Among the aspects regulated in Article 41 of the Spanish Labour Relations Act (“ET”) on significant changes in working conditions are the remuneration system and the amount of the salary.
For such purpose, eliminating or reducing a salary supplement, even more so when it consists of a reduction to half the amount planned in an undefined manner, as occurs in this case, is certainly a change that must be carried out by virtue of Article 41 of the ET. Moreover, the term for challenging this change would therefore be 20 days, counted from when the company notified the worker of its decision.
However, in this case, such term is not applicable because the Supreme Court sustained that it was not a significant change in working conditions but a breach of contract by the company related to salary aspects.
In order to understand this matter better, we analyse the case in detail below:
What happened in this specific case?
A teacher of a cooperative had received a bonus in her salary for years but, when a new company that was awarded the service took it over in 2009, the bonus she had been receiving was reduced to half the amount.
It was not until 9 years later that such employee claimed the salary differences and various questions were raised in this respect.
Did the company make a significant change in her working conditions? Therefore, has the statute of limitations expired in order to claim the right to this supplement? Has the reduction to half the amount of this salary supplement been consolidated due to the lack of action by the worker for 9 years?
The High Court of Justice deemed that the reduction of the remunerative supplement to half the amount implied a significant change in the employee’s working conditions (Article 41.1 c) of the ET) and, due to the long period of time that had elapsed since such reduction took place, around 9 years, with no record of any claim in this respect having been filed by the worker, implied tacit acceptance of such change and that it has been permanently included in the contract.
Therefore, the worker had no right to be paid the aforementioned supplement or to claim the salary differences due to not having challenged the modifying decision within the legally stipulated term.
In this respect, after the High Court of Justice revoked the judgement ruled by the lower court in her favour, the worker appealed to the Supreme Court (cassation) claiming infringement of Article 41.1 d) of the ET, related to Article 59 of the ET.
What was the Supreme Court’s judgement?
The Supreme Court deemed that the company had not made a significant change to the employee’s working conditions, according to Article 41 of the ET, for the following reasons:
- The company did not apply the procedure mentioned in Article 41 of the ET nor did it allege any of the reasons to allow that.
- The company did not notify the worker of its decision, which is compulsory according to Article 41 of the ET, nor did it inform her of the legal consequences: The possibility to terminate the contract with severance pay or to challenge the decision.
- At the time the supplement was reduced, the change in salary was not regulated in the aforementioned legal provision.
Therefore, the conclusion reached by the Supreme Court was that this reduction in the supplement was simply a breach of contract by the company related to salary aspects that violated the worker’s right to receive the agreed remuneration according to Article 4.2.f) of the ET.
In this respect, salary obligations have a successive course and, as such, the action remains possible while this continues in force; hence the right to payment of the supplement does not expire. However, the right to claim the amounts payable and not received or demanded does indeed expire, which is governed by the general statute of limitation of one year.
Therefore, the claim for salary differences for the last year worked by the employee was admitted.
The grounds offered by the Supreme Court for its ruling that there was no significant change in working conditions were not correct.
There is a great deal of case law that deems there is a change in an employee’s working conditions even if the company has not applied the legally stipulated procedure in Article 41 of the ET.
Similarly, even if the change in salary is not regulated in the aforementioned provision, the reduction of the supplement to half the amount can be perfectly well understood as such because a significant change was made to her salary and also bearing in mind that the list in Article 41 of the ET is not numerus clausus, in my opinion, the justification of the Supreme Court to deny that a change has been made according to Article 41 of the ET is inadmissible.
Please do not hesitate to contact me if you have made any change to your workers’ salaries and have doubts about the application of this judgement or the practical impact it could have on your company. Judicial judgements are not always applicable in the same way to all cases and the special features of each case must be assessed in order to find the most suitable solution.