March 2007

NEWSLETTER

The information contained in this Newsletter is of a general nature and does not constitute legal advice



LABOUR LAW

 


Equality between women and men

The purpose of Basic Law 3/2007 of 22 March, on equality between women and men, is to safeguard the principle of equal opportunities and treatment of women and men by eradicating discrimination towards the latter, in whatever form, particularly, within the employment area. (More information)

Labour related infringements and penalties. Updates to the amounts of the penalties

Royal Decree 306/2007, of 2 March, updates the amounts of the penalties established in the revised text of the Law on the Infringements and Sanctions in the Labour Jurisdiction. (More information)

Void dismissal. Discrimination on the grounds of gender. Pregnant employee. Dismissal after a second probationary period

The judgment of the Constitutional Court of 12 February 2007 considered that the dismissal of an employee after the probationary period is discriminatory and, consequently void. The Constitutional Court stated that the dismissal is justified on the leave which resulted from the two pregnancy situations of the employee and the complications deriving from the pregnancy situations, which resulted in both pregnancies being terminated. (More information)

Bonus. Minimum period of employment with the company to be eligible for bonus. Refusal of payment as a consequence of leaving the company before this period has elapsed

The judgment of the Labour Chamber of the Supreme Court of 23 November 2006 upheld the appeal of an employee who was denied the payment of a bonus as she voluntarily left the company. The Supreme Court declared that the employee is entitled to the payment of the bonus in view of the fact that her employment contract followed the establishment of a bonus system and the contract does not set out any limitation to its payment, except the fulfilment of certain objectives which, in the case at hand, were attained. (More information)

Transfer of undertakings. Exclusive distribution agreement

The judgment of the Labour Court of the High Court of Justice of the Basque Country of 11 April 2006 declares that the exclusive distribution of certain products from a company to another does not imply the a transfer of undertakings. (More information)


Equality between women and men

Basic Law 3/2007 of 22 March, on equality between women and men. Spanish Official Gazette of 23 March 2007

Basic Law 3/2007 of 22 March, on equality between women and men (“BL 3/2007”) establishes the principle of equal treatment and equal opportunities in employment, professional training, promotion and working conditions. Similarly, BL 3/2007 deals with discrimination based on maternity, which is to be considered direct discrimination on the grounds of gender.

BL 3/2007 sets out specific measures for these purposes: programmes for the improvement of women’s employment conditions, promotion of equality in collective bargaining, the acknowledgement of the right of employees to personal, family and professional life and, specifically, the preparation and application of gender equality plans by companies with over 250 employees. In this regard, an award for distinction was established for companies that undertake to apply equality policies, which is beneficial for commercial and advertising purposes.

In relation to labour and social security matters, BL 3/2007 amends various aspects of the Statute of Workers (“SW”), of the General Social Security Law (“GSSL”), of the Labour Procedure Law (“LPL”), of the Law on the Infringements and Sanctions in the Labour Jurisdiction (“LISLJ”) and of the Law on the Prevention of Occupational Hazards (“LPOH").

·                  Section five is added to article 17 of the SW for the setting up of gender equality plans in companies.

·                  The first paragraph of section 5 of article 37 of the SW is amended: the age limit of children whose care requires a reduction in the working hours of an employee is raised from six to eight years of age, the salary being reduced proportionally between one eighth (formerly one third) and a maximum of half of the working period.

·                  A paragraph is added to article 39.3 of the SW: the right of a woman to enjoy her holidays outside the period established for this purpose or have her employment contract suspended during pregnancy, childbirth or the breastfeeding period, regardless of whether the corresponding calendar year of accrual has already elapsed.

·                  The minimum period for voluntary leave is reduced from two years to four months, the maximum period being five years. In addition, leave to take care of a relative up to the second degree of consanguinity or affinity who cannot take care of him/herself and who does not carry out any paid activity is extended to two years, unless otherwise set out in the collective bargaining agreement.

·                  New article 48 bis is implemented in the SW, establishing the suspension of a labour agreement for 13 successive days due to paternity. This period may be extended in the event of multiple childbirth, adoption or fostering by two additional days per child from the second child onwards. This suspension will imply a social security benefit of 100 percent of the appropriate base salary, under the same conditions as maternity leave.

