Employment - Legislative and case law developments

1. No transfer of undertaking from a special employment centre to a multi-service company without its own collective bargaining agreement

The case law on when a workforce is transferred from a special employment centre (centro especial de empleo) to a multi-service company that does not have its own collective bargaining agreement (but there is a sector-specific collective bargaining agreement covering the specific activity the workforce is performing that can and should be applied) cannot be applied in cases where the activity that the transferred workforce is performing is not covered by any collective bargaining agreement at all.

2. The largest trade unions can negotiate equality plans in companies without workers’ representatives

The Administrative Chamber of the Supreme Court has confirmed that article 5.3 of the Regulation on Equality Plans is lawful. This provision allows the largest trade unions generally (and the largest trade unions in a given sector that are entitled to participate in negotiating the applicable collective bargaining agreement) to negotiate equality plans on behalf of the employees in companies where there are no workers’ representatives. Expanding the scope of collective bargaining through additional secondary legislation does not breach the principle that certain matters – notably, the rules on the negotiation of equality plans – must be regulated by law (principio de reserva de Ley).

3. Economic grounds must be proved in each group company to justify an objective dismissal in one of them

When a company makes an employee redundant on economic grounds and it belongs to a group of companies for employment law purposes, the economic grounds it relies upon to justify the redundancy must apply to the entire group of companies for the employee’s termination to be considered fair. This is because the employee is entitled to be fully aware of all the objective grounds justifying their redundancy.

4. No obligation to redeploy workers at the end of a contract when a reduction in workload reduces the need for staff

When a contractor loses a client or the volume of work generated by one of its contracts drops, it is presumed that there is an imbalance between the workforce available to provide the contracted service and the number of employees actually needed to do so that entitles the contractor to dismiss the excess workforce. The Supreme Court has held that the production grounds relied on to terminate their contracts must be proven in relation to the specific production unit which workload has reduced. These dismissals may still be fair even if there are vacant positions in other units within the company.

5. Supreme Court upholds the “link theory”: a company has a services relationship with its board members if they carry out management functions in addition to their board functions

The Labour Chamber of the Supreme court has upheld its case law on the “link theory”. An individual can only simultaneously have a services relationship and an employment relationship with a company if their functions (aside from those inherent to being a board member) are not management related. There is a services relationship if the individual forms part of the company’s management and carries out functions inherent to the role of the management bodies.

6. Dismissing an “unsuitable” employee is unfair if based solely on an external medical exam

When an external medical examination service does not have specific details of the actual circumstances causing an employee’s illness and it issues a report indicating that the employee is not suitable for their post, this finding only triggers an obligation on the part of the employer to remove the employee from their post. If that finding were to result in the employee being dismissed on the grounds they are no longer suitable to hold the post (ineptitud sobrevenida), the evidentiary weight of the report will depend on its content.

7. Collective bargaining agreement provisions on salary to be considered when calculating if an employee is receiving the national minimum wage

In cases where salaries mandated by a collective bargaining agreement end up being below the national minimum wage, the amount by which they must be increased must be calculated taking into account all the salary items that the employee is entitled to over a year, unless a law or the applicable collective bargaining agreement expressly states otherwise.

8. Clause in a remote-working agreement impinging on the employee’s right to digital disconnection is null

It is not possible to limit an employee’s right to digital disconnection by imposing a non-negotiated clause in their remote-working agreement that makes a generic reference to “justified urgent situations”. This right can only be limited through collective bargaining.