Judgment of the Porto Court of Appeal of 2015-11-16 - Termination of overtime remuneration – Principle of the irreducible nature of remuneration

In the present case, in which the employee was no longer working overtime, the Court analysed whether the termination of the corresponding payment for overtime by the employer was in breach of the principle of the irreducible nature of remuneration.

According to the Court, the principle of the irreducible nature of remuneration does not prohibit termination of the payment of all and every sum of remunerative nature. The Court pointed out that the said principle is based on the assumption that employees are economically dependent on their salaries, in view of the fact that in most cases such remuneration is their only source of income.

Hence, considering the reasoning of the referred principle, the Court underscored that both doctrine and case law unanimously consider that the principle does not apply to remuneration in its entirety, but only to remuneration in the narrow sense – upon which the employee is presumed to be economically dependent – and therefore, does not encompass the amounts pertaining to overtime, nor, for example, the remuneration for working-time exemption or shift work.

Accordingly, the Court ruled that the employer was not in breach of the principle of the irreducible nature of remuneration by terminating the overtime remuneration as the aftermath of the employee having ceased to work overtime, even though such overtime work was of remunerative nature considering the regularity and periodicity of the respective payment.

Judgment of the Court of Justice of the European Union of 2015-11-11 – Concept of redundancy within the meaning of the Collective Redundancies Directive

A Spanish court submitted a reference for a preliminary ruling requesting the Court of Justice of the European Union (“CJEU”)'s opinion on the scope of the concept of redundancy within the meaning of the collective redundancies directive, in particular, if termination of an employment contract  by mutual agreement, following an employee's refusal  to accept unilaterally-decided detrimental amendments to core contractual conditions, was tantamount to redundancy within the meaning of the collective redundancies directive.

The CJEU was of the opinion that the termination of the employment relationship by mutual agreement in the present case stemmed from unilaterally-decided changes made by the employer to a key condition of the employment contract, for reasons not related to the individual employee – specifically a 25% cut in the said employee's remuneration – and that, as this was the root cause of the termination of the employment relationship, it was encompassed by the concept of redundancy within the meaning given by the directive.

Furthermore, the CJEU underlined the fact that any other interpretation would render the directive ineffective and recalled that the concept of redundancy cannot be subject to restrictive interpretations, since the directive's purpose is to strengthen the protection of employees when a collective redundancy occurs.