The surcharge on Social Security benefits is a long-established institution in the Spanish legal system. It is a penalty that applies when a work-related accident occurs, triggering a range of benefits (temporary disability (IT), disability, widowhood, etc.) where the accident has been caused by a failure to comply with the occupational health and safety (OHS) measures required by law.
Written by Josep Conesa
Employment and insolvency lawyer
The benefits surcharge has existed in Spain since the Work Accidents Act of 1900. Today, Article 123 of the General Social Security Act (General Social Security Act (LGSS)) imposes an increase of between thirty and fifty per cent on Social Security benefits arising from occupational contingencies, payable by the employer, where there has been a breach of OHS regulations.
This penalty is designed to serve three purposes: protective, preventive, and deterrent. Although accident statistics do not suggest that it has produced sufficiently positive results, the benefits surcharge is intended to discourage employers from neglecting their OHS obligations.
The surcharge remains relatively little known, yet it is attracting growing criticism across a number of sectors due to its complex consequences and significant financial impact. The majority of judicial opinion has adopted a broad and flexible interpretation of what constitutes an employer's "breach" of safety measures. This allows the surcharge to be applied not only in response to specific, clearly defined infringements, but also as a reaction to a more general failure by the employer to fulfil the overarching duty of prevention — the duty to avoid situations that put the life or health of workers at risk.
The application of this penalty is governed by a case-by-case approach: it is necessary to establish a causal link between the employer's act or omission and the harm resulting from the accident for the penalty to apply. At present, however, there is a trend towards relaxing these criteria in a way that questionably extends employer liability to scenarios involving contractors and subcontractors vis-à-vis the principal employer, and temporary employment agencies vis-à-vis the client companies — arguably in an attempt to ensure that injured parties are able to recover compensation.
The most contentious aspect is that, in addition to the surcharge, the employer's breach may also be penalised as an administrative offence, attracting substantial fines.
The benefits surcharge has the following further characteristics:
· For small and medium-sized businesses, this penalty can lead to insolvency, given the impossibility of absorbing the surcharge amounts on top of the administrative fine and any civil damages award. This can leave the injured worker or affected family members without adequate protection in respect of the harm suffered by the employee.
It should also be noted that in the event of employer insolvency, those affected cannot bring a claim against the National Social Security Institute (INSS) (National Social Security Institute), as that body bears no subsidiary liability and is furthermore exempt from any obligation to advance the surcharge amount.
· This employer liability is strictly personal in nature, which means that any agreement or arrangement entered into with the aim of covering, offsetting or transferring it to a third party is null and void ab initio. Neither public nor private insurance may cover it. This legislative choice is designed to reinforce the punitive character of the rule by ensuring that only the employer bears the financial burden.
· The National Social Security Institute (INSS) (National Social Security Institute) is the body responsible for determining the monetary amount of the penalty by means of a decision that may be challenged before the employment tribunal following the mandatory prior administrative complaint. However, the jurisdictional rules conceal a considerably more complex picture than might initially appear: the General Social Security Act treats this penalty as "independent and compatible with sanctions of any kind, including criminal, that may arise from the breach." This means that the employer's non-compliance may also give rise to criminal liability.
· As noted above, the company's civil liability must also be addressed in parallel. This is sometimes resolved within the employment jurisdiction — where the dispute arises from an employment contract — and sometimes before the civil courts.
· The criminal courts may assume jurisdiction over civil liability only where it is established that one of the offences set out in the Spanish Criminal Code as violations of workers' rights in the area of health and safety has been committed.
· The Law on Labour Procedure prevents the suspension of employment tribunal proceedings on the grounds that a criminal matter arising from the same facts is pending. This may result in a finding of no criminal offence in the criminal courts, regardless of what the other jurisdictions decide.
· Finally, the company will be required to pay the administrative fine provided for under the Law on Infringements and Penalties in the Social Order, any challenge to which must be brought before the administrative courts.
A breach of any occupational health and safety measure is therefore one of the rare situations in which all four branches of the Spanish court system may have concurrent jurisdiction. As can be seen, current legislation coordinates the consequences of the surcharge in a clumsy and inadequate manner. Taking into account the non bis in idem principle (the principle that no one may be sanctioned more than once for the same act), the penalty proceedings relating to the surcharge on benefits arising from a work-related accident may constitute a violation of this maxim.
The entire controversy appears to hinge on how the surcharge is characterised in law. If we accept that it is punitive in nature, we risk subjecting the same act to multiple proceedings, when only the authorities should receive the compensation amount. If, on the other hand, we consider the surcharge to be compensatory in nature, we effectively sanction the unjust enrichment of those who, having already received a civil settlement, go on to increase the total amount claimed through additional benefits arising from the accident.
Given the full extent of the proceedings that a failure to comply with workplace health and safety obligations can trigger, it is essential that companies take preventive action — all the more so since such failures can, in some cases, lead even small and medium-sized enterprises to insolvency.
Given the importance and complexity of this matter, our firm is at your complete disposal to answer any questions you may have or to advise you on how best to prevent potential liability arising from workplace accidents — which, in most cases, are entirely avoidable.
