The Labor Reform entered into force on 12 February 2012 ("Labor Reform"), introduced substantial changes to Spanish employment regulations. One of the most important amendments concerns the enforceability of a denounced Collective Bargaining Agreement ("CBA"). Until the Labor Reform entered into force, according to the Workers' Statute, when the negotiating parties of a denounced CBA did not reach an agreement, the CBA remained in force indefinitely once the negotiation period ended. In this sense, the Workers' Statute stated that the CBA remained in force during the ultra activity until a new CBA was negotiated. As this provision was contained in the Workers' Statute, it was transcribed to several CBAs.
However, the referred Labor Reform eliminated this indefinite enforceability and a new ultra activity period limited to one year was established. Therefore, after this one year limitation, the CBAs, in principle, would lose their effect. The only exception to the limitation of one year of ultra activity, was to reach an agreement between the parties extending the referred ultra activity. However, the Labor Reform did not explain how such an agreement would be reached.
Thus, the impact of the Labor Reform was expected to be far-reaching, as the consequences of the CBA's enforceability being eliminated after one year of their denouncement meant that the CBA would lose its effects, and, in lack of a superior CBA, the Worker's Statute would apply to the employees' employment relationship. The latter only recognizes the basic rights of the employees, leaving out all the improved conditions specific to collective bargaining.
Notwithstanding the above, the High Courts have been reluctant to apply the Labor Reform and have found the slightest reason for justifying the maintenance of the enforceability of a denounced CBA, even though one year had elapsed. In this regard, it is important to recall that most of the CBAs published before the Labor Reform, contained the wording of the Worker's Statute before the Labor Reform which, as indicated above, stated that the CBA remained indefinitely enforceable during the ultra activity until a new CBA was negotiated. Although it can be interpreted that this wording was stated by the CBAs just in order to transcribe the Worker's Statue Act, and that it must not be taken into consideration since the Labor Reform entered into force, almost all the rulings until recently by the High Court (e.g. High Court of Galicia of 12 December 2013) have interpreted that this wording cannot be considered as a transcription of the wording of the Workers Statute but, instead, a voluntary agreement of the parties to maintain the CBA in force.
Therefore, according to the rulings, although a CBA has been denounced for more than one year, if it includes the wording from the former Workers' Statute, then it must remain in force until a new CBA is negotiated. Therefore, the transcription of the provision of the former Worker's Statute in the CBA is sufficient to indicate that the parties wished to indefinitely extend the ultra activity.
Another example of the restrictive interpretation of the Courts with regard to CBAs ceasing to be in force is found in a ruling of the High Court of Catalonia dated 20 March 2014, in which the CBA contained a phrase stating that it would remain in force after being denounced as long as the parties were negotiating a new CBA. After more than two years of negotiations, the parties did not reach an agreement. Company representatives then sent a communication to the unions stating that the negotiations had been broken. In the communication the company representatives also indicated that according to the Labor Reform, the CBA was no longer in force. However, the High Court of Catalonia stated that (i) the Labor Reform only applied when the parties did not agree that the CBA must remain in force and, (ii) as the CBA stated that it should remain in force during the time the parties were negotiating, it could not be considered that a certain period of time without negotiations meant that parties were not negotiating, and therefore, the CBA should remain in force.
According to the examples provided, it is clear that the High Courts are not favorable to a broad interpretation of the Labor Reform and, in practice, have given advantage to the renegotiations of the CBAs in order to maintain their provisions, as they are the main instrument in Spain governing employees' labor rights.