With the publication of the Royal Decree-Law 3/2012 of 10 February and its validation by the entry into force of the Law 3/2012 of 6 July the Spanish legislator significantly modified several basic labour institutions, such as collective negotiation, collective dismissals and internal restructuring measures (the "Labour Reform").

As a consequence of this extensive reform, certain public agents of the labour market - mainly trade unions and some judges of the labour courts - have been applying the modifications introduced by the Labour Reform restrictively.

The reasons for such restrictive application of the Labour Reform were: (i) opening of a judicial procedure before the Spanish Constitutional Court regarding the constitutionality of certain sections of the Law 3/2012 6 of July; and (ii) the reluctance of applying the said law literally, which could result in diminishing the basic labour conditions established so far under the previous regulations.

1. Ruling of the Spanish Constitutional Court, dated on 22 January 2015 concerning the constitutionality of certain sections of the Labour Reform.

This recent ruling of the Constitutional Court resolves several questions regarding the constitutionality of the following most relevant modifications implemented by the Labour Reform in collective negotiation and internal restructuring matters:

  • According to the provisions introduced by the Labour Reform a specific procedure would have to be followed to exclude the application of the conditions established under a collective bargaining agreement applicable to a company.  Such procedure establishes that, in the absence of an agreement with the worker's legal representatives, the company's proposal would be subject to the decision of the National Consulting Commission of Collective Agreements.  The mentioned Commission consists of members of (i) the most relevant trade unions nationwide; (ii) the most relevant employers' associations; and (iii) the public employment authority. Therefore, in case of disagreement between the trade unions and the employers' associations, the public employment authority would have the final say in a matter in which it did not participate as a signatory party.  The Court confirmed the constitutionality of such a procedure including the intervention of and decision-making by a third non-signatory party in order to avoid negative effects on the viability of the company and the stability of employment that could otherwise result from the signatory parties not being able to reach an agreement.   
  • The Labour Reform also introduced a measure allowing for greater flexibility in the application of the conditions under collective bargaining agreements whereby certain conditions of collective bargaining agreements at company level would apply in priority to the ones of sector-specific collective bargaining agreements.  The Constitutional Court has also confirmed the constitutionality of the said measure in light of the consideration that this will prevent an extensive use of collective dismissals as an alternative to adapting employment conditions to the needs of a company

2. Ruling of the Supreme Court, dated 22 December 2014, concerning the interpretation of the extension ("ultraactivitidad") of collective bargaining agreements.

Section 86.3 of the Worker's Statute, in accordance with the wording given by Law 3/2012 of 6 July establishes that if a collective bargaining agreement ceases to be in force, it would only be enforceable for one more year unless otherwise agreed in the collective bargaining agreement.

The literal interpretation of this provision would mean that in a case where there are no other applicable collective bargaining agreements, the only applicable employment conditions would be the minimum standards established in the Worker's Statute.

This in turn would have significant effects on, among others, the minimum salary, the disciplinary powers of the company, the working hours, the distribution of working time, etc.

In the mentioned ruling, the Supreme Court has confirmed a recent judicial interpretation of Section 86.3 of the Worker's Statute, limiting the effects that would otherwise result from the literal application of this section.

According to the Supreme Court ruling, on the date of expiration of a collective bargaining agreement, the conditions of the expired collective bargaining agreement would be automatically incorporated into the individual employment agreements of the employees who are at that time employed by the company.

Consequently, the new employees hired after the expiration of a collective bargaining agreement would not benefit from the incorporation of such conditions into their employment agreements, and therefore, only the minimum legal conditions established by the Worker's Statute would apply.