A fresh blow to legal certainty

Spain - 

Spain - Labor and Employment Law

Federico Durán López, of counsel at Garrigues Labor and Employment Law Department.

The repeal of the own-initiative proceeding initiated with the labor courts and related to procedures for the characterization (or otherwise) for employment purposes of certain contractual relationships, which entailed a suspension of administrative proceedings, is a hard blow to legal certainty.

Law 3/2023 of February 28, 2023, on Employment, removes (in final provision nine) letter d) of article 148 of the Labor Jurisdiction Law (LJS), (although, under transitional provision five, the own-initiative proceeding envisaged in that letter will remain applicable in relation to claims that were admitted before the entry into force of the Employment Law, that is, before March 2, 2023). This reform has gone largely unnoticed but has important consequences.

Firstly, it reproduces a few of the ills that have recently beset the Spanish legislative process: a major reform has been included, cloaked in disguise almost, in an additional provision of a law that bears absolutely no relation to the content or purpose of the reformed provisions. This has contributed, even though the Employment Law is related to the field of labor and employment law, to the dispersion process of the legislation on employment relationships, which has experienced very important amendments included in laws with subject-matters that have little or nothing to do with those relationships (a whole host of laws could be mentioned on this subject. Recently, Organic Law 1/2023, of February 28, 2023, amending Organic Law 2/2010, on sexual and reproductive health and voluntary termination of pregnancy; Law 2/2023, of February 20, 20223, on the protection of people who report breaches of the law and on combating corruption; and Law 4/2023 of February 28, 2023 for real and actual equality of transgender people and to guarantee the rights of LGBTI people. This trend has been retained for bills under consideration, such as the preliminary bill for the Families Law and the Bill for a Sustainable Mobility Law). Extensive and confusing legislation has been the result, which is a source of legal uncertainty and prevents the existence of the necessary unified vision to undertake reforms of labor and employment law.

Plus, secondly, the amendment of the Labor Jurisdiction Law occurred without the necessary debate between government, employer and employee representatives and the formal participation of the consultative bodies (the preamble to the law makes a general reference to the fact that “the autonomous community governments, the employer organizations and the most representative union organizations were informed”). Note the use of the expression “were informed”, which clearly expresses the absence of dialog between government, employer and employee representatives, which has been replaced apparently by a “public consultation hearing and public information” period, for “affected citizens” to “participate and be heard”. The legislative process and the process for creating legislation have therefore been weakened.

And, thirdly and most importantly, the removal of the own-initiative proceeding for the labor courts to characterize as employment or otherwise certain types of contractual relationships, the termination of which is binding for both the public authorities and the judicial review courts, strengthens the powers of public authorities and very considerably reduces the legal protection of citizens. A discrepancy over the employment nature or otherwise of the relationships at issue will now have to be submitted only in the administrative jurisdiction, and subsequently, to the judicial review courts by reason of a challenge of any notices of settlement (and infringement) that may have been issued. The prior pronouncement by the labor court has been removed, a body which, by reason of its expertise and in the interests of procedural efficiency, is much more appropriate, and, definitely, much more adequate from the standpoint of legal certainty.

This last point is made more serious by the provisions of Organic Law 14/2022 of December 22, 2022 on the transposition of European directives and other provisions for adapting criminal legislation to European Union legislation, and to reform offenses against moral integrity, public disorder and arms smuggling. The new point 2 added to article 311 of the Criminal Code introduced by this law defines as a criminal offense the acts of persons who “impose illegal terms and conditions on their workers by hiring them under mechanisms other than an employment contract”. Separately from the criticisms already made of this definition in our earlier newsletter, it must be taken into account that criminal censure is being used to punish the avoidance of employment contracts in relation to provisions of services. Obviously, there may be other legal instruments, aside from the employment contract, which are able to be used to enter into a specific service. The acceptability of using those legal instruments, protected by free will and freedom of contract, may be questioned by the public authorities, which, if they consider that the contracts are really employment relationships, may issue the necessary notices of settlement and infringement. The removal of the prior pronouncement as to the employment nature or otherwise of the relationship by the labor courts takes away legal certainty and opens up a dangerous field of ambiguity for criminal action, especially since article 311.2 of the Criminal Code expressly includes cases in which the legal terms and conditions (under mechanisms other than an employment contract) are “retained against an administrative request or penalty”. A discrepancy over a characterization of the contractual relationship made by the public authorities, and which serves as a basis for their requests and penalties, has now been entrusted for resolution to the judicial review courts, which are far from experts in labor matters and will presumably be more inclined, therefore, towards accepting characterizations by public authorities. It is rare for coincidences to exist in these cases, and almost simultaneous reforms of the Criminal Code and the Labor Jurisdiction Law were doubtless made for the same purpose of strengthening the powers of the public authorities and limiting the legal protections of citizens, employers in this case, who are going to encounter much greater difficulty if they have a discrepancy with the public authorities and are going to run much greater risks in those discrepancies.