2016 Employment Law Worldview Webinar Featured Country: Spain

Transcription

1 2016 Employment Law Worldview Webinar Featured Country: Spain Presented by Ignacio Regojo and Juan Nasarre 10 November 2016

2 Today s Presenters Ignacio Regojo Partner, Madrid Juan Nasarre Senior Associate, Madrid Moderator Janette Lucas Partner, London 2

3 The impact on employment law of the recent Spanish general elections There have been two General Elections during the last 12 months; the first one on December 20 th, 2015 and the second one on June 26 th, In both General Elections, the People s Party (Partido Popular) - led by the president Mariano Rajoy - won in the Congress of Deputies with a simple majority. However, he was unable to form a coalition to form Government. From 4 th November 2016 there is new Government in place, although a weak one, with the need for votes from Ciudadanos and PSOE (centre and left wing). Taking into account that the same party is going to govern, the elections are not expected to have a significant impact on employment law. However there may be changes in (i) the different types of contracts; (ii) severance payments; and (iii), collective negotiation. 3

4 The Spanish economy and labour and employment market has, nevertheless, been recovering Evolution of the Unemployment Rate in Spain from 2013 to date (National Statistical Institute): 4

5 The impact on employment law of the recent Spanish General Elections Evolution of the Employment Rate in Spain from 2013 to date (National Statistical Institute): 5

6 The impact on employment law of the recent Spanish General Elections Evolution of the GDP in Spain from 2013 to date by INE (National Statistical Institute): 6

7 Contracts of Employment (1) Types of Contracts: over 50 different types, including: a) indefinite; b) fixed-term; c) training and work experience a. Indefinite-term contracts Under Spanish legislation, an indefinite-term contract is the normal type of labour contract and may be entered into without any particular reason. In the absence of any other formalized contract type, the contract is presumed to be a normal indefinite-term contract. Severance pay for unfair dismissal is a maximum of 33 days salary for every year worked, up to a maximum of 24 months equivalent salary Severance pay for genuine redundancies based on objective reasons is a maximum of 20 days salary per year of service, up to a maximum of 12 months salary 7

8 Contracts of Employment (2) b. Fixed-term Contracts Fixed-term workers are workers whose work is limited in time, ending when the particular project is completed or a specific date is reached Fixed-term contracts can only be entered into where there is a valid reason for the contract to be temporary. A fixed-term contract can only be entered into for one of the following reasons: For specific, well-defined and time-limited tasks or projects determinado (Contrato de obra o servicio); Interim/Relief workers, hired to replace absent employees who are entitled to have their employment preserved during their absence due to temporary disability, holidays, special leave of absence (e.g. maternity) or selection processes (Contrato de interinidad); 8

9 Contracts of Employment (3) Casual workers hired by companies for the provision of services to satisfy peak market requirements, a backlog of work or higher than expected levels of orders (Contrato eventual); or Retiree replacement contract (Contrato de relevo), which allows for the temporary employment of a new employee to replace an employee who, being at least 61 years old, has exercised his/her right to partial retirement. If the temporary contract of employment does not satisfy these formal requirements and have a valid reason according to the law it will be considered as an indefinite term contract. According to the current employment legislation: The indemnity (compensation) due on the termination of a valid temporary contract (i.e. a fixed-term contract) is equivalent to 12 days salary per year of service up to a maximum of 12 months salary Exceptions apply to interim temporary workers who are not entitled to receive any severance. 9

10 Contracts of Employment (4) Consequences of the recent European case law on severance pay entitlements. The Court of Justice of the European Union on 14 September 2016 in case C 596/14 (Ana de Diego Porras vs Ministerio de Defensa (Spain)), held that domestic law denying compensation for terminating temporary replacement contracts is not in line with European Union law. According to the Court of Justice, the mere fact that an employee had rendered services under a temporary replacement contract was not an objective ground for denying the employee compensation. Consequently, Spanish fixed-term workers should receive the same severance pay as an objective dismissal of permanent workers of 20 days salary per year of service (capped at 12 months salary). 10

11 Contracts of Employment (5) Recently, two local Judgements have applied the ECJ s doctrine: Judgment issued by Employment High Court of Madrid dated 5 October 2016, in the underlying case that resulted in the referral to the ECJ, applied the ECJ s doctrine and indemnifies with 20 days salary per year of service an interim employee who for seven years doing temporary contracts at the Ministry of Defense. Judgment issued by Employment High Court of País Vasco dated 19 October 2016 awarded 20 days salary per year of service for the termination of well-defined and timelimited tasks contract, extending the application of the ECJ s doctrine to a type of fixed-term contract other than an interim contract. In conclusion: Spanish Employment Courts are already applying the ECJ s doctrine and extending it to other types of fixed-term contracts, and; Going forward, the new Government will reform employment legislation adapting it to ECJ s doctrine. Spanish fixed-term workers should receive the same severance pay as an objective dismissal of permanent workers of 20 days salary per year of service. 11

