Employment Update, Spain

05 February 2008

Daniel Cifuentes, Maria Eugenia de la Cera

Legislation

Social Security’s protective action for retired employees (amendment legislation)


Background

The previous legal framework set the minimum retirement age at 65 years, which also applied for partial retirement. Further to this, an employee would only be entitled to a retirement pension when he/she had contributed to the Social Security System for at least 15 years, 2 of which had to be included in the 15 years prior to his/her 65th birthday.

Should an employee retire after 65 and comply with the referred requisites, the base to calculate the corresponding pension was increased by 2% for every ‘extra’ year of contribution if he/she had already contributed for 35 years. Otherwise, such increase only applied when the employee finally met this latter requirement.

Employees over 65 who met the requirements necessary for ordinary retirement were entitled to a partial retirement pension. Moreover, employees over 60 who met the requirements necessary for ordinary retirement were also entitled to a partial retirement pension if the company simultaneously employed an unemployed individual or someone who was rendering services under a fixed term contract to substitute him/her.

New legislation

Law 40/2007 enacted on 4 December 2007, which entered into force on 1 of January 2008, established that employees who retire after the age of 65 and meet the requirements to obtain a retirement pension will automatically see their base calculation of the retirement pension increased by 2% per ‘extra’ year worked, even if they have not contributed to the Social Security System for more than 35 years, and by 3% if the employee has contributed to the Social Security System for at least 40 years on his/her 65th birthday.

Further to this, the new legislation provides that employees over 65 who meet the requirements necessary for ordinary retirement and are entitled to a partial retirement pension can only reduce their working time between 25% and 75%. With regards to employees over 60 who met the requirements necessary for ordinary retirement, the will following additional requirements will have to concur for him/her to obtain a partial retirement pension: (i) the employee has to have rendered services for the company for at least 6 years prior to the retirement date; (ii) the employee has to have contributed to the Social Security System for at least 30 years; and (iii) the substitute must occupy the same position as the partially retired employee or, if this is not possible, he/she must have a similar base of contribution.

What this means for you

This new legislation helps companies retain senior talents by increasing the scope of the economical benefits and, more restrictively, their amounts. However, since it also restricts partial retirement, in some cases it may cause difficulties when trying to refresh the staff.

Minimum guaranteed interprofessional wages (amendment legislation)

Background

Pursuant to the Statute of Workers, the minimum wage for all types of employment and for national or foreign employees over 18 years of age engaged in full time work is established annually by the Spanish government.

For 2007 it was set at €19.02 per day and €570.60 per month.

New legislation

Royal Decree 1763/2007, enacted on 28 December 2007, sets the minimum guaranteed interprofessional wage at €20 per day and €600 per month.

What this means for you

This 5.5% increase in the minimum guaranteed interprofessional wage will affect not only those companies who have employees under such retributive level but also those which fall under the scope of collective bargaining agreements, or any other statutory provisions, which use this figure to determine the corresponding annual salary increase.

The Social Security provides first aid kits to companies

The Ministry of Employment and Social Affairs issued an Order which establishes that companies will be supplied with first aid kits as part of the health care action plan designed by the Social Security system.

Mutual insurance entities that cover occupational accidents and illness on behalf of companies and the Social Security’s management bodies will be in charge of distributing the kits.

What this means for you

We encourage companies to get in contact with any of the two bodies referred to above to make sure they obtain one. This will ensure their due observance of the minimum legal obligations and will demonstrate the required concern on employees’ health and safety at work.

Case law

Individual termination for an objective reason unrelated to the individual. Failure to comply with formal requirements implies a null and void dismissal. Judgment of the Labour Chamber of the Supreme Court of 18 April 2007

The company terminated an employee’s contract on the basis of redundancy reasons but did not provide a copy of the dismissal letter to the employees’ representatives as required in article 53 of the Statute of Workers (SW).

In view of this situation, the Supreme Court was asked whether failure to communicate the dismissal to the employees’ representatives could be considered a breach of the legal formalities and, consequently, could entail the nullity of the employment termination, as provided under article 122 of the Labour Procedural Law.

The difficulty in determining whether this was the case stems from the fact that article 53 SW states that the company has to provide the employees with a copy of the prior notice, instead of referring to the communication of the dismissal or dismissal letter.