·                  In the event of the death of the baby during birth, the sixteen week suspension of the employment agreement will not be reduced unless the mother voluntarily requests to return to her post when the six week period of mandatory rest has elapsed. In the event of the premature birth of the baby or any other reason for which the newborn baby must remain in hospital after birth, the mother or father will be entitled to request the suspension of the employment agreement from the date of the release of the baby from hospital, excluding for these purposes, the six week post-birth period. Similarly, if the newborn baby is underweight or needs hospitalisation immediately after birth for a period exceeding seven days, the suspension of the agreement will be extended by the duration of the baby’s stay in hospital, up to a maximum of thirteen weeks. In the event of the disability of the child or the fostered or adopted minor, the suspension of the employment agreement will be extended for two additional weeks.

The grounds for nullity of the dismissal are extended to include the dismissal of employees who are enjoying their leave to care for a premature baby and the dismissal of employees who have returned to their post after the suspension periods for maternity, adoption or paternity, provided that a maximum period of nine months from the birth, adoption or fostering of the child has not elapsed.

The responsibilities of the Works Council are widened to the extent that the Works Council must be informed, at least yearly, of the application of the right to equal treatment and equal opportunities of women and men within a company. In addition, the Works Council must supervise and ensure the right to equal treatment and equal opportunities of women and men.

The GSSL has been amended with regard to maternity benefits (Chapter IV Bis). The minimum period during which an employee under 21 years of age must have been contributing to the Social Security from the birth of a baby or from the moment when an adoption becomes effective through a judicial resolution, is excluded from the GSSL. If all the requirements to be entitled to maternity benefits are met, except for the contribution period mentioned above, BL 3/2007 introduces an economic benefit which is based on the Public Indicator of Multiple Items Income (“IPRIM”).

The LISLJ has been amended by imposing specific responsibilities on employers who have committed very serious infringements regarding equality issues. This will include ancillary sanctions in addition to the general ones, such as the automatic ineligibility to economic grants, rewards and benefits derived from the application of the employment policies, as well as the automatic exclusion from these benefits for a period of six months.

Finally, the LOPH sets out the Public Authorities’ commitment to promote the principle of equality of women and men in order to identify and prevent situations in which damages related to employment are linked to the gender of the employee.


Labour related infringements and penalties. Updates to penalties

Royal Decree 306/2007, of 2 March, in accordance with which the amounts of the penalties established in the revised text of the Law on the Infringements and Sanctions in the Labour Jurisdiction are adjusted. Spanish Official Gazette of 19 March 2007

Royal Decree 306/2007 adjusts the amounts of the penalties in article 40.1 of Law on the Infringements and Sanctions in the Labour Jurisdiction (“LISLS”) resulting from infringements in labour and employment relationships, social security, immigration and employment of foreigners as well as infringements on obstructions, as follows:

a)      minor infringements, punishable with fines ranging from:

(i)  €60 to €125 for the lowest level;

(ii)  €126 to €310 for the medium level;

(iii) €311 to €625 for the highest level;

b)      serious infringements punishable with fines ranging from:

(i) €626 to €1,250 for the lowest level;

(ii)  €1,251 to €3,125 for the medium level;

(iii) €3,126 to €6,250 for the highest level;

c)      very serious infringements punishable with fines ranging from:

(i) €6,251 to €25,000 for the lowest level;

(ii) €25,001 to €100,005 for the medium level;

(iii) €100,006 to €187,515 for the highest level.

Regarding the prevention of occupational hazards, Royal Decree 306/2007 adjusts the amounts of the penalties in article 40.2 of LISLJ as follows:

a)      minor infringements, punishable with fines ranging from:

(i)  €40 to €405 for the lowest level;

(ii)  €406 to €815 for the medium level; and

(iii) €816 to €2,045 for the highest level;

b)      serious infringements punishable with fines ranging from:

(i) €2,046 to €8,195 at the lowest level;

(ii) €8,196 to €20,490 at the medium level; and

(iii) €20,491 to €40,985 at the highest level;

c)      very serious infringements punishable with fines ranging from:

(i)  €40,986 to €163,955 at the lowest level;

(ii) €163,956 to €409,890 at the medium level,

(iii) €409,891 to €1819,780 at the highest level.

Finally, in relation to cooperative matters, the amount of the penalties are set out as follows:

(i)  minor infringements, punishable with fines ranging from €375 to €755;

(ii) serious infringements, punishable with fines ranging from €765 to €3,790; and;

(iii  very serious infringements, punishable with fines ranging from €3,791 to €37,920.


