, if the company had intended to be bound by an obligation to provide the courtesy, it would have included the benefit in the collective bargaining agreement, as it had done in connection with other employees.
Finally, the HCJ referred to the fact that these courtesies are not salary items, but gifts related to festive traditions, which are not legally claimable.
The dissenting judge stated that the Christmas hamper was a more beneficial condition in view of the period of time during which it had been provided and that the new employer maintained the practice for a year following the merger, subsequently offering the unfavourable economic situation as the reason for eliminating the practice.