Spain employment law newsletter - October 2019

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I. Terminations

In Spain, as in “2001: A space odyssey”, man beats the machine

On September 23, a Social Court in Las Palmas de Gran Canaria tackled one of the greatest fears of workers today: Will employees whose functions are mechanical and repetitive be replaced by machines? The answer, not at the moment. The court declared that the dismissal of a worker whose duties were going to be automated through IT tools had been unfair.

The judgement declared that automation, as a technical reason for dismissal, does not mean that the right of entrepreneurial freedom to carry out business should prevail over employment rights (minimum wage, working hours, limits on overtime) and the constitutional right to work, even if, by reducing labor costs, competitiveness is increased.

Therefore, the company cannot take advantage of a privileged kind of termination where the employee receives a lower statutory severance compensation than the one for unfair terminations and, therefore, the termination must be declared unfair.

If the arguments of the Court, which can be appealed, are upheld, it could lead to a slowdown in the implementation of the use of new technology in business in favor of traditional working arrangements and, consequently, it could support the maintenance of jobs.

Fair dismissal for having an offensive screensaver

An employee who had a screensaver with an image of Auschwitz was fired not only for having that image but also because when his superior asked him why he had it as a screensaver, the worker replied that the company was managing its business as if it were a concentration camp.

The High Court of Justice of Madrid, in its judgement of 2 June, 2019, decided that both the display on a company’s computer of an image that should be considered offensive itself and the comparison of the company’s employer with the Nazi regime are offensive, serious and guilty infringements. Therefore, it deserves the sanction imposed, especially taking into account that the company is German.

It must be taken into consideration that materials and working tools are the property of the company and that, as a result, the constitutional right of individual freedom of expression cannot prevail over these kind of injuries. In this case, because there was no coherent justification either about the reason for using that screensaver or about the verbal statements made, the disciplinary sanction was considered fair.

What happens if a company in bankruptcy does not attend the trial of a dismissal procedure?

In many cases, companies in bankruptcy that carry out dismissals do not attend oral trials because they consider that, since their causes of extinction are fully justified, their intervention is not necessary.

The Supreme Court has declared in a recent judgement (5 March 2019) that the Salary Guarantee Fund (Fondo de Garantía Salarial; FOGASA) has the capacity to exercise the right to choose between paying the employee severance compensation or reinstating the worker in the event of dismissal, provided that: (i) the company is involved in insolvency proceedings or has been declared insolvent or has disappeared; (ii) the company has not appeared in court; (iii) the holder of the right of option is the employer; and, (iv) FOGASA appears in the proceedings at the time of exercising the option.

Although the Supreme Court judgement allows FOGASA to exercise the aforementioned option, if the company is closed or disappeared, given that readmission in this scenario is unfeasible, there will be no option other than the payment of the compensation. In this way, FOGASA will become the creditor of these amounts against the company. A problem would arise if the activity of the company continued and FOGASA opted for the option of reinstating the employee. The same situation would be applied in the case of the acquisition of a company or an autonomous production under an insolvency process. In this case, the purchaser will have to take care of the procedures filed by terminated employees.

In view of the foregoing, it is advisable for the company to attend the oral proceedings through their legal representation and, in the event that the company or the purchaser could not appear before the Courts, it is necessary to assess whether the FOGASA has not opted for reinstating the employee.

May the company terminate an employee on long-term sickness leave?

A new back-and-forth has occurred in this matter as a result of the resolution of a preliminary ruling by the Court of Justice of the European Union. In this context, the European Court of Justice has traditionally treated temporary sickness leave as a disability. However, our High Court has distinguished both situations. This discrepancy is relevant because their consequences in case of termination are different. In this sense, if a long sickness leave is considered as disability, a termination without legal causes will be declared null and void and the company will have to reinstate the employee, paying the accrued salaries from the termination date. However, if it is not considered as disability, the company may terminate the employee without cause (acknowledging that an unfair termination exists and, in this case, the company should pay the statutory severance compensation).

The Court of Justice of the European Union has ruled that long-term sickness leave must be considered as a disability situation.

Bearing in mind that there is not a concrete definition for long-term sickness leave, and regardless of how the Spanish labor courts may interpret this preliminary ruling, taking into account that up to now a solid case-law does not exist exist, prior to dismissing an employee on long-term sickness leave, it should be analyzed (by comparing other judgements) whether there is a risk that, under this particular situation, would be a Court will declare that it is a null termination.

