Cross-border posting of workers in Europe

18 April 2018

Europe

Labor

10 practical aspects to consider for an adequate timing

Meanwhile similar legal standards apply in most industrialized countries if an employment relationship shall be terminated; however, in every jurisdiction some specifics still need to be considered. The following ten aspects may be a first general guideline for the termination of an employment contract in Germany, in particular regarding its timing.

In some cases notice needs to be given within a two-week period

In case of gross misconduct an employer may be entitled to terminate an employment relationship forthwith. However, if notice of termination is not served to the employee within two weeks after acknowledgement of the respective facts, this right is forfeited.

Notice has to be given in writing

The notice has to be signed by the legal representative of the employer and delivered to the employee. Neither a transmission by facsimile nor an email with a scanned copy is sufficient. If the representative is not on site, timing may become an essential aspect of the termination process.

Ordinary dismissal may be prohibited by a collective bargaining agreement

Collective bargaining agreements often provide a ban on ordinary dismissal under certain circumstances (e.g. based on the age of the employee). A careful assessment of all applicable collective bargaining agreements before a termination is therefore indispensable.

Insufficient information of the works councils may lead to an invalid termination

The establishment of a works council is not mandatory in Germany. However, if it is established, it needs to be notified and heard before every termination of an employment contract. The notification must contain a sufficient description of the grounds for the termination, otherwise the termination may be deemed invalid. Having been notified, the works council has one week (in some cases: three days) to object. Any termination before such term without consent of the works council would be deemed invalid as well. Timing may therefore become again an essential aspect of the termination process.

General dismissal protection is related to seniority and size of the establishment

General dismissal protection is basically applicable in establishments with more than 10 employees. Exceptions may apply in favour of those employees whose employment relationships commenced already before 1st January 2004. In addition, the respective employee needs to have at least a seniority of six month. If these criteria are met, the termination has to be justified by operational reasons, misconduct or personal incapacity as set out in the Dismissal Protection Act.

Some terminations may need prior permission

Irrespective of the application of the afore mentioned Dismissal Protection Act some kind of terminations (e.g. employees on parental leave) may need a special permission of the works council, the Labour Court or the respective public authority as applicable. These procedures may last from some days up to two years.

There is no general claim for severance payment in case of an unfair dismissal

Aside from those agreed in termination agreements there is no general claim for severance payment in case of an unfair dismissal. In general, the statutory remedy will only be reinstatement and back pay. Only under certain circumstances each party may apply for the termination of the employment relationship and a severance payment in front of the Labour Court. However, in most of the cases parties end up in a voluntary termination agreement.

Non-competes may lead to extensive payments and cannot be withdrawn forthwith unilaterally without cause

A binding covenant to non-compete leads to a compensation payment of at least 50 % of the former salary for every month of its duration. Even in case of a justified termination it may only be terminated with a notice period of one year. However, both parties may agree upon its immediate suspension in a termination agreement.

Any termination agreement has to be in written form as well

Also a termination agreement needs to fulfil the same formal requirements as set out already above under point 2. Again, if the representative is not on site, timing may become an essential aspect of the bargaining process.

The forfeiture clause of a termination agreement may not cover all claims

Termination agreements often contain general forfeiture clauses at their end, covering also those potential claims which have not been explicitly mentioned or identified by the parties. However, some claims (e.g. pension claims) may not be covered by such a (general) forfeiture clause.

Please note that these ten aspects contain general information only. Further details as well as possible exceptions therefore need to be checked on a case-by-case basis by a professional advisor.

Tha author of this post is Alexander Lentz

We have cross-border posting of workers when an employer from a State provides its services in another State, sending there its employees.

The phenomenon has been spreading out in Europe in the last 20 years, mostly since Eastern countries, with lower labour costs, joined the EU. Therefore various legislative measures have been discussed with regard to this subject at European and national level and it has been dealt with in some major decisions of the European Court of Justice too.

Indeed, the cross-border posting of workers involves many fundamental rights recognised by the EU and requires a careful balancing of the interests at stake.

