Spain: The European Union Court Of Justice Corrects And Clarifies Its Criterion On The Compensation Regime Applicable To Temporary Contracts In Spain

Alfredo Aspra and José Antonio Sanfulgencio analyze the two judgments of the Grand Chamber of the Court of Justice dated 5th June 2018

On 5th June 2018, the Grand Chamber of the European Union Court of Justice delivered two judgments in response to two questions referred for a preliminary ruling on the compensation of temporary contracts by the Madrid Court of Social Affairs No 33 (Montero Mateos case - C-677/16, on an interim worker) and by the High Court of Justice Galicia (Grupo Norte Facility case; C-574/16), concerning the termination of a replacement contract.

The content of this opinion reflects the correction of the doctrine of the famous judgment of the Court of Justice of 14 September 2016 (C-596/14; Diego Porras case), which held that the refusal to grant compensation for termination of the temporary employment contract was contrary to Clause 4 of the Framework Agreement on fixed-term work annexed to Directive 1999/70,'while allowing for the award of such compensation, to comparable permanent workers'.

1.- Firstly, the Judgment of the Court of Justice of the European Union (Montero Mateos case - C-677/16) emphasises that the Spanish labour legislation governing the non-reimbursement of temporary workers is compatible with Community law.

The reporting judge, the Bulgarian Alexander Arabadjiev, determines that it is necessary to check whether there is an objective reason why the termination of an interim contract should not give rise to the payment of compensation to the temporary worker concerned, whereas a permanent worker is entitled to compensation when he or she is dismissed on one of the grounds provided for in Article 52 of the worker's statute.

After analysing the difference between the regulation of the termination of temporary contracts regulated in Article 49(1)(c) of the worker's statute and the termination for objective reasons of Article 52, it considers that 'Spanish law does not apply any difference in treatment between workers on temporary contracts and comparable permanent workers, since Article 53(1)(b) of the Workers' Statute provides for the payment of a legal indemnity equivalent to 20 days' salary per year of service in favour of the worker, regardless of the fixed or indefinite duration of his employment contract' (point 62)'.

Furthermore, the specific subject-matter of the compensation provided for in the two provisions, the payment of which is part of fundamentally different contexts, 'constitutes an objective reason justifying the difference in treatment at issue' (paragraph 63).

It therefore concludes that, with regard to the interim contract, the Framework Agreement must be interpreted as meaning that it does not preclude national legislation which does not provide for the payment of any compensation to workers with fixed-term contracts concluded for the temporary filling of a post during the selection or promotion process for the definitive filling of that post, on the expiry of the term for which those contracts were concluded, while compensation is granted to permanent workers on the termination of their employment contract for an objective reason' (paragraph 65). 

2.- For its part, the Judgment of the Court of Justice of the European Union Norte Facility case (C-574/16) endorses the Spanish legislation on the retirement respite contract, which allows the employer to choose whether the respite contract is for an indefinite period or a fixed-term contract - up to the retirement age of the replaced worker.

 It is clear from the definition of the term 'fixed-term contract' in Clause 3(1) of the Framework Agreement that such a contract ceases to have effect for the future when the term assigned to it expires and that the term may be the completion of a specific task, a specific date or, as in this case, the occurrence of a specific event. Thus, the parties to a temporary employment contract know, from the moment of its conclusion, the date or event that determines its termination. This term limits the duration of the employment relationship, without the parties having to express their willingness to do so after the conclusion of the contract (paragraph 57).

And that in the present case, the payment of compensation on the occasion of the termination of a replacement contract, which was foreseen, from the moment of its conclusion, to end on the occasion of the worker's access to full retirement, took place in a context that was significantly different, from the factual and legal point of view, from that in which the employment contract of a permanent worker is terminated due to the existence of one of the grounds provided for in Article 52 of the worker's statute (point 56).

In order to continue in this way, the same previous reporting judge, pointing out that Spanish law does not provide for any difference in treatment between workers with temporary contracts and comparable permanent workers, since Article 53(1)(b) of the worker's statute provides for the payment of a legal indemnity equivalent to twenty days' salary per year worked in the company in favour of the worker, irrespective of the fixed or indefinite duration of their contract of employment (point 59), so that in these circumstances the specific subject-matter of the allowances provided for in Articles 49(1)(c) and 53(1)(b) of the workers' statutes respectively, the payment of which is part of fundamentally different contexts, can be regarded as an objective reason justifying the difference in treatment at issue (point 60), and finally it can be held that:

 "Clause 4(1) of the Framework Agreement on fixed-term work concluded on 18 March 1999, annexed to Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP, must be interpreted as meaning that it does not preclude national legislation under which the compensation paid to workers on fixed-term contracts concluded to cover the working day left vacant by a worker who partially retires, such as the relief contract at issue in the main proceedings, at the end of the term for which those contracts were concluded, is less than the compensation paid to workers on indefinite-term contracts on termination of their employment contracts for an objective reason'.

3.- The conclusion drawn from the two judgments mentioned above is that in Spain the differences in the termination of temporary contracts are not discriminatory (no provision for severance pay in the event of termination of temporary contracts and lower severance pay in the event of termination of replacement contracts).

 Furthermore, regarding the resolution of the questions referred for a preliminary ruling to the Court of Justice, it seems reasonable that in the future the decisions to be taken by the European Court should follow the same doctrine.

One of these questions, let us remember, is the one raised by the Social Chamber of the Supreme Court itself by means of an order dated 25 October 2017 (precisely in the Diego Porras file), before deciding on the appeal for the unification of doctrine against the Judgment of the High Court of Justice Madrid of 5 October 2016, in which ruling, in spite of declaring the termination of a temporary employment contract to be appropriate, the employer was ordered to pay an indemnity equivalent to 20 days' salary per year worked.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions