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One of the practical problems arising from the Labour Reform is the delay that proceedings in the employment tribunals are experiencing.
Just recently, from the bench of a employment tribunal, it was remarked that these courts "are becoming like administrative courts", a reference to the historically long delays that jurisdiction is known for. And it is true. Those of us who attend these courts on a daily basis can see that an employee now has to wait between 8 and 18 months to obtain a ruling, whereas the average used to be between 3 and 6 months. The principle of procedural urgency, which is mandatory in employment matters, has been lost.
Given this situation, in which interim wages are no longer accruing in dismissal cases, it is entirely logical that companies prefer to use this blank cheque to defer payment of compensation. Why pay the redundancy now if you can pay it later?
While it is true that the judge will ultimately calculate the compensation as at the date of the ruling rather than the date of dismissal, some HR managers have a clear strategy when it comes to issuing the dismissal letter: there is time to negotiate, and in any case the matter must go through the CEMAC (the mandatory pre-trial conciliation service) in order for the compensation to be tax-exempt.
In salary claims, the situation is similar: an employee may have to wait up to 24 months for a ruling. Failing to reach an agreement at the CEMAC stage can trigger a 10% late-payment surcharge on the amount claimed, yet for many companies, that 10% may be an entirely acceptable cost to absorb.
By the time the hearing date arrives, the employee may no longer be in Spain and may abandon the case altogether. In that scenario, the employee must grant a power of attorney to the lawyer representing them, and that power must be sufficiently broad to allow the lawyer to reach settlements if needed. For its part, the company should scrutinise the claimant's representation carefully, as it may be able to raise a procedural objection and win the case on that formal ground alone.
All things considered, having the lawyer hold a notarised power of attorney from the outset is both the most practical and most prudent course of action. It can be used at the CEMAC stage and before the court, avoiding the need for the client to travel later, or dealing with complications that may arise over time, such as the client relocating abroad, or the company entering insolvency proceedings and the resulting representation issues that may emerge with the involvement of the insolvency director.
Given this judicial situation, and the adversarial nature that court proceedings always entail, mediation is increasingly being considered as a solution for certain employment matters: substantial changes to working conditions, holiday disputes, disciplinary sanctions, and similar issues, areas in which pilot schemes have already been introduced.
Mediation already has a legal framework for civil and commercial matters under Law 5/2012. It involves engaging a professional mediator, someone with specific mediation training, not necessarily a lawyer, who intervenes in the dispute to help the parties find a mutually acceptable solution themselves. Mediation suspends limitation and lapse periods, and is distinct from arbitration, in which a third party imposes a binding decision.
The concept is not new, least of all in employment law. The French "Conseil de prud'hommes", which is now the court of first instance in France for matters relating to the performance or termination of employment contracts, has its historical roots in what was traditionally the arbitration role of senior guild members, men regarded within their trade as "men of worth, prudence, and sound counsel". Even today, the panel members who sit on that body are not necessarily lawyers.
Let us hope that time proves European Directive 2008/52/EC right, and that mediation genuinely helps to resolve disputes and ease the burden on the courts.
