LABOR LAW

Constitutional Court backs three aspects of labor reform

Judges approve reduction of severance payments in cases of unfair dismissal

The Constitutional Court has backed three aspects of the controversial labor reform introduced by the conservative Popular Party of Prime Minister Mariano Rajoy two years after it came into existence. In a seven-to-four vote, the magistrates said the government was right to pass the legislation in the form of a royal decree. It had ruled that two previous reforms introduced in 2002 and 2007 in the form of a decree breached the Constitution, requiring them to be made into laws.

The magistrates also approved the de facto removal of so-called “proceedings wages,” a system whereby a worker was entitled to the wages he would have received during the period between his sacking and a judge ruling that the worker in question had been unfairly sacked.

The court also gave its backing to the reduction of severance pay in the event of unfair dismissal from 45 days per year in service up to a maximum of 42 months to 33 days per year and a maximum of 24 months. Workers unfairly dismissed after the introduction of the labor reform in February 2012 are entitled to the previous severance terms for the years they worked prior to the reform.

This is the first time the Constitutional Court has ruled on the reform, having rejected previous appeals against it on technical grounds. The court has yet to rule on other more controversial aspects of the reform such as in the introduction of a one-year trial contract under which a worker can be dismissed at the end of term without any compensation.

The European Commission and the IMF have been pushing the government to take the reform even further in order to tackle persistently high unemployment in Spain in times of crisis. The jobless rate currently stands at 26 percent. However, Labor Minister Fátima Báñez has ruled out another major overhaul of the current legislation.

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