12 Working Time Regulations Are employers obliged to record an employee s working hours? Judgment of the National High Court of 4 December 2015 The requirement to record the working hours, stated in Article 35.5 of the Workers Statute in connection with overtime work, now extends to all cases. Actions to be taken: Employers must provide the employee with a monthly template of the daily working day records. Each month the employee shall receive a copy of this record sheet together with his payslip. Employers must keep these registration sheets which must be signed by the employee - for a minimum period of 4 years. Consequences: Part-timers may claim to be full-time employees. Back payment in connection with the remuneration corresponding to the last 12 months and 10% surchage for late payment. Administrative fines between 626 and 6,250 12

13 Working Time Regulations Issues with employees who work across different locations Judgement of the European Court of Justice C-266/14 (Tyco case) Under European Law Working Time is defined as any period during which the worker is 1. working; 2. at the employer s disposal; and 3. is carrying out his/her activity or duties, in accordance with national laws and/or practice. This judgement states that journeys made by workers without a fixed or habitual place of work between their homes and the first and last customer of the day constitute working time. Actions to be taken: travelling time must be compensated and such time will count towards any statutory working hour restrictions. Consequences: back payment in connection with the last 12 months and 10% surchage for late payment. Administrative fines between 626 and 6,

14 Holidays Calculating holiday pay Judgement of European Court of Justice C-539/12 (Lock case) The pay for statutory holiday entitlement under the EU Working Time Directive must be calculated according to normal remuneration (fixed and variable salary). The criteria stated in the ECJ ruling has been recently ratified by the Spanish Employment Supreme Court in two judgments of 8 June Actions to be taken: The pay for statutory holiday must include variable remuneration averaged over 12 months (such as commissions) and all remuneration for ordinary working time (such as night working time, holiday working time, Sunday working time, and part-time allowance). Consequences: Back payment in connection with the last 12 months and 10% surchage for late payment. Administrative fines between 626 and 6,250 14

15 Severance Payments in Spain (1) a) Unfair termination: does not necessarily have a negative meaning. The employer has the choice between either paying severance to the employee or reinstating the employee (with back pay). b) Redundancy (genuine) TYPE OF TERMINATION FOR THE PERIOD OF FOR THE PERIOD OF CAP ON INDEMNITY EMPLOYMENT BEFORE EMPLOYMENT AMOUNT 12/02/2012 AFTER 12/02/2012 Unfair dismissal Disciplinary 45 days salary for each year of service (pro rata for part years) 33 days salary for each year of service (pro rata for part years) 24 months pay although it can be up to 42 months in certain cases where the employee has long service before 12/02/2012 Redundancy Genuine objective dismissal 20 days salary for each year of service (pro rata for part years) 20 days salary for each year of service (pro rata for part years) 12 months pay 15

16 Severance Payments in Spain (2) a) Unfair dismissal: Statutory Severance Compensation is capped at 720 days salary, except for employees hired before 12 February 2012 and who have accrued more than 720 days salary as of 12 February 2012 in which case compensation will be capped at 42 months salary. The validity of the 720 days' cap has been recently confirmed by the Spanish Employment Supreme Court in its judgement issued on 2 February 2016 (Rec. 1624/2004). b) Redundancy: In dismissals for economic, technical, organisational or production reasons unrelated to the employee. If an Employment Court does not consider the redundancy as genuine the termination will be unfair and the severance will increase to the amount due in unfair dismissal cases (i.e days' pay per year of service, taking into account the above-mentioned limits). 16

17 Severance Payments in Spain (3) C) Fixed term 12 days salary per year of service for temporary contracts entered into from 1 January 2015 Nevertheless since the ECJ decision, Spanish fixed-term workers are receiving the same severance pay as an objective dismissal of permanent workers of 20 days salary per year of service. General note on Taxation. Statutory severance payments (stated above) are tax-free up to a maximum of 180,000. It is advisable to bring the matter before a mediation hearing. Sums paid over and above the statutory severance amounts or paid following a mutually agreed termination will be subject to tax. However, such amounts may benefit from certain tax rebates (40%-30%) where the indemnity has been generated over a period longer than two years. Indemnities over 1,000,000 will not benefit from this tax rebate. 17

18 Collective redundancies Current issues (i) Judgement of the European Court of Justice C-392/13 (Rabal Cañas case) The Spanish definition of collective redundancy under Spanish law is contrary to EU law. According to the Workers Statute, there will be a collective dismissal if on the grounds of economic, technical, organisational or production reasons an employer dismiss within a 90-day period, at least: 10 employees when the total workforce of the company is less than 100 employees; 10% of the total workforce when the company has between 100 and 300 employees; 30 employees when the total workforce is 300 employees or more. The above headcount includes all employees working at the company on the date that the collective redundancy procedure starts irrespective of their contractual status (e.g. part-time or full-time). Exceptions only apply to (i) voluntary resignations and (ii) fair disciplinary dismissals and fair terminations of fixed-term or temporary employees. 18

