Spain: Interim Contracts That Are Lawful At Their Termination Do Not Give Rise To A Right To Compensation. | Supreme Court Judgement 13th March 2019

After almost two and a half years since the ECJ shocked the Spanish labour market by equating the compensation derived from the termination of temporary interim contracts to that of permanent employees, the Spanish SC has finally settled the ruling that temporary interim contracts do not generate any type of compensation once their term has expired

After almost two and a half years since the European Court of Justice shocked the Spanish labour market by equating the compensation arising from the termination of temporary interim contracts to that of permanent employees, finally the Spanish Supreme Court has settled the matter in its recent ruling of 13 March 2019, ruling that temporary interim contracts do not give rise to any type of compensation once it ends.

In relation to the famous file of Mrs. Ana de Diego Porras against the Ministry of Defence, after a long wait the unknown has been resolved. It was the dossier of a worker who, after several internships since February 2003, signed a new interim contract in 2005 that lasted approximately seven years.

The legal question was whether she was entitled to compensation at the end of his temporary contract. And if so, whether it should be 20 days' salary per year of service (which is the objective dismissal) or 12 days (under the same conditions as a temporary contract, either temporary due to circumstances of the production of the work and/or a specific service).

Disregarding the multiple procedural vicissitudes of the procedure (with prejudicial questions before the European Union Court of Justice) we place ourselves in the final solution given to the appeal for the unification of doctrine formalized by the Ministry of Defence against the judgement f the High Court of Justice of Madrid of October 5, 2016 that granted to the worker at the end of her contract a compensation of 20 days per year worked (which was a dismissal for objective reasons).

Now the Plenum of the Social Chamber of the Supreme Court (13 Judges) by majority (11) in sentence 207/2019 issued on March 13, upheld the appeal and annulled the High Court judgement, completely dismissing the worker's claim on the understanding that the exclusion, by the Statute of Workers, of a compensation at the end of an interim contract, whatever its duration, is fully consistent with law.

The reasoning leading to this conclusion can be summarised as follows:

1º.- It is not possible to apply the 20-day compensation provided for contractual termination to temporary workers for objective reasons because "it is not possible to confuse the different causes of contractual termination and transform the regular termination of a temporary contract into a supposed objective that the legislator has not contemplated as such. The compensation regime for the end of temporary contracts has its own identity, legally configured separately" (Fundamento de Derecho (Point of Law) III.5).

2º.- It is not discriminatory for interim workers to be treated differently from other temporary workers.

Indeed, the judgment underlines that "the mere imposition of an indemnity such as that laid down for other temporary contracts does not only not constitute a sanction for the abusive use [of temporariness], but does not even have, on its own, the deterrent effect against such abusive use of temporary contracts". And this is because a lower compensation would be recognized than the sanction with which a fraudulent temporary employment relationship is admonished: the conversion into indefinite; "a sanction for the employer that is much more burdensome than that of the compensation of 12 days" (Fundamento de Derecho (Point of Law) IV.3).

It is also pointed out that although "a priori the difference between temporary workers and others might seem to be exempt from justification, the fact is that the different solution of our legal norm obeys the will of the legislator to highlight a situation that is not identical to the other contractual modalities, since in the case of temporary substitution the job is covered by another worker with the right to reserve work". (Fundamento de Derecho (Point of Law) IV.4).

3º.- Finally, the judgment states that "the incentive that the company could provide by saving the 12-day indemnity by extending the temporary contract or converting it into a permanent one does not make sense here, since employment remains in any case when it is covered by the substituted person when he or she rejoins" (Fundamento de Derecho (Point of Law) IV.4 in fine).

The Supreme Court judgement has the Private Vote of two judges, who propose, for the extremely long duration of the interim period that was being tried (seven years), to reconvert their contract into a fixed one, with an indemnity, therefore, of 20 days. Subsidiary, to establish in favour of the worker a compensation "of an amount equivalent to the proportional part of the amount that would result from paying 12 days of salary for each year of service".

In short, after long procedural upheavals, the 13th March 2019 Supreme Court judgement concludes by stating the doctrine that temporary workers by substitution have no right to any compensation at the lawful end of their contract for compliance with the term. This confirms the adequacy of Spanish labour law to the content of Directive 1999/70 (clauses 4 and 5).

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.

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