1. LAW 23/2015 OF 21 JULY ORGANISING THE LABOUR AND SOCIAL SECURITY INSPECTORATE (“LAW 23/2015”)
This piece of legislation regulates a new legal framework for the Labour and Social Security Inspectorate (the “LSSI”) to adapt it to the current social and labour market following several reforms in recent years.
Law 23/2015 regulates the functions and powers of the LSSI, its scope of action, its organisation and its collaboration with other institutions.
In this regard, the following new provisions in respect of Law 42/1997 of 14 November organising the LSSI are worth noting:
- The LSSI has been set up as an independent body with its own legal personality. It is separate from the State and has sufficient legal capacity to fulfil its purposes.
- The Labour Sub-inspectorate now has two levels (each called something different): (i) the labour and social security level, comprising the current Labour Sub-inspectorate; and (ii) a new health and safety sub-inspectorate level with specific functions pertaining to the scope of occupational hazards.
- As regards the Labour Inspectorate’s collaboration with the different entities and authorities, the facts verified directly by authorised civil servants or their agents can be used as evidence in proceedings brought by the Labour Inspectorate and will be accepted as true unless evidence to the contrary is provided.
2. ROYAL DECREE 708/2015 OF 24 JULY WHICH AMENDS VARIOUS SOCIAL SECURITY REGULATIONS FOR THE APPLICATION AND IMPLEMENTATION OF LAW 34/2014, OF 26 DECEMBER, ON MEASURES REGARDING THE SETTLEMENT AND PAYMENT OF SOCIAL SECURITY CONTRIBUTIONS, AND OTHER LEGAL PROVISIONS
Royal Decree 708/2015 of 24 July, which amends various social security regulations for the application and implementation of law 34/2014 (RD 708/2015) amends various general regulations on social security to adapt them to the new system of direct settlement for social security contributions as established by Law 34/2014 of 26 December on measures regarding the settlement and payment of social security contributions.
As stated in the preamble of RD 708/2015, the purpose of the amendments is to simplify and harmonise the categories of companies and employees under the different social security regimes, and ensure that it is in line with the direct settlement system for contributions.
In relation to the General Regulation on the registration and affiliation of companies, their registration, deregistration and the amendment of information, the removal of the request for the registration of employees by any means other than the RED System (online document submission system) should be highlighted. Moreover, when registering a company, the collective bargaining agreement code applicable to that company must be notified to the General Treasury of the Social Security (“GTSS”). Those companies which are already registered must notify this code to the GTSS within six months.
The time for which the documentation for registration and deregistration, as issued by the regional office of the GTSS, must be kept is also reduced. The term is now four years (as opposed to five years under the former regulation).
The term to notify changes in information regarding the registration and winding-up of companies, and the data of their respective employees, has been amended, and is now reduced from six to three calendar days.
Furthermore, Royal Decree 2064/1995 of 22 December on the means of determining social security contributions depending on the method of settlement used (self-assessment, direct settlement or simplified settlement) has also been amended. The new regulation now establishes the settlement period for each of those methods. In this regard, the GTSS will now have powers to check and control that companies have carried out settlements and deductions correctly. Furthermore, managing and collaborating entities will have the capacity to check the accuracy of the allowances and deductions applicable under their respective budgets. In these cases, the GTSS will refer this information to the corresponding collaborating entities which will check the settlements.
Moreover, the amendments to the General Regulations on the collection of social security contributions, as approved by Royal Decree 1415/2004 of 11 June have extended the term (from one to four months) for the Labour Inspectorate to request payment of outstanding contributions which have not been paid on time.
RD 708/2015 also amended article 7 of the General Regulations on the financial management of the Social Security, approved by Royal Decree 1391/1995 of 4 August on the movement of funds and internal treasury transactions of the GTSS.
Finally, RD 708/2015 entered into force on the day after its publication in the Spain’s Official Gazette, that is, on 26 July, except for those provisions regarding the contributions of sales representatives which enter into force on 1 September 2015.
3. LAW 25/2015 OF 28 JULY ON THE SECOND CHANCE MECHANISM, REDUCING THE FINANCIAL BURDEN AND OTHER SOCIAL MEASURES
On 29 July, Spain’s Official Gazette published Law 25/2015, which aims to allow companies which end up in liquidation (for the benefit of their creditors) to become debt-free after liquidation.
