Spanish labour market reform has been developing over the last three years, where employer associations, most representative trade unions and the Spanish government have not been able to reach any agreement. Although the RD-law was passed by the Parliament, being in force since 18 June 2010, it is important to bear in mind that this RD has to be ratified by the Parliament as a Law. This means it is highly likely that the current RD will be amended. It is estimated that the definitive reform will be in place by the end of 2010.
It must also be noted that this RD-law has substantially reformed the Spanish Statute of Workers and, more specifically, the procedure for carrying out redundancies. According to the new regulation, when the employer does not follow the due procedure to carry out individual redundancies, Labour Courts will declare the redundancy unfair, rather than null and void. As a result, the risk of nullity for infringing mere formalities has now disappeared. In addition, the RD-law states that employees affected by individual redundancies are now entitled to 15 days prior notice (previously it was 30 days).
Moreover, the new regulation is aimed at encouraging employers to hire permanent rather than temporary employees. For this purpose, among other measures, the labour reform favours a specific type of contract ("contrato de formento del empleo") with a smaller severance payment of 33 days per year worked, instead of the ordinary contract with a severance of 45 days per year worked.
New case law
Judgment of the Labour Chamber of the Supreme Court (SC) dated 7 October 2009 (Appeal number 2,694/2008)
An employee was dismissed due to multiple unjustified absences. Once the dismissal became effective, the employee justified her absences by informing the company that she had been on sick leave. As a result of this information, the company withdrew its disciplinary decision, asking the employee to be reinstated in her position. However, the employee did not accept the company's offer and subsequently she filed a claim before the Labour Court challenging her dismissal.
Following the case law, the SC declared that once the dismissal had become effective, the company did not have the possibility of withdrawing its decision, since the employment relationship had already been ended. Moreover, the employee's refusal to resume her position in the company could not be considered a resignation.
Judgment of the Labour Chamber of the Supreme Court (SC) dated 18 December 2009 (Appeal number 71/2009)
In this case, the company acknowledged the unfairness of the dismissal and paid statutory severance, which the employee received even though he disagreed with the severance calculation.
The Labour Court held that the dismissal was unfair and increased the severance payment because it considered that the employee's length of service was longer than the one acknowledged by the company, and gave the option to reinstate or pay severance to the employee. However, the High Court of Justice held that once the company opted to pay the severance as a result of the employee's dismissal, it did not have the option to reinstate him.
In this important decision, the SC declared the company's right to reinstate the employee since: (i) he did not accept the termination agreement; and (ii) having increased the severance that the company initially offered was not bound by its previous decision.
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