Free movement of workers, capitals and goods and especially free provision of services (art. 56 TFEU) shall be granted, but also fair competition and workers’ protection are to be ensured.

In 1996 the European Parliament and the Council adopted a first directive on the matter (Directive 96/71/EC, implemented in Italy with D. Lgs. 72/2000); in 2014 another directive was adopted (Directive 2014/67/EU, implemented in Italy with D. Lgs. 136/2016) in order to better enforce the principles set out in the first one.

European and national rules pursue two main goals:

– to prevent and combat fictitious postings through letterbox companies, ensuring a level playing field for the service providers in Europe;

– to ensure uniform treatment and protection of posted workers, avoiding ‘social dumping’ phenomena.

To achieve these goals the 1996 Directive laid down a nucleus of mandatory rules to provide a minimum protection for posted workers all over Europe. To enforce this protection, the 2014 Directive strengthened the cooperation system among national authorities and set out a series of factual elements to be considered in order to determine whether a posting is ‘genuine’ or not.

Art. 4 of the 2014 Directive (transposed into art. 3 of Italian Law) details many of these elements concerning the companies involved and the posted workers.

As far as the companies are concerned the following elements are deemed relevant:

a) the place where the company has its registered office and its head office, where it uses premises, pays taxes and social security contributions and where it is registered with the Chamber of Commerce;
b) the place where posted workers are recruited and from which they are posted;
c) the law applicable to the contracts concluded both between the company and its workers and between the company and its customers;
d) the place where the company carries out its main business activity and where its administrative staff is employed;
e) the number of contracts performed and/or the turnover of the company in the Member State of establishment, taking into account the specific situation of newly established companies and of SMEs.

As far as the workers are concerned, the following elements should be taken into consideration:

a) whether the work is carried out for a limited period of time in another Member State;
b) the date on which the posting starts;
c) whether the work is usually carried out in the country of origin;
d) whether the posted worker will resume work in the Member State from where he has been posted;
e) the nature of activities performed;
f) whether travel, board and lodging costs are reimbursed by the employer;
g) any previous period during which the activities have been carried out by the same or by another posted worker.

None of these elements shall be deemed final; it’s up to the national authorities to make an overall assessment of all factual elements and decide whether a posting is genuine or not.

If it proves not to be genuine, financial administrative penalties and fines can be imposed both on the posting and on the host company; moreover both of them are held responsible for the workers’ credits.

Italian law has also strengthened that provision, confirming its hostility towards any kind of labour brokering. If the Italian authorities assess that the posting is not genuine, the “posted worker is considered in all respects a direct employee of the company taking advantage of his work (art. 3 of Italian Law).

To protect posted workers and ensure a level playing field, art. 3 of the 1996 Directive (art. 4 of Italian law) requires that each Member State grants posted workers employment conditions comparable to those granted to local workers, whatever the laws applicable to the working relationship are. In particular, posted workers shall be entitled to equality of treatment concerning the following matters:

– maximum work and minimum rest periods;

– minimum paid annual leave;

– minimum rates of pay;

– health, safety and hygiene at work;

– protective measures for mothers, children and young people;

– equal treatment of women and men and non-discrimination.

As a matter of fact, the most challenging aspect is the ‘minimum rates of pay’. Actually, in each Member State wages are made up of many different entries, not always easy to be compared, and are defined from different sources (law / administrative provisions / collective agreements). By the way economic issues are obviously crucial to companies and workers when they have to decide whether the posting is worthwhile.

For these reasons, the European Court of Justice set out that the rates of pay granted to posted workers shall be compared with those of the host country workers on an overall basis and not by comparing individual entries. Besides, the ECJ has specified that the only elements to be taken into consideration for such comparison shall be those strictly connected to the work performed, thus excluding bonuses or cost refund. European case-law has also made clear that the pay items to be taken into account shall be transparent and available to posting employers.

Lastly, European Provisions impose to the Member States to allow access to the legal protection instruments provided for local workers to the workers posted within their territory.