However, Law 25/2015 also implements the following important social measures:
- In the area of public employment and social security policies, a new incentive has been established for permanent contracts. This new incentive consists of fixing a minimum exemption on employer contribution to the Social Security for permanent employees.
The first EUR 500 of the monthly base for common contingencies is exempt from employer contribution for full time employment contracts. For part time employment contracts, the amount will be reduced proportionately to the reduced working hours.
Specifically, the shortfall between the employer’s contribution due and the discounted contribution actually paid is borne by the Public State Employment Service for permanent contracts with young employees registered with the National Youth Guarantee System. In other cases, this shortfall is borne by the Social Security.
- Moreover, modifications to Law 14/2013 of 27 September on supporting entrepreneurs and their internationalisation have been enacted. Specifically, section 2 on international mobility and the residence requirements for foreign entrepreneurs in Spain has been amended.
The modifications affect the rules, duration, visas and residence permits. This Law also transposes Directive 2010/41/EU of the European Parliament and of the Council of 7 July 2010 on the application of the principle of equal treatment between men and women engaged in an activity in a self-employed capacity.
Regarding the general requirements for residence in Spain, adult children who are dependent on the entrepreneur as well as the entrepreneur’s partner or spouse, will now be able to request the authorisation or a residence visa in Spain.
However, regarding the residence visa for investors, the circumstances under which a significant investment is deemed to exist have been broadened. A significant investment is deemed to exist if, among other things, an investment of over EUR one million is deposited in banks, investment funds or risk capital entities in Spain.
Finally, modifications have also been introduced regarding the authorisation of residence permits for intra-company relocation. Therefore, the authorisation for temporary relocations from a company located outside the EU to a company in the same group located in Spain will now have a maximum duration of three years for managers.
4. UNION REPRESENTATIVES’ CREDIT HOURS ARE SET ON A MONTHLY BASIS BECAUSE THEY ARE LINKED TO WORK ACTIVITY
Judgment of the Supreme Court dated 23 March 2015
In this case, a union representative of Unión Sindical Obrera in a security company requested the 15 monthly credit hours to which the company’s employee representatives are entitled pursuant to article 63 of the Interprovincial Collective Bargaining Agreement for Security Companies (“CBA”). The company claimed that union representatives were not entitled to the credit and instead they were entitled to six hours per month.
The union filed a claim arguing that the CBA expressly states that unit representatives and union representatives should receive the same treatment with regard to credit hours.
The union requested that, like employee representatives, union representatives should be entitled to 15 monthly credit hours (and 180 hours per year).
On 26 November 2012, the National Court partially found for the union by declaring that the union representatives are entitled to 15 credit hours per month while they are actually working. However, it rejected the petition for the 180 credit hours per year on the basis that the union representatives cannot be entitled to the 15 credit hours per month during holiday periods as no union activity is carried out during that time.
The union appealed the decision to the Supreme Court claiming that articles 28.7 and 37.1 of the Spanish Constitution, article 68 of the Statute of Workers, article 10 of the Basic Law on union freedom and OIT Convention no. 158 had all been breached because credit hours cannot be excluded during holiday periods, since the employment relationship remains in force during that time.
The Supreme Court dismissed the appeal on the basis that the right to credit hours is remunerated, thus it can only be enjoyed during a period of work because it is linked to the existence of work activity.
However, there were six dissenting opinions, arguing that according to article 63 of the CBA credit hours can personally and over time be accumulated on a yearly basis, which means that the union representatives being on holiday is irrelevant and that the holiday period cannot be excluded to calculate the yearly credit hour entitlement.
5. THE LIMITATION PERIOD FOR A DISMISSAL CLAIM DOES NOT EXPIRE IF A REQUEST FOR CONCILIATION IS SUBMITTED BEFORE 15:00 ON THE TWENTY-FIRST DAY AFTER THE DISMISSAL IS NOTIFIED
Judgment of the Supreme Court dated 26 May 2015
The claimant in this case carried out administrative tasks for a construction company and had been temporarily unable to work since 2 July 2012.
On 21 January 2013, the claimant received a letter notifying her of her dismissal based on economic grounds, which was effective immediately.
The dismissal was held to be unfair at first and second instance. Both Labour Court number 19 of Madrid and the High Court of Justice of Madrid rejected the company’s allegation that the limitation period for the claim had expired.