Void dismissal. Discrimination on the grounds of gender. Dismissal of a pregnant employee after a second probationary period

Judgment of the Constitutional Court no. 17/2007 of 12 February

The preliminary ruling held that the dismissal of the pregnant employee was fair as she had not passed the second probationary period set out in her employment agreement. The preliminary ruling found no grounds for considering the dismissal discriminatory due to the pregnancy.

However, the Constitutional Court (“CC”) declared that the dismissal was void, in view of the causal link between the leave taken by the employee as a consequence of her pregnancy and the termination of the agreement.

The CC rejected the company’s arguments, which were based on its fair treatment of other pregnant employees and, in particular, on the fact that from all the leave taken by the employee, only two periods were due to her pregnancy. According to the CC’s ruling, even if only two of the leave periods were linked to the pregnancy, this would constitute sufficient evidence of discrimination, as it is not necessary that all leave taken be linked to the pregnancy.

Finally, the CC concluded that if the reason for the dismissal is a decrease in the employee’s performance at work, the inherent risks of the pregnancy must be considered, therefore, the dismissal was based on this condition. In light of this, the dismissal is discriminatory on the grounds of gender, since pregnancy can only affect women.


Bonus. Minimum period of employment with the company to be eligible for bonus. Refusal of the bonus payment as a consequence of leaving the company before this period had elapsed

Judgment of Labour Chamber of the Supreme Court of 23 November 2006

The employee claimed a bonus and the preliminary ruling declared the entitlement of the employee to the payment. The company’s appeal was upheld by the Court of Appeal and the preliminary ruling which discharged the company’s liability for the claim was revoked. This judgment was appealed before the Supreme Court which analysed the clause relating to the variable remuneration. This clause stated that the payment of the variable remuneration is subject to attaining certain objectives.

The company argued that its bonus policy states that if the employee leaves the company within 6 and 18 months from the date when he/she began providing services for the company (i.e., as in the case at hand), this employee is only entitled to a fixed amount which, in this case, is lower than the amount that the employee would have been entitled to for fulfilling her objectives.

The Supreme Court declared that, in view of the fact that the employment contract was entered into after the establishment of the bonus system and that there is no specific limitation period in the employment contract for the payment of the bonus, this constitutes an infringement of the Civil Code regulations on the interpretation of contracts. For these purposes, the Supreme Court stated that the company had expressly admitted that the claim would be acceptable if the employee had been working for the company for a minimum length of time.

Finally, the Supreme Court rejected the company’s argument that the training provided to the employee who left the company was detrimental to its interests, on the grounds that that if the training was considered a duty imposed on the employee to remain in employment with the company, in accordance with article 21.4 of the SW, the elements required by case law to enter into such a contract would never have been fulfilled.

In light of the above, the Supreme Court upheld the preliminary ruling and ordered the company to pay the bonus to the employee.


Transfer of undertakings. Exclusive distribution agreement

Judgment of the Labour Chamber of the High Court of Justice of the Basque Country of 11 April 2006

This judgment of the Labour Chamber of the High Court of Justice of the Basque Country analysed the application of article 44 of the SW (transfer of undertakings) to a change of distribution company within the context of a distribution agreement. The case involved a German company, which manufactured orthopaedic and lingerie products, and distributed its products in Spain through an exclusive distribution agreement with a Spanish company in which the claimant was employed. The German company decided to terminate the sole distribution agreement with its exclusive distributor in Spain and have its products distributed by a recently established subsidiary.

Upon the termination of the exclusive distribution agreement with the Spanish company, the claimant began providing services to the Spanish subsidiary of the German manufacturer as a sales representative and entered into a one year contract. Once this term elapsed, the Spanish subsidiary informed the claimant that the agreement had terminated.

The High Court of Justice of the Basque Country upheld the preliminary ruling and rejected the argument of the claimant who called for the application of the provisions of article 44 of the SW on the basis that there was no interruption in the provision of services and that the services provided were the same.

The High Court justified its decision by stating that exclusive distribution does not in itself give rise to an economic entity in accordance with Directive 2001/23/EC of 12 March, since it does not constitute an organised grouping of resources which can act autonomously, independently and freely. In other words, the change in the distribution of the products lacked the essential requirement for the application of the transfer of undertakings provisions to apply.


The information contained in this Newsletter is of a general nature and does not constitute legal advice