The Supreme Court, following the experts’ interpretation of the referred article, concludes that there is an error in its drafting since there is no legal or logical reason for employees’ representatives to be interested in the prior notice given to an employee when he/she is being dismissed. On the contrary, if provided with a copy of the dismissal letter, employees’ representative will be able to (i) make sure that it complies with the legal formalities i.e. that it sets the cause of the dismissal and informs the employee that the company has put at his/her disposal the statutory severance and what is more important; (ii) to verify the number of employees that are being dismissed and, hence, if the company is avoiding the collective dismissal procedure statutorily provided for these cases.

What this means for you

From now on companies must duly provide employees’ representatives with a copy of dismissal letters (preferably on the same day) in case of individual redundancies otherwise there is a very high risk that the company will be obliged to reinstate him/her in her previous position and to pay him/her the salaries accrued since the termination date if the affected employee challenges the employment termination before the Labour Courts.

Right to privacy. Employers’ control over their employees’ use of the computer at work. Judgment of the Labour Chamber of the Supreme Court of 27 September 2007

The company’s IT expert found some temporary archives in the employee’s computer while repairing the system which evidenced that he had accessed websites with sexually explicit contents. As a consequence, the employee was dismissed.

In respect of the limits applying to the employer’s ability to control employees use of computers at work, the Supreme Court has ruled that:


  1. In principle, employers are entitled to access their employees’ computers under article 20.3 SW which expressly provides that employers may adopt supervision and control measures as may be deemed appropriate to verify their employees’ compliance with their duties, maintaining in the adoption and application of such measures the necessary consideration to human dignity.

  2. However, given that there is a generalised tolerance among employers to certain moderate uses of the computing resources, and in observance of the general principle of good faith, employers should determine expressly and beforehand which uses of the working tools are allowed and which are not, to avoid generating reasonable expectations of privacy.

  3. Pursuant to the European Court of Human Rights’ prior rulings, temporary archives which register the personal use of the internet may contain private information regarding, the individual’s ideology, sexual orientation or hobbies etc. Therefore, accessing these files constitutes an illegitimate intrusion of the employee’s privacy.

In light of these considerations the dismissal was held to be unfair since the evidence provided to base the decision had not been duly obtained.

What this means for you

To avoid these situations, as the Supreme Court suggests, it would be useful for companies to reinforce the legal certainty of the practices and policies employees are expected to comply with by issuing, for instance, codes of conduct or ad hoc mailing letters. In any case, employers should always exercise their control powers with due proportionality and caution.

Control of employees’ working hours. Use of new technologies does not breach employee’s privacy or personal integrity. Judgment of the Contentious-Administrative Chamber of 2 July 2007

The regional government of Cantabria introduced a mechanism of controlling employees’ working hours whereby a biometric identification system takes a reading of the hand and records it in a database, allowing the administration to monitor the hours between the arrival and the departure of each employee.

Unlike the trade unions which challenged such measure, the Supreme Court held that this is a perfectly adequate, relevant and proportional way to exercise a legitimate entitlement of any employer ensuring that its employees effectively comply with their corresponding working hours when obliged to adhere to a timetable. In this respect, the Court argued that the novelty or complexity of the system is not in itself a reason to conclude that it constitutes an illegitimate interference in the employees’ privacy or a breach of their personal integrity.

What this means for you

Companies now have a more solid basis to establish mechanisms to monitor employees’ working hours since this is identified as a legitimate faculty which derives from employers’ powers to organise and control their business and, in particular, their staff.

Qualification of dismissals. Dismissal of an employee during sick leave is unfair, not null. Judgment of the Labour Chamber (plenary session) of the Superior Court of Madridof 5 November 2007

Although the Supreme Court has repeatedly held since 2004 that dismissals during sick leave shall not qualify as null per se, some of the Judges in the Labour Chamber of the Superior Court have still been ruling that such decision breaches the employees’ fundamental right to their physical integrity and indemnity and declared these employment terminations to be null and void.

The issuance of this last Judgment of the Labour Chamber of the Superior Court of Madrid, adopted by majority vote in a plenary session, will hopefully end the uncertainty generated by the situation described above.

What this means for you

Companies will have a wider range of choice when deciding on the employees to be affected by a dismissal, as long as they do not incur discriminatory practices.