For that purpose, art. 5 of Italian Law enables workers posted in Italy to call on the competent administrative authorities and to take judicial action to defend their rights.

France has for long been seen as a “social trap” by foreign investors… and it was often right.

The last few months have been dedicated to change this, in order to secure more employers, and allow more flexibility (in a negotiated framework) within companies.

On the 14^th of February, the Senate has ratified what we call the “Macron” decrees that were issued at the end of September.

Below, a summary of what you need to know in 8 points.

1 – More flexibility in the motivation of dismissal letters

In France, dismissals must be justified. However, to reduce litigation and convictions of employers linked to lack of motives, it is now provided that:

Before referring to the Judge, employees might ask their employer for more explanation on what the allegations against them are, this to defuse conflict and promote dialogue.
If the employee did not ask for more explanations, the dismissal will not be judged unjustified for a lack of motives but only an irregularity of procedure might be retained (giving an entitlement to a maximum of 1 month salary as damages).
The employer might, if asked by their employee or at their own initiative, explain more into details the reason for termination, and this explanation will be taken into account by the Judges in case of litigation (when before, only what was written in the dismissal letter was taken into account without any possibility to give any further explanation).

The time-limit to challenge a dismissal is moreover reduced to 12 months (vs 2 years before) with an aim to rapidly secure the situations.

2 – Some changes in redundancies

At last, a glimmer of hope for employers belonging to an International group: the perimeter of appreciation of the economic reason which is required to make someone redundant, is now restrained to the national territory (except for fraud).

It means that an investor abroad who has financial difficulties on the French territory can, from now on, decide redundancies even if the other companies of the group abroad make profit.

Also, the research for redeployment shall take place within the French territory only and not in the whole group outside France.

3 – Damages scales

In matter of dismissal without any substantial grounds, a compulsory statutory scale is included in the Labour Code.

These new provisions are applicable to any dismissal issued after the 25^th of September.

The maximum allowance is set at 20 months of gross salary for someone having 29 years’ seniority or more when being unfairly dismissed.

4 – Termination Indemnity

For all the terminations decided by an employer or for any agreed termination concluded after the 25^th of September, the legal indemnity is now:

1/4 of gross salary per year of presence for the 10 first years of seniority,
1/3 of gross salary per year of presence for more than 10 years of seniority.

Moreover, the minimum seniority required is lowered, from one year to eight months continuous seniority to be able to benefit from this legal termination indemnity.

5 – Home Working

Companies who want to organize work from home (other than occasional) must implement it by a collective agreement or a company charter, specifying the eligible positions to this work mode, the working conditions, etc. If telework is refused, the employer shall explain the reasons for refusal to the employee.

On the contrary, for an occasional work from home, only the parties’ agreement is required without any formality or financial compensation.

6 – Merger of staff representatives in a unique Social and Economic Committee

Until recently, French companies have had Workers’ Representatives (“Délégués du Personnel”), Work’s Council (“Comité d’Entreprise”), Health, Safety and Working Conditions Committee (“CHSCT”) depending on the company’s workforce. Sometimes, these Committees were linked one to another or sometimes just merged.

This implied a complexity and often an obligation for the employer to officially hold several meetings on the same topic with different representatives (no matter if those meetings had the same elected members or not).

Now this is simplified: as soon as companies reach the number of 11 employees on their payroll, they have to implement an Economic and Social Committee (CSE). Its missions and resources are more or less important depending if the threshold of 50 employees is reached or not.

A Company’s agreement might as well enforce the fact that this CSE will also have the power to negotiate agreements (instead of the Unions) and will from now on be named Company Council (inspired by Germany).

7 – Larger possibilities to negotiate Company’s own rules, even if these rules do not comply with Branch Agreements

The announced revolution took place: the Company’s Collective Agreements now prevail over the branch agreements as a general rule (even if some clauses of the Branch Collective Agreements should still be respected).