The company appealed the judgment of the High Court of Justice of Madrid before the Supreme Court alleging the infringement of articles 9 and 24 of the Spanish Constitution and articles 44 and 59 of the Statute of Workers on the grounds that the limitation period for the dismissal claim had expired because the request for conciliation was submitted after the deadline.
The Supreme Court dismissed the appeal as the claimant had submitted her request for conciliation before 15:00 on 19 February 2013, which was the twenty-first day after she was notified of her dismissal (21 January 2013). Therefore, when she filed her claim on 11 March 2013 (i.e. the day after the conciliation meeting which did not result in an agreement), the dismissal claim had not expired.
6. SIX-WEEK MANDATORY REST PERIOD FOR MATERNITY CANNOT BE TREATED AS AN ABSENCE FOR REMUNERATION PURPOSES
Judgment of the Supreme Court dated 27 May 2015
A consultancy company had a bonus policy that required that employees be present in the workplace to be eligible to receive variable remuneration. Objectives and bonuses were reduced if an employee took more than 30 calendar days of authorised absences.
Specifically, section 3.5 of the plan established that if an employee had authorised absences totalling more than 30 calendar days (excluding annual leave) for maternity or medical reasons, the employee would only be entitled to the bonus corresponding to the period during which he or she actually worked.
For those employees who took maternity leave, the mandatory six-week rest period after the birth of the child was considered an absence and as a result they received less variable remuneration.
A trade union filed a collective dispute claim against the company before the National Court requesting that the company’s policy be declared unlawful and the employees adversely affected by the policy be paid the remuneration owed to them.
The National Court upheld the trade union’s claim and declared the company’s policy null on the grounds that it infringed the right to equality established in article 14 of the Spanish Constitution.
The company appealed to the Supreme Court, which dismissed the appeal and confirmed that the Company’s policy was discriminatory on grounds of gender.
7. THE SUPREME COURT DECLARES A DISMISSAL UNLAWFUL AFTER REJECTING THE EXISTENCE OF CONTRACTUAL SUBROGATION
Judgment of the Supreme Court dated 16 June 2015
A catering company entered into a service contract with a company owning a nursing home to perform catering and cleaning services. The contract established automatic renewal if neither party communicated to the other the intention to not renew the contract.
Nevertheless, although neither party submitted notice, the company rented the nursing home to a third-party company, contractually establishing that the third party would be subrogated to all labour obligations regarding the employees who rendered services in the nursing home.
The new lessor informed the catering company’s employees that their contracts would not be subrogated and that they would be rehired if they voluntarily resigned from the catering company.
The catering company simultaneously informed the claimant that the new lessor would be managing the services and in fact had become her employer by subrogation and offered her the corresponding salary settlement. However, on the date of subrogation, the employee stopped rendering services in the nursing home because the new lessor had informed her that the company had not subrogated to her contract. The employee filed a claim against both companies for unfair dismissal.
On 30 April 2012, Labour Court No. 1 of Jerez de la Frontera declared the employee’s dismissal as unfair. On appeal, the High Court of Justice of Andalusia overturned the decision and declared the catering company’s communication to the employee as a dismissal.
The catering company subsequently appealed to the Supreme Court.
The Supreme Court therefore was set to decide on whether the lessor company as the new owner of the nursing home was legally obliged to be subrogated to the employment contracts of the catering company in accordance with article 63 of the Collective Bargaining Agreement for Services and Care for Dependent Persons.
The Supreme Court rejected the appeal on the basis that, under article 63, subrogation can only occur if a new company takes over the contract, which did not happen in this case because there was no evidence that the lessor company had assumed the catering and cleaning services. Therefore, since there was no transfer of the material and personal resources for the performance of the contract, a legal subrogation could not be considered to have taken place.
8. NATIONAL COURT DECLARES 35 INDIVIDUAL DISMISSALS VOID FOR EXCEEDING COLLECTIVE DISMISSAL THRESHOLD
Judgment of the National Court (“NC”) dated 3 July 2015
A company in the contact centre industry sector with workplaces throughout Spain and with more than 300 employees carried out the following dismissals:
- Two individual dismissals on 12 February 2015 on productive grounds.
- 14 individual dismissals on 23 February 2015 on productive and organisational grounds linked to the end of a service in the Valencia workplace.
