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To a certain extent, case law had already nuanced and mitigated the most adverse effects that this reform could have had on employees, with court decisions gradually interpreting the literal wording of the Workers' Statute in a more balanced way.
Two clear examples of this case law were:
- the doctrine of the "contractualisation of the collective bargaining agreement", developed to prevent the harmful consequences of abolishing the ultra-activity of the collective bargaining agreement (ruling of the Constitutional Court Constitutional Court ruling on the Supreme Court judgment of 22 December 2014.)
- Article 51 of the Workers' Statute, which stated that "In any event, a decline shall be considered persistent if, over three consecutive quarters, the level of ordinary income or sales in each quarter is lower than that recorded in the same quarter of the previous year." This provision was also interpreted more broadly, in the sense that the overall situation of the company had to be taken into account when determining whether a dismissal on economic grounds was justified.
The new labour reform by Podemos and the PSOE
We are now facing a different situation from the one experienced by the economy and businesses during the severe crisis that began in 2007 and lasted well beyond 2012. Today, the new labour reform put forward by Podemos and the PSOE is intended to reverse the earlier labour reform introduced by the PP (the centre-right People's Party).
The cost of dismissal under the 2020 labour reform:
One of the cornerstones of the reform concerns the cost of dismissal, which was reduced by the PP to 33 days' pay per year of service, capped at 24 months. Any increase in this cost will most likely be achieved by reintroducing interim salary payments during the proceedings, since the number of days is already broadly in line with what other EU member states provide.
OPT-OUT FROM THE collective bargaining agreement UNDER THE 2020 LABOUR REFORM:
This mechanism, introduced in 2012 to allow companies to temporarily disapply the minimum obligations set out in the collective bargaining agreement when facing financial difficulties, is also a target of the PSOE and Podemos labour reform.
This link explains how to proceed when seeking to disapply the collective bargaining agreement
Trade unions will also undoubtedly push for this measure to be restored to its previous form, known as "wage opt-out", significantly reducing the circumstances in which company companies can exercise this option.
COMPANY-LEVEL collective bargaining agreement UNDER THE 2020 PSOE AND PODEMOS LABOUR REFORM:
Another major point of contention during the 2012 labour reform was the priority given to company-level collective bargaining agreements over sector-wide agreements.
Although the Workers' Statute limited the matters to those set out in Article 84 of the Workers' Statute, and case law established that any such agreement had to be reached with employee representatives and that its conditions had always to exceed those of the sectoral collective bargaining agreement, the emergence of the potential "primacy" of the company-level collective bargaining agreement over sectoral bargaining struck a nerve with trade unions.
ADMINISTRATIVE AUTHORISATION IN COLLECTIVE DISMISSALS:
One of the changes introduced in 2012 to "streamline" collective redundancy procedures was the removal of the prior administrative authorisation requirement before implementing a Collective Dismissal Procedure (ERE).
This authorisation can be understood as a form of political oversight of company decisions, aimed at preventing injustice and controlling job losses across a given territory.
It is possible that this prior administrative oversight will once again be reinstated.
ABOLITION OF objective dismissal FOR INTERMITTENT ABSENCES:
objective dismissal on grounds of intermittent absences has already been repealed. Despite the fact that employment lawyers like us had been applying this type of dismissal sparingly, and with great care given the judicial rigour applied when assessing which absences do or do not count towards the threshold.
The ruling of the High Court of Justice of Catalonia dated 17 January 2020 had already signalled its demise by ruling that a dismissal of a female employee under Article 52(d) of the Workers' Statute was contrary to international treaties on grounds of indirect discrimination. It remains to be seen what the Supreme Court would have said, because although the ruling found a breach on grounds of indirect discrimination against women, it did not declare the dismissal null and void but merely unfair. This is something we struggle to understand from our own perspective.
COUNTING BREAKS AS working hours:
Following the National Court's ruling that breaks could not be deducted from working time after the introduction of working-time recording requirements (ruling 144/2019 of 10 December 2019), the PSOE-PODEMOS Government appears to intend to amend the basic legislation so that coffee breaks, cigarette breaks and lunch breaks count as working time.
GREATER RIGHT TO FLEXIBLE WORKING HOURS:
The PSOE-PODEMOS Government also appears to intend to extend the rights of employees to request flexible working arrangements from their employers, broadening the new rights to flexible working hours provided under Article 34.8 of the Workers' Statute.
There is also discussion of introducing hour-banking arrangements to help employees better manage their working hours and achieve a healthier work-life balance.
REMOVAL OF PRIORITY APPLICATION OF COMPANY-LEVEL collective bargaining agreementS:
Although case law had already clarified that the priority application of a company-level collective bargaining agreement could not override the minimum standards set by sectoral collective agreements (whether provincial, regional or national), it is very likely that Articles 83 and 84 of the Workers' Statute will once again be amended.
REVIEW OF THE GROUNDS FOR objective dismissal UNDER ARTICLE 52(C) OF THE Workers' Statute:
It is highly probable that it will become more difficult for employers to demonstrate that objective grounds exist to justify an objective termination, whether individual or collective.
The requirement of three consecutive quarters of losses is very likely to be removed, although case law has already clarified that, notwithstanding the literal wording of the legislation, any contractual termination measure proposed by the company must be "reasonable".
Restrictions on subcontracting under Article 42 of the Workers' Statute:
In order to prevent the fragmentation of production and the deterioration of working conditions, consideration is being given to requiring the principal company, or, in the view of the new political parties, whichever company is the largest, to formally integrate into its workforce and payroll any subcontracted self-employed workers, economically dependent self-employed workers (TRADEs), or employees of other subcontracted companies, where their work falls within the "core activity" of the principal company.
Bringing subcontracted workers onto the company's own payroll could serve as a measure to prevent unfair competition from businesses that resort to subcontracting precisely to circumvent the salary levels established by the relevant sectoral agreement.
CONCLUSIONS ON THE 2020 LABOUR REFORM:
Using legislation as a political instrument has both advantages and drawbacks. The fact is that the new tools introduced in 2012 for businesses ultimately could not be applied as literally as the legislation might have suggested, yet they have remained in force and may still be relied upon where the company can demonstrate justified grounds.
Remove the tools, and the options disappear with them.
We shall see how the final legislation takes shape.