A brand new occasion for employers to grab this opportunity and to adapt and customize the rules of the game for the needs of their company and their employees, renegotiating for example bonuses (seniority bonus, vacation bonus, …) or some aspects of working time.

Specific working conditions can also be negotiated if they are necessary to the well-functioning of the company.

8 – Opening of company‘s negotiations to the small companies without staff representatives

In companies with less than 50 employees, possibilities to negotiate are now on larger, to allow the managers to negotiate with staff representatives or with employees if there is no Union in the company.

An agreement can be concluded directly with the employees who approve the agreement draft by referendum, especially, in companies with less than 20 employees and without any staff representatives.

Wide possibilities are therefore now open to companies in France, no matter the size, the absence of unions, or the branch of activity, as long as they are willing to negotiate with their personnel.

This post aims at giving an overview of some key issues about labor rights in Argentina, which foreign investors should know before entering in the Argentinian market.

Minimum Salary: ARS 8,060 (ARS 40.40 per hour) or the amount established for the employee’s category in the collective bargaining agreement, whichever is higher.

Salary Reduction: No.

Profit Sharing: It is mandatory according to a constitutional clause, though it is not regulated by the labor law.

Stock Options: Not mandatory.

Integration of Benefits as part of the Salary: Unless specifically regulated by the labor law as a non- remunerative fringe benefit, its economic value is part of the remuneration and cannot be withdrawn.

13^th Salary: Yes, but there is no 14^th Salary.

Seniority Payment Fund: No.

Employment Contract: It is not required for indefinite-term contracts, but it is mandatory for special hiring alternatives (e.g.: fixed term, seasonal, internship, etc.).

Internal Labor Regulations: Yes.

Trial Period when the Employment Relationship begins: 90 days.

Employment Contract for a Stated Term: The minimum duration is of one month and the maximum of five years. It requires the existence of a just cause.

Types of Contract:

Indefinite-Term Contracts:
- Are the general rule in Argentinian Labor law.
- No need to be drafted in written form, however it is normally used and convenient.
- Subject to a trial period of three months.
Fixed-Term Contracts
- The end of the term is fixed
- Requires existence of a just cause.
- Minimum duration: One month.
- Maximum duration: Five years, severance payment upon termination when term exceeds one year.
- No trial period is applicable and must be executed in writing.
Contingent Work
- For contingent work and the end of the term is uncertain
- Requires existence of a just cause
- When an employee is hired due to a production peak or market requirements, the maximum hiring period is six months per year and 12 months every three years.

Work Day and Work Week: Eight hours and 48 hours.

Overtime Surcharge: 50% weekly days and 100% on weekends (Saturdays after 1:00 p.m.) and holidays.

Paid Weekly Rest Days and Holidays: Yes.

Annual Paid Vacations: 14, 21, 28, and 35 calendar days after one, five, 10, and 20 years of accrued seniority.

Annual Vacation Bonus: Yes. Annual paid leave: salary during vacation days is increased by 20% of its regular value.

Maternity Leave: 90 days of paid leave.

Statute of Limitations: Two years with possible extension up to three years and six months, when causes of suspension of statute of limitation term applies.

Special bars against dismissal: Employers cannot discharge workers’ council’s representatives.

Pregnant women, new mothers and newlyweds receive special severance in case of termination without just cause.

Termination: No prior authorization is required to dismiss without just cause. Execution of termination agreement and approval (“homologación”) by a labor judicial or administrative authority is advisable.

Severance:

Seniority: one month of salary per year of work or fraction exceeding three months, with limitations.
Lack of prior notice: one-half, one or two months of salary, if seniority is less than three months, more than three months and less than five years, or more than five years.
Accrued salary, proportional vacations, and proportional 13th salary.

Prior Notice of Dismissal:

15 days: during the trial period.

30 days: up to five worked years.

60 days: above five worked years.

Restrictions on hiring foreign employees: There are no limitations.

Unions: Membership in labor unions is voluntary and there may be different types of unions representing the same activity. Organization of unions requires compliance with several formalities.