19 Collective redundancies Current issues (ii) The criteria stated by the ECJ has been recently ratified by the Spanish Employment Supreme Court in its judgment of 17 October Actions to be taken: Following this ruling, employers in Spain will have to carry out a double assessment when considering if there is a collective redundancy (in which case collective consultation and information requirements are triggered). Now, when redundancies affect more than 20 employees, the collective obligations are triggered if the previous mentioned thresholds are met as a result of counting the number of redundancies in: the employer company as a whole; OR the workplace (establishment) where the affected employees render their services. 19

20 Collective redundancies Current issues (iii) Example: Dismissal of 12 employees Workplace with 30 employees Company with 200 employees Outcome: Before the Rabal Cañas case = no collective redundancy (12 is below 20 - the 10% of 200 employees) After the Rabal Cañas case = collective redundancy (12 is above 9) Consequences: If this assessment is not done, some terminations may be declared as null and void (resulting in back payment of salaries and social security contributions and compulsory reinstatement). 20

21 Employee Monitoring - Recent Case Law (1) Inform about (i) the fact; (ii) the purpose and (iii) the means. Judgment issued by Spanish Constitutional Court dated 3 March 2016 (Rec Amparo ) STC 39/2016) In a nutshell, the Constitutional Court dismissed the employee s appeal to invalidate her dismissal (dismissed on the basis of CCTV footage where she was seen stealing money from the cash register). The employee claimed that the CCTV surveillance was: in breach of her constitutional rights to privacy and image under articles 18 (1) and (4) of the Spanish Constitution; and she had neither (i) expressly consented to the surveillance nor (ii) been personally informed of the installation of surveillance cameras. 21

22 Employee Monitoring - Recent Case-Law (2) The Court held that: the Organic Law 15/1999 on the protection of personal data does not require the employee s prior express consent for the purposes of processing personal images; It is sufficient that the employer displayed a warning of the use of surveillance cameras. In this case, the employer had displayed a For Information notice on the use of surveillance cameras at the entrance of the store. The notice was aimed at customers as well as employees. The surveillance in this case was justified in accordance with the exception under article 6(2) of the Organic Law 15/1999 which allows the processing of data without employee consent where it is necessary for performance of the employment contract. The Court held the measures taken in this scenario were justified, adequate, necessary and proportionate. Indeed, the cameras were installed in connection with the employee s contractual duties, were located in a public area of the store and installed following some cash inconsistencies at the store check-outs. Labour Court of Tarragona upheld the fairness of the disciplinary dismissal of an employee who stole an unspecified amount of money from another employee s vehicle that was located in the company s car park. Judgment dated 27 May

23 Employee Monitoring - Recent Case-Law (3) Judgment issued by Employment High Court of Cataluña dated 13 June 2016 In a nutshell, the occasional use of a computer and the Internet for personal purposes by a teacher justified her dismissal. The worker claimed that the decision to terminate for cause was excessive because the time spent browsing the internet was only 1.5 hours per day during the period of greatest use and the worker had a flexible working schedule. The Court held that: Although the company could have provided more effective technical means that would have prevented any unwanted use of the computer, and that lesser penalties had been imposed for the same acts by other workers, this could not undermine the seriousness of the breach and the breach of good contractual faith. 23

24 Employee Monitoring - Recent Case-Law (4) That it is irrelevant that the teacher had a flexible working schedule. That the internal policies warned that computers could be monitored, and the fact that this control was never previously carried out does not mean that the breach of good faith is less serious as there is proven disobedience of a wellknown order by the employee. 24

25 Contact Details Ignacio Regojo Partner, Madrid Tel: E: Juan Nasarre Senior Associate, Madrid Tel: E: Janette Lucas Partner, London T +44 (0) E janette.lucas@squirepb.com For Global Edge please contact: Olivia Mardon Director of Global Edge, London T +44 (0) E olivia.mardon@squirepb.com 25

26 Global Edge Our one-stop shop to Global Labour Law Aimed at in-house lawyers & HR professionals, Global Edge offers a one stop shop to global labour law, ultimately saving you time & money Key features include: Presently covers 30 countries and 22 topics, with more to come Background Checks has just been added across all featured countries On the Horizon (what s in the pipeline) and News features Updated quarterly Enables users to produce bespoke reports in under 30 seconds Compatible with mobile devices (Apple ios and Android compatible). Written in plain English without the legal jargon To arrange a demonstration, please contact the Director of Global Edge Olivia Mardon (olivia.mardon@squirepb.com) 26

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28 Disclaimer The information contained in this presentation is for general information purposes only and should not be construed as giving the ground for any action or omission in connection with the above material. This presentation should not be construed as professional advice on legal or any other matters. The examples given in this presentation are described with a level of detail that does not provide for their implementation without additional comprehensive review with due regard to specific relevant facts and circumstances. The application of laws and statutes may vary depending on particular circumstances. Squire Patton Boggs does not assume liability for any damage that may be caused to anyone as a result of any action (or omission) on the basis of the information contained herein. 28