II. Working time

Is it possible to deduct salary from an employee who is late for work?

A company’s obligation to register working hours has begun to be a source of litigation. In this context, the National High Court (Audiencia Nacional), in its ruling dated June 20, 2019, gave a company the possibility of deducting from the employee’s salary the amount equivalent to the delays in the time of entry evidenced under the timing registration system. The company argued that, since the employee had not rendered services, the prorated amount could be discounted from the salary.

Although the employee argued that he could recover the time because an irregular annual distribution of working time should be applied, since, according to the applicable Collective Bargaining Agreement, such irregular distribution of working time is a company right, this argument was rejected.

Thus, the Court ruled that the deduction of salary is fine because the employee had not rendered the services during the entire daily working time.

Does the company have to show that no overtime has taken place?

Normally employees claiming overtime are the ones that must evidence it. However, on 31 January, 2019, the Superior Court of Justice of Santa Cruz de Tenerife () reversed the burden of proof when overtime is a common practice in the company.

Due to the obligation to register effective working time on a daily basis, it is easier for a company to prove whether or not overtime has really been carried out, transferring the burden of proof to the company, which is the one which must implement and keep the time register.

Although it is true that the aforementioned ruling is applicable to a case in which overtime is frequently carried out, it could also be applied to other cases where the working day is extended on an occasional basis, exceeding the annual amount established by the applicable collective bargaining agreement.

In this regard, it should be highlighted that, in general terms, overtime is the time that the employee, voluntarily, decides to carry out the duties expressly instructed by the company.

Is the time an employee spends attending a company’s business events considered as effective working time?

The Supreme Court, in its judgment of 19 March, 2019, established that attendance at corporate business events outside working time must be considered as an extension of the employees’ working schedule. Thus, the working time rules stated under the Employment Legislation and the Collective Bargaining Agreements must be applied.

Therefore, if a company requires the employee’s attendance at events outside working time and the employee accepts it, regardless of the activity performed, such hours will be considered as effective working time for the purpose of calculating the annual working schedule.

In order to prevent such working time being considered as overtime, the company may compensate the hours spent on assisting at these events with rest periods. In any case, it must be borne in mind that, in general terms, overtime exists when the annual working hours stated under the applicable collective bargaining agreement are exceeded.

III. Employees’ protection on fundamental rights

Is it workplace harassment not to give work to an employee?

On May 6, 2019, the Constitutional Court issued a judgment in which it ruled that a prolonged lack of effective occupation and, in particular, professional inactivity for a year and a half, should be considered as an infringement of an employee’s fundamental right to moral integrity and must be treated as moral harassment. In this sense, the degrading treatment of the employee (by not providing him/her with effective duties) complies with the requirement to prove that moral harassment exists.

In this sense, the employee, due to the lack of effective occupation, may have the right to terminate his/her employment contract, receiving the statutory compensation for unfair dismissal (or, if higher, the one stipulated in the employment contract), as well as an additional compensation for damages.

Is your company obliged to implement a reporting channel?

In October, 2019, the European Parliament approved the Whistleblower Protection Directive. The Directive, which has to be implemented in Spain within two years, establishes that companies with more than 50 employees and public legal entities have to create effective and efficient reporting channels for people to speak up when situations involving wrongdoing exist within the company. These channels will have to include internal and external procedures for reporting to public authorities.

The Directive highlights the key points that the procedures should include as well as how the follow-up of the reports must be implemented. In addition, it is stated that the reporting channel must be applicable to every individual who is linked with the company or the public entity (e.g. workers, trainees, suppliers, freelancers, shareholders, etc.).

This obligation to implement the reporting channels is crucial to carry out a successful internal investigation. Moreover, in the event that the company finds itself in a situation of corporate wrongdoing, it can be held that the necessary means to prevent this kind of situation have been implemented. It could mitigate a penalty risk or, even, its liability. In addition, implementing as soon as possible the reporting channel according to the requirements set forth in the Directive will contribute to the establishment of a better business culture and will improve the working environment and also the company’s image before customers and potential investors by showing that it follows ethical and transparency commitments.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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