Strike:

Only recognized trade unions can call for strikes.
Employees are not obliged to adhere to a strike, but if they do, they are not entitled to their wages. Employers cannot suspend employees on grounds of the strike but they can ordinarily dismiss without just cause.

Legal Strike: It is indispensable that a settlement period of no more than 15 days is observed, during which a settlement must be tried before the Labor Ministry. The settlement period may be extended for five additional days, after which – if no agreement is reached – the parties are free to start the action or agree on the voluntary extension of the settlement stage.

Illegal Strike: This occurs when:

the trade union fails to comply with the settlement procedures, or
the strike does not respond to a labor cause, or
there is strike-related violence either on or off the employer’s property.

Illegal strikes entitle employers to request employees to withdraw the strike, and eventually dismiss them with just cause. In addition, the union that called the illegal strike could be suspended or lose their official recognition.

Provision of Food: It is not mandatory: if paid, the economic value may be considered part of the remuneration.

Company Car: It is not mandatory: if the car is provided to the employee as a working tool, the economic value does not integrate the remuneration. If not, the economic value integrates the remuneration.

Housing Benefit: It is not mandatory, but if provided to the employee, the economic value integrates the remuneration.

Health Plan: It is not mandatory, as it is granted by Social Security System. Anyway, if it is provided to the employee, the economic value does not integrate the remuneration.

Life Insurance: It is not mandatory. If the employer provides additional coverage, the economic value could be deemed as part of the remuneration.

Performance Bonus/Commission: not mandatory; if granted at the employers’ sole discretion (i.e. without objective basis) it will generate an acquired right in favor of the employee. Thus, the bonus would be part of the remuneration and the average value would integrate the base to calculate severances.

Social Security Contributions / Income Tax:

The employers’ contributions are calculated over the employee’s total salary, depending on their activity and turnover amount:

27% if the employer is engaged in the provision of services or in commercial activities and the invoiced amount exceeds ARS 111,900,000.
23% for the rest of the employers.
Employees’ contributions: 17%. These contributions have a cap. No social security contributions would be due on employee’s monthly salary exceeding ARS 72.289,62.
Net salary after deducting employees’ social security contributions would be subject to income tax withholdings up to 35%.

Labor agreements: Although labor agreements are not mandatory, and employees are not obligated to visit the labor authority to sign agreements, the execution of these kinds of agreements is convenient. Such waivers and/or releases executed between employees and their employers shall be valid and enforceable only if signed before the government officials of the labor authority (i.e. Ministry of Labor) and approved by such authority.

The author of this post is Tomás García Navarro.

The change in ownership of a company, of a working place or of an autonomous production unit will not extinguish by itself the employment relationship, and the new employer will be subrogated in the labour rights and obligations and in the Social Security obligations from the previous employer.

Company Succession shall be considered to exist when the transmission affect to the economic entity which maintains his identity, understood as an organized grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.

The transferor and the transferee shall be jointly and severally liable during three years for the labour obligations born beforehand the transmission and which had not been satisfied.

The transferor and the transferee have to report to the legal representatives of the affected employees by the change in the ownership about the following:

Expected time of the transmission.
Reasons for the transmission.
Legal, economic and social consequences of the transmission to the employees.
Measures envisaged in relation to the employees.

If there are no legal representatives of the employees the transferor and the transferee shall provide that information directly to the affected employees.

Occupational risk prevention

The law 31/1995 of Prevention of risks at the workplace has the objective of promote the security and the health of the employees’ through the application of measures and the development of the necessary activities to the prevention of risks derived from work.

For that purpose, the Law establishes the general principles concerning the prevention of professional risks for the protection of the life and health.