- A disciplinary dismissal in the Madrid workplace on 20 March 2015, which the company acknowledged as unlawful.
- A dismissal for objective grounds on 31 March 2015.
- 17 individual dismissals on 10 April 2015 on organizational and productive grounds in the A Coruña workplace.
The trade union Confederación General del Trabajo filed a lawsuit against the company and several other unions challenging the dismissals on the grounds that the thresholds established in article 51 of the Statute of Workers had been exceeded and that the dismissals should have been carried out pursuant to the appropriate procedure.
The NC concluded that in the 90 days following 10 April 2015 (date on which the employment contracts of the A Coruña workplace were terminated), 14 dismissals were carried out in Valencia, two in Madrid and 17 in A Coruña.
Within a term of three months, a total of 35 individual dismissals had been carried out for one or more reasons, unrelated to the individual employees, including a disciplinary dismissal which the company acknowledged as unlawful.
Since the 30-employee threshold in companies with more than 300 employees established in article 51 of the SW had been exceeded, the NC accepted the claim and declared the 35 individual dismissals carried out void for failing to follow the procedure for collective dismissals.
9. THE HIGH COURT OF JUSTICE OF MADRID DECLARED A COLLECTIVE REDUNDANCY VOID BECAUSE IT INFRINGES THE RIGHTS TO UNION FREEDOM AND TO STRIKE
In this case a joint venture (the “Joint Venture”), formed by two companies, was awarded the contract for the integrated management of the public service of the municipal parks in Madrid on 12 November 2013. The contract included the obligation to render integral maintenance services for the parks Juan Carlos I, Lineal de Manzanares, Juan Pablo II, and Madrid Río.
On 2 December 2014, the Joint Venture notified the employee representatives for the Madrid Río workplace of its intention to initiate a collective redundancy procedure which would affect that workplace.
Subsequently, on 10 December 2014, the Joint Venture notified the negotiating committee of its intention to terminate the employment contracts of 127 employees on economic, production and organisational grounds pursuant to article 51 of the Statute of Workers, as a consequence of a new clause in the conditions of the service which gave rise to a change in the integrated management model of the Madrid Río park. The Joint Venture stated that it was no longer viable to maintain the same level of employees, and it also cited economic grounds due to current and forecasted losses.
The consultation period took place between 16 December 2014 and 9 January 2015 and ended without an agreement being reached. In one of the meetings of the negotiating committee, on 2 January 2015, the Joint Venture proposed some conditions to reach an agreement and the employee representatives stated that they could not assess the proposal at that time.
However, that same day, the Joint Venture delivered a letter to all the affected employees explaining the proposal.
Simultaneously, the employees of the Madrid Río workplace began an indefinite strike on 15 December 2014. During the strike, employees who rendered services in other parks performed cleaning services at Madrid Río.
Finally, on 20 January 2015, with the consultation period having ended without any agreement, the Joint Venture took the decision to carry out the collective redundancy affecting 121 employees and notified this to the Directorate General for Employment of the Department of Employment, Tourism and Culture of the Autonomous Community of Madrid.
On 21 January 2015, the Comisiones Obreras union challenged the collective redundancy before the High Court of Justice (“HCJ”) of Madrid by filing a claim against the Joint Venture, the Madrid City Council and the companies which formed the Joint Venture. Other unions also filed claims which were joined to the proceedings.
In their claims, the unions requested that the collective redundancy be declared void for several reasons, most significantly: (i) the negotiation procedure was carried out in bad faith since the Joint Venture had delivered a letter to all employees with specific proposals prior to the end of the consultation period; and (ii) the right to strike had been infringed because the Joint Venture hired employees to carry out services in the Madrid Río park.
The HCJ accepted both arguments and declared that the collective redundancy was void. In particular, in connection with the two grounds raised by the unions, the Court concluded the following:
- Delivering a letter with specific proposals to all of the affected employees proved that this conduct was incompatible with the requirement to negotiate in good faith and the principles of transparency and reasonableness that the Joint Venture was obliged to observe. Therefore, by attempting to circumvent the collective representatives, by substituting the collective negotiation process with an individual one, the Joint Venture had acted in bad faith.
- During the strike, the Joint Venture’s behaviour infringed the right to strike established in article 28.2 of the Spanish Constitution, since it used employees who were not from the park to carry out the maintenance activities with the clear objective of reducing the pressure exerted by the strike.