Employment Update, Spain - October 2007

09 October 2007

Daniel Cifuentes, Maria Eugenia de la Cera

Legislation

Statute covering self-employed workers due to come into force on 12 October 2007

Background

The current legal framework for self-employed workers has been developed by the Labour Courts on a case-by-case basis. Consequently, the distinction between self-employed workers and ordinary employees is not clearly determined, giving employers free rein to enter into contracts with workers on a ‘false’ self-employed basis.

New legislation

The Self-Employed Statute provides a systematic legal framework for self-employed workers, i.e. individuals who carry out personal and continuous economic or professional activities for financial gain, independently of the direction and organisational powers of a third person. In particular, and provided that such requirements are met, the new law applies to: (i) working partners of general and limited liability partnerships; (ii) members of joint ownerships and irregular civil partnerships, provided that their tasks are not limited to the management of the goods that are held in common; and (iii) administrators or directors performing managerial functions for limited liability companies, provided they are remunerated for these specific services.

Although contracts entered into by self-employed workers in the performance of their services are of a civil or business nature, the new Statute provides that they may be oral or in writing. They must always be in writing however if one of the parties requests it. The object and duration of the professional relationship shall be determined by the parties.

Furthermore, the Statute identifies and establishes a specific legal regime for ‘economically dependent self-employed workers’. These are individuals who are self-employed, as specified above, but who obtain more than 75% of their professional income from one ‘client’. Any contract that the economically dependent self-employed worker enters into with such a client must now be in writing and filed with the relevant public authority. Any disputes that may arise from the contract will be dealt with before the Labour Courts. Moreover, economically dependent self-employed workers will now also be entitled to 18 working days’ annual leave.

Effect on employers

This new legislation will increase the formal obligations of ‘clients’, especially with regards to economically dependent self-employed workers. It will increase costs for employers since the definition of ‘self-employed workers’ may give the latter grounds to assert that they have been incorporated as ordinary members of staff and are therefore employees. There may also be a rise in litigation as the new legislation is yet to be tested. It is likely that disputes between dependent self-employed workers and their clients will be heard before the Labour Courts, in which proceedings are faster and cheaper than in the civil courts.

Working time in road transport activities (amendment legislation)

Background

Prior to the new legal framework for drivers, effective working time only comprised time spent driving or carrying out other similarly active services. The general rules established in the Statute of Workers in relation to working time applied as follows: an annual average of 40 hours per week and 9 hours per day, unless otherwise provided by a collective bargaining agreement (subject to the minimum necessary requirement to include 12 hours of continuous rest).

New legislation

The new legislation defines ‘itinerant employees rendering road transportation services’ as drivers, assistants, collectors and other auxiliary personnel rendering services related to transportation and/or its passengers or load, employed by road transportation sector companies (whether urban or interurban) or by companies operating in other sectors that also carry out the aforementioned activities.

As regards effective working time, the concept now includes those periods of time when the employee cannot dispose freely of his/her time but is obliged to stay in or with the vehicle ready to perform his regular work including, in particular, loading and unloading for unlimited periods. Furthermore, periods other than breaks or pauses, during which the employee does not have to stay in or with the vehicle but has to be available to start or resume the services, shall be considered to be time on call.

In addition, the new working time limit for employees is, in general, 48 hours per week averaged over a 4-month period, with a maximum limit of 60 hours per week. Likewise, working days exceeding 6 consecutive hours shall include a break of at least 30 minutes, and if the working day exceeds 9 hours, at least 45 minutes - with further breaks of at least 15 minutes. Itinerant employees rendering driving services shall respect, in any event, the limits established in Regulation EC 561/2006. Time limit rules apply whether the employee renders services for one employer or for more than one.

Finally, this new legal framework provides that the employer must keep a record of all its employees’ working time.

Effect on employers

Companies will have to ensure that their timetables comply with the new time limits. Claims for working time infringement are likely to rise. Similarly, employers’ liability in cases of work accidents due to working time infringements is likely to increase.

Case law

Validity of voluntary resignation/Judgment of the Labour Chamber of the Supreme Court of 6 February 2007

The company in question decided to terminate an employee’s contract on the basis of a security camera recording which revealed that he had stolen certain goods while performing his duties as stock clerk. In the termination meeting, the company informed the employee of the legal and criminal consequences of his acts and then expressed its intention of dismissing him unless he signed the voluntary resignation letter they had prepared. The employee signed the resignation letter but filed a claim before the courts for unfair dismissal.

The High Court of Justice held that the company had failed to give the employee the necessary time to reflect on his decision and had to a certain extent threatened him in order to get him to sign the resignation letter. The Supreme Court however ruled that the employer’s act was permitted since stating the legal consequences of someone’s acts cannot be deemed threatening or against the principle of good faith, and that it was precisely the employee’s awareness of the seriousness of his acts that made him sign the letter.

Heart attack suffered at the work place during working hours/Judgment of the Labour Chamber of the Supreme Court of 11 June 2007

The employee suffered a heart attack at the work place during working hours. According to the expert’s report however the attack had commenced before the employee’s arrival at work. In light of the conclusions of the expert’s report, the National Institute of Social Security refused to consider the heart attack as a workplace incident. The Supreme Court held that the fact that the symptoms manifested before the employee had started his working day was irrelevant when deciding whether the incident was an ordinary or workplace incident. It is the critical moment that has to be taken into consideration when determining the protection the Social Security system should provide to the affected individual.

Informing and consulting employees in the European Union/Failure of the Kingdom of Spain to fulfil its obligations/Judgment of the Court of First Instance of 5 July 2007

The Court held that Spain failed to adopt the necessary measures to transpose the Directive 2002/14/CE, establishing a general framework for informing and consulting employees in the European Community.

This Directive applies, according to the choice made by Member States, to: (a) undertakings employing at least 50 employees in any one Member State, or (b) establishments employing at least 20 employees in any one Member State. It provides that information and consultation shall cover: (a) information on the recent and probable development of the undertaking's or the establishment's activities and economic situation; (b) information and consultation on the situation, structure and probable development of employment within the undertaking or establishment and on any anticipatory measures envisaged, in particular where there is a threat to employment; (c) information and consultation on decisions likely to lead to substantial changes in work organisation or in contractual relations. Likewise, consultation shall take place: (a) while ensuring that the timing, method and content thereof are appropriate; (b) at the relevant level of management and representation, depending on the subject under discussion; (c) on the basis of information supplied by the employer and of the opinion which the employees' representatives are entitled to formulate; (d) in such a way as to enable employees' representatives to meet the employer and obtain a response, and the reasons for that response, to any opinion they might formulate; (e) with a view to reaching an agreement on decisions within the scope of the employer's powers.

Since the Directive is now directly applicable in Spain, companies will have to ensure that they comply with the obligations provided therein when the aforementioned situations arise. Otherwise, they will be liable for ‘serious infringement’ of labour law with resulting economical sanctions of between €626 and €6,250.