Under Spanish law a labour contract may be suspended by the following causes:

Mutual agreement of the Parties.
The legitimate causes consigned in the contract.
Temporary incapacity of the employee.
Maternity, paternity, risk during pregnancy, risk during breastfeeding, and adoption or family placement.
Military service.
Holding a representative public charge.
Deprivation of the liberty of the employee, as long as a condemnatory sentence does not exists.
Suspension from duties without pay for disciplinary reasons.
Temporary force majeure.
For economic, technical, organizational or production causes.
Forced leave of absence.
For exercising the right to strike.
Legal closing of the company.
For decision of the employee as a consequence of gender-based violence.

The suspension of the contract exonerates the reciprocal obligations of working and remunerating the work.

Leaves

The leave can be voluntary or forced. The forced leave will give the right to return to the same workplace and to the computation of the seniority, this leave will be given cause by the designation or the election for a public charge which makes impossible to assist to the work. The readmission has to be applied on the following month since the cessation in the public charge.

The employee with seniority in the company of one year has the right to ask and have the opportunity of having the voluntary leave for a period of time between four months and five years. This right is only possible if four years since the last leave have passed.

The employees will have the right for a leave period for no more than three years to attend the care of every son.

The employee in leave will keep only a preferential right to re-entry in a vacant in the same or similar category in relation with his position.

Collective dismissals

Collective dismissal means the extinction of the contract based on economic, technical, organizational or production causes when, in a period of nineteen days, the extinctions affects at least to:

Ten employees, in companies with fewer that one hundred employees.
The ten per cent of the number of employees in companies with between one hundred and three hundred employees.
Thirty employees in companies which employ more than three hundred employees.

The collective dismissal must be preceded by a consultation period of no more than thirty days, or fifteen in case of companies with fewer than fifty employees, with the legal representatives of the employees. The consultation with the legal representatives of the employees must be, at the very least, about the possibilities of avoid or reduce the collective dismissals and attenuate its consequences through the use of accompanying social measures (e.g.: outplacement activities, training activities…).

The communication of the opening of the consultation period will start by means of a document by the employer to the legal representatives of the employees, and one copy which has to be sent to the labour authority. In this document shall be specified the following points:

The specification of the causes of the collective dismissal.
Number and professional qualification of the affected employees by the dismissal.
Number and professional qualification of the employees employed in the last year.
Period of time expected for the realization of the dismissals.
Criteria used for the designation of the affected employees by the dismissal.
Copy of the communication directed to the employees or their representatives.
Representatives of the employees who will be part of the negotiating committee.

The communication to the legal representatives of the employees and to the labour authority shall be accompanied with an Explanatory Memorandum about the causes of the collective dismissal and the other aspects indicated in the previous paragraph, and also the financial and accounts documentation and the technical dossier.

During the consultation period, the Parties shall negotiate with good faith, aiming to reach an agreement.

That agreement shall require the approval of the majority of the legal representative of the employees or, where appropriate, the majority of the members of the representative commission of the employees.

The termination of the consultation period can finish with an agreement or without agreement; if it finishes with an agreement a Deed of Agreement has to be drafted, or a Deed of Final Decision in case no agreement can be reached. After the consultation period, the result of the communication period has to be communicated to the labour authority and to the employees individually. In case of objection, this can be individually or collective.

Termination of the contract due to objective causes

The employment contract may be terminated for the following causes:

For known or for subsequent ineptitude of the employee after his effective placement in the company.
Because a lack of adaptation of the employee to the technical modifications operated in his works placement, if those changes are reasonable. First, the employer shall offer to the employee a guided course to facilitate the adaptation.
When any of the causes of the collective dismissal concurs and it affect to less than the thresholds established for the collective dismissals.
For non-attendance faults to the work, even if justified but intermittent, which are more than the twenty per cent of the working days in two consecutive months, as long as the total of non-attendance faults in the last twelve months exceed the five per cent of the working days, or the twenty five per cent in four discontinuous months.
The absences caused by legal strike, exercise of legal representation activities, accident at work, maternity, risk during pregnancy or breastfeeding shall not be count as non-attendance faults to the work, nor if the absences obey to a medical treatment of cancer or serious illness.

