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Miss Winslow

Feb 17, 2020

It is evident that the ruling of the Court of Justice of the European Union (CJEU) of September 14, 2016 (Case C-596/14, de Diego Porras) declares that it is contrary to Community Law for Spanish legislation to eliminate any compensation for interim workers upon the termination of their employment contracts. This resolution has generated significant reactions among social partners.

The government, employers’ associations, unions, political parties, and experts have defended different interpretations of a ruling that, inevitably, will require substantial reforms in our labor legislation.

On the other hand, no one seems to agree on the limits established by this important ruling, not even on basic aspects, such as whether it only affects the specific case or has general implications, the types of contracts it affects, only interim or also temporary ones; the necessity to reform labor legislation or its effects remain to be clarified.

It is necessary to mention that the CJEU had equated concepts and compensation amounts. Thus, the first preliminary question presented was based on whether Council Directive 1999/70/EC on temporary work, which aims to equalize the «working conditions» of permanent and temporary workers, was applicable to termination compensation. Thus, the CJEU considers that “since the compensation is granted to the worker due to the termination of the employment contract that binds them to their employer […], it is therefore included in the concept of ‘working conditions’”.

This directive will apply, as its Article 4.1 stipulates that temporary workers cannot be treated less favorably than comparable permanent workers, except for objective and reasonable reasons that justify such differentiation, which does not amount to inequality.

In the specific case, the CJEU reasoned that the worker replaced a union representative—permanent—and performed the same functions and, therefore, should not have been terminated with compensation inferior to that granted to permanent workers in the event of termination for objective reasons.

However, there are significant doubts about the objective significance of this ruling, as it is now up to the State to modify its regulations to conform to the European directive, which preceded the referenced ruling and in accordance with Article 96 of the Spanish Constitution.

However, it should be noted that directives do not generally have direct application in relationships between individuals, except in very exceptional cases.

It is evident that labor courts will begin to recognize higher compensation for the termination of interim contracts, and even for temporary workers.

A reflection on the types of temporary contracts to which the CJEU doctrine would apply is necessary. In this regard, the preliminary question raised by the Madrid High Court is very important when mentioning “temporary contracts”.

There is a risk that temporary workers, and where there is a comparable permanent job in the same workplace, could file a claim demanding compensation of 20 days’ salary per year of work, instead of the current 12 days’ salary established by law.

Therefore, the CJEU ruling represents a before and after, and although it does not entail changing Spanish legislation, judges and courts will have to jurisprudentially apply its content.

Thus, it will now be up to the legislator to promulgate national labor legislation to accommodate the spirit of this ruling, as the exegesis of the CJEU’s interpretation will follow. The ruling establishes that an interim worker performing the same functions as the one they replace, and upon termination of their contract, should receive compensation identical to that which would correspond to the replaced worker.

Today, there are several types of compensation in Spanish legislation when the employment relationship ends: 12 days per year worked for temporary contracts, 20 days per year for permanent employees dismissed for just cause, and 33 days per year for permanent employees dismissed without just cause, and 0 days of compensation for trainees or interim workers, but now interim workers are entitled to compensation identical to that of permanent employees.

It is evident that Spanish labor legislation is far from the «legal winds blowing in Europe». It is undoubtedly necessary to understand this ruling as a step towards equal labor rights. However, it is also true that Spanish and Community legal frameworks must be equated, both in terms of employer burdens and worker benefits, because if we only equalize penalties, we risk further penalizing job creation in Spain; whereas legal alignment could be achieved by equating compensation between permanent and temporary workers, reducing the penalties for objective dismissals of permanent workers.

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