Comments to the provisional conclusions of the Experts Committee on the effects of the European case-law regarding interim employment contracts and clarifications about social security contributions related to work accidents while performing office tasks

The decision of the Court of Justice of the European Union of 14 September 2016 was analysed by an Experts Committee appointed by the Spanish Government, which reached some relevant provisional conclusions. On a different note, it is convenient to explore the practical effects of the modification of the term “office tasks” for the purpose of social security contributions related to work accidents. 

Provisional conclusions of the Experts Committee on the decision of the European Court of Justice of 14 September 2016

As it was announced in our Newsletter issued in December 2016, in October 2016 the Ministry of Employment and Social Security appointed an Experts Committee (the “Committee“) to analyse the effects of the decision of the European Court of Justice dated 14 September 2016 (the “Decision“).

The Committee, whose members included two representative trade unions and representatives of some business organizations, met in several occasions to discuss and try to clarify the implications of the Decision. They concluded that it is not possible to give a final opinion about the consequences of the Decision because of the inconsistencies therein. Specifically, the Committee’s report dated 10 February 2017 rejects the comparison established in the Decision between the grounds for termination established for interim employment contracts and the objective grounds for termination of employment contracts.

In order to fully understand this statement, it is necessary to keep in mind that the interim contract may be terminated by lapse of time or loss of purpose, that is to say, the substitution of an employee with job security and the filling of a vacancy while the selection process is being carried out, and that there is no legal provision establishing a severance payment for this type of contracts unlike other fixed term employment contracts (i.e.: temporary contract due to production overload and contracts for a specific job or service), which have legal compensation of 12 days per year worked.

Dismissals based on objective grounds can be justified on business reasons which can be economical, productive, technical or organizational or because of circumstances linked to the employee when those circumstances are not related to disciplinary cases, which may involve, among others, cases of ineptitude or lack of adaptation of the employee to a job post. Dismissal based on objective grounds can affect fixed term or permanent contracts and the affected employees are entitled to a legal severance payment of 20 days’ salary up to 12 months’ salary.

The Committee considers that equalizing the grounds for termination provided for in the interim contract and the objective grounds for termination is a flaw of the Decision, which prevents an analysis of its conclusion according to which termination of interim contracts had to be compensated.

Likewise, the report also stated that the vagueness of the Decision had caused a severe discrepancy in the Committee regarding the economic compensation to which the interim contracts should be entitled. In particular, some members of the Committee defended that interim contracts should be compensated with the legal severance payment for objective dismissals; while other members considered that the applicable compensation foreseen for termination of temporary employment contracts should be the one to be applied.

The lack of certainty of the Decision, the impossibility to reach an agreement regarding the economic compensation, and the questions for preliminary rulings raised to the European Court of Justice requesting a clarification of its Decision made the Committee consider that issuing a final position about the effects of the Decision at this stage would go against the principle of legal certainty.

Notwithstanding the above, the Committee reached an agreement regarding the unfeasibility of the “single contract” without giving further explanations for its reasoning. Furthermore, the members of the Committee stated that it is necessary to reform the legal framework of interim contracts to limit its term and avoid the succession of this type of contracts caused by its excessive use.

Interpreting  the social security’s criteria for applying the work accident contribution section when performing office tasks

The National Budget Law for 2016 allowed the clarification of the cases in which the work accident contribution section for office tasks was applicable, in order to gain greater certainty on the Labour Inspectorate’s interventions.

In particular, the National Budget Law for 2016 established that the office task section should include those employees who render office tasks in working areas exclusively reserved for offices purposes, provided that the employees are exclusively assigned to those functions.

According to such provision, the exclusive dedication to office tasks in the terms explained above prevails over the activity of the company when determining the work accident contribution section. Therefore, even if they are similar, the work accident contribution section for office tasks would have to be applied, allowing contributions at a 1% rate for work related accidents.

Notwithstanding the above, the campaign of the Labour Inspectorate regarding the work accident contribution section has given rise to different controversies in connection with the interpretation of the terms provided in the National Budget Law for 2016, mostly because the campaigns of the Inspectorate can review the last four contribution years and the 2016 modification had no retroactive effects. We will still have to wait three more years for the modification to have full effects, since the Inspectorate can still interpret, for the periods previous to the modification, that the company’s activity prevails over the office tasks when there exists no complete separation between the tasks performed and the company’s activity.

In addition, in those cases where, during an inspection of the Labour Inspectorate, the tasks effectively performed by the personnel of “office tasks” are not completely proven, the Labour Inspectorate has established the existence of differences between the contributions that were paid at the rate corresponding to office tasks instead of the rate applicable to the company’s activity.

It can therefore be concluded that the modification of the National Budget Law for 2016 has not led to a complete suppression of the previous criteria, which allowed the application of the work accident contribution section corresponding to the company’s main activity for the years previous to 2016. Moreover, after the modification introduced in 2016, the exclusive assignment of the employees to office tasks in the relevant office spaces needs to be justified so that the work accident contribution section for “office tasks” is applied.