Form and effects of the extinction due to objective causes

The adoption of an extinguishment agreement demands the following requisites:

Written communication to the employee explaining the cause.
Make available to the employee, at the same time of giving the written document, the compensation of twenty days per worked year, prorating as months the periods of time less than a year and with the maximum of twelve monthly pays.
Fifty days prior notice of the termination of the contract, to commence from the moment of the official notification to the employee, until the end of the contract.

During the period of notice, the employee shall have the right of 6 hours per week licence to look for a work.

Against the termination decision the employee is able to appeal in the same way as with a disciplinary dismissal.

If the decision is based in reasons of the types of discrimination forbidden by the Constitution or by the Law, or it is made with violation of the fundamental rights and civil liberties, the termination decision will be null and void.

It will be also null the termination decision in the next situations:

Employees when their contracts are under suspension caused by maternity, risk during pregnancy, risk during breastfeeding, adoption or family placement…
To the pregnant employees, from the beginning of the pregnancy until the start of the period of suspension.
Employees after the return from the situations mentioned in paragraph a) if there has not passed nine month since the date of birth or date of the family placement.

The qualification by the judicial authority as null, fair or unfair dismissal of the same will produce the same effects than in case of disciplinary dismissal with the following modifications:

In case of fair dismissal, the employee shall be entitled for a compensation of 20 days per worked year, prorating as months the periods of time less than a year and with the with the maximum of twelve monthly pays.
In case of unfair dismissal, if the employer proceeds to readmit the employee, the employee has to reintegrate the perceived compensation and corresponding procedural salary. In case of substitution of the readmitting for financial compensation, the amount of that compensation will be deduced from this compensation.

Disciplinary dismissal

The contract can be terminated by decision of the employer, through a dismissal based on serious and negligent breach of duty by the employee.

Shall be regarded as contractual breaches:

Repeated an unjustified absenteeism.
The indiscipline or disobedience at work.
Verbal or physical offences to the employer, or other employees of the company, or relatives who live with them.
The breach of the contractual good faith, as well as the breach of trust in the course of the work.
The voluntary and continuous decline on working output.
Habitual drug or alcohol abuse which adversely affects to the work performance.
The harassment based on racial or ethnic origin, religion or convictions, disability, age or sexual orientation or sexual harassment.

Form and effects of the extinction due to disciplinary effects

The dismissal must be notified in writing, with an explanation of the causes and the date when it takes effect.

If the employee is a legal representative of the employees or a trade union representative will proceed to open a contradictory dossier, in this will be heard, besides the interested employee, the other members of the representation.

If the employee is a labour union member and the employee knows it, has to give prior hearing to the union representatives.

If the dismissal is done not respecting these requirements, the employer can make a new dismissal with all of the necessary requirements omitted in the previous. This new dismissal, will only be effective since its date of execution, and can only be done within the term of twenty days since the first dismissal.

The dismissal will be qualified as fair, unfair or null.

The dismissal shall be fair when the breach is accepted by the employer. It will be unfair in the opposite case or if its form is not adjusted to the Law.

It will be null in case the dismissal has been done by causes of discrimination prohibited in the Constitution or in the Law, or when is done with a violation of the fundamental rights or the public liberties of the employee.

It will be also null and void the dismissal in the following causes:

The employees who have their contracts under suspension caused by maternity, risk during pregnancy, risk during breastfeeding, adoption or family placement…
To the pregnant employees, from the beginning of the pregnancy until the start of the period of suspension.
Employees after the return from the situations mentioned in paragraph a) if there has not passed nine month since the date of birth or date of the family placement.

The previous specifications will be also null, except if the dismissal is qualified as fair by reasons which are not related with the pregnancy or the exercise of the rights to leaves or other licenses pointed.

The effect of the null dismissal is the automatic reinstatement of the employee, with the payment of the salaries they did not receive since the date of dismissal to the declaration of null dismissal.

The fair dismissal may validate the extinction of the work contract, without the right of compensation and nor procedural salaries.

