In the judgement dated 14th September 2016, the Court of Justice of the European Union (ECJ) has answered the preliminary questions raised by the High Court of Justice of Madrid pursuant to the ruling of 9th December 2014, the purpose of which was to clarify, broadly speaking, whether Community legislation is contrary to the provisions of the Worker’s Statute regarding severance pay in cases of fixed-term contracts.

– At Community level, clause 4 of the Framework Agreement on fixed-term work of 18th March 1999, annex to Directive 1999/70/CE (hereinafter referred to as the “Framework Agreement”, sets forth that “In respect of employment conditions, fixed-term workers shall not be treated in a less favourable manner than comparable permanent workers solely because they have a fixed-term contract or relation unless different treatment is justified on objective grounds”.

– Although at national level, the Worker’s Statute establishes different types of severance pay, depending on the type of contract, which may fall into 3 main categories:

(i) Permanent contracts: severance pay of 20 days salary per year worked.

(ii) Temporary contracts: severance pay of 12 days salary per year worked.

(iii) Training contracts: no severance pay.

In light of the apparent contradiction between community regulations and Spanish employment legislation, the High Court of Justice of Madrid decided to address the following prejudicial question with the ECJ:

  1. First of all, whether the concept of “working conditions” as per clause 4 of the Framework Agreement includes severance pay which the employer is obliged to pay an employee upon the termination of the employment contract; and
  1. Secondly, and in the case that the answer to the previous question is affirmative, whether it should be interpreted that the Community regulation is opposed to Spanish law establishing different severance pay clauses in accordance with the type of contract in question.

The response of the ECJ was affirmative in relation to both questions.

In this way, the ECJ declared that the Spanish regulations are contrary to European regulations, paving the way for employees with temporary contracts being able to claim severance pay upon the termination of the employment relationship, similar to that established by law for employees with permanent contracts.

 

Ismael Marina Schneider

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

4th November 2016