Unfair dismissal

If the dismissal is qualified as unfair, the employer, within five days since the notification of the sentence, may elect between the reinstatement of the employee or to pay an indemnity equal to thirty-three days of salary per worked year, prorating as months the periods of time less than a year and with the maximum of twenty-four monthly pays.

If the employer chooses the reinstatement, the employee has the right to obtain the procedural salaries.

If the employer does not choose between the reinstatement and the compensation, it is understood that he choose the first.

If the dismissed employee is a legal representative of the employees or a trade union representative, the option will always correspond to him. If he does not choose between reinstatement and compensation, it is understood that he choose the reinstatement, and he will have right to receive the procedural salaries.

Legal representation of the employees

The employees have the right to participate in the Company through the representative bodies. There are two different representative bodies, which are the Personnel Delegates and the Works Council.

Personnel Delegates

The representation of the employees in a company or in a workplace which has less than 50 and more than 10 employees correspond to the Delegates. The employees shall elect through free, personnel, secret and direct suffrage the personnel delegates depending on the number of employees, 1 delegate if are 30 or less employees, and two personnel delegates if the company has more than 31, till 50 employees.

The personnel delegates will exercise together before the employer the representation of the employees, and the will have the same conditions established for the works council.

Works Council

The works council is the representative and collegiate body of the employees in the company or workplace, its function is to defend the interests of the employees, in every workplace where the census is more than 50 employees.

The company which has in the same community two or more workplaces or in the bordering communities and their census are less than 50 individually but more than 50 employees in the whole workplaces will have a works council for all of the centers. And if there are one with more than 50 employees and more with less, the first will have one works council and in the others will constitute other.

Information and consultation rights

The works council will have the right of being informed and consulted by the employer about those questions that can affect to the employees, and also about the situation of the company and the evolution of the employment in the same.

The works council has the right of being informed quarterly:

About the general evolution of the economic area of the company.
About the economic situation of the company.
About the forecast of the employer to celebrate new contracts.
About the statistics regarding the index of absenteeism and the causes, the accidents at work, occupational illnesses and its consequences.

The works council will also have the right of receive information, at least annually, related with the implementation in the company the right of equal treatment and opportunities among men and women.

The works council will have the right to obtain the following documents:

The balance, the P&L account, the memory and, other relevant documents.
The model of the contracts which are used in the company and the documents related with the dismissals.
The severe sanctions targeted.

The works council will have the right of being informed about the situation and structure of the employments in the company or work place, and about the evolution of the same.

The number of the members in the works council will be depending on the number of employees in the company, and will be:

From 50 to 100 employees, five.
From 101 to 250, nine.
From 251 to 500, thirteen
From 501 to 750, seventeen.
From 751 to 100, twenty-one.
More than 1000, two per each thousand, with the maximum of seventy-five.

The works council will choose between their members one president and a secretary, and the will elaborate their own procedural regulation, which cannot contravene the Law.

Substantial changes in working conditions

The business management may agree substantial modifications in the working conditions if there exists real economic, technique, organizational, or production reasons. They shall be consider related with the competitiveness productivity or technique organization or work in the company.

The modification in the next causes will be considered as substantial change in working conditions:

Working day.
Timetable and working time arrangements.
Scheduled working hours.
Compensation package and the amount of salary.
Functions, if exceed the limits from article 93 of the Works Statute.

The Substantial changes in the working conditions could affect to the recognized conditions to the employees in the work contract, agreements or collective agreements.

It is consider as collective character the modification that, in a period of 90 days, affect at least to:

Ten employees, on companies with fewer 100 employees.
The ten percent of the number of employees in the company in the companies which have more than one hundred and less than three hundred.
Thirteen employees, in the companies of more than three hundred employees,

The decision to change the working conditions individually shall be notified by the employer to the affected employee and his/her legal representatives no later than fifteen days before effective date.

If the Substantial change in working conditions has a collective character, this decision has to be preceded by a consultation period of no more than fifteen days.

Giovanni Bertola

Practice areas

Labor
Contracts
Insolvency
Intellectual property
Litigation

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