International employment law news

No work permit – no benefits, rules Spanish Court

The Labour Chamber of the Spanish Supreme Court has ruled that foreign workers who do not have valid work and residence permits are not entitled to receive unemployment benefits.

The court said there is nothing in Spanish or international law that entitles foreigners who do not have the right documentation to claim benefits, even if they have previously been working in Spain.

Some Spanish commentators have said that this decision contradicts a 2003 decision of the same court, which ruled that a Columbian employee who had suffered an accident at work was entitled to claim social security benefits, even though he did not have a work and residence permit.

Spanish attempts to encourage foreign workers to repatriate are proving unsuccessful. Last year, the government introduced financial incentives for foreign workers to leave Spain, but few have taken up the offer in return for a promise not to return to Spain for at least three years.

Spain currently has one of the highest unemployment rates in Europe, hitting 13.9% in the last quarter of 2008. The Spanish Government expects it to peak at 15.9%, but the European Union has said it could go as high as 19%.

Italian reforms cut collective agreement terms

On 22 January 2009 the Italian Government entered into a new national collective bargaining agreement with employer and union representatives, replacing the current tri-partite arrangements that had been in place since 1993. The new agreement was entered into in response to calls for greater flexibility in light of the current economic crisis.

It will cover all businesses, except for the banking sector which has refused to sign it. One of the major Italian unions (CGIL) has also refused to sign the agreement, citing concerns that it will undermine workers’ rights.

The new arrangements will change the duration of collective agreements. Currently the non-pay provisions of agreements are valid for four years and the pay provisions are valid for three years. Going forward both pay and non-pay provisions will be valid for three years.

There will also be new arrangements governing how wage levels are set. Currently, industry-wide agreements set out basic minimum rates and provide for general pay increases, while company-level agreements provide for additional increases linked to company performance. The government wants a greater role for company-level agreements. It has, therefore, been agreed that wage increases will be mainly linked to increases in labour productivity as per any rules set out in a company-level agreement.

The index used for measuring inflation and thus calculating wage increases will also change. In future the parties will use the Eurostat index instead of the national consumer prices index.

UK won’t sign Illegal Workers’ Directive

On 4 February the European Parliament debated a directive proposing tough new measures against employers of illegal immigrants. Guilty employers could be fined, forced to pay wages in arrears or banned from bidding for public sector contracts or receiving state aid for up to five years (whether national or European). In the most serious cases criminal sanctions could also be imposed.

Third parties such as voluntary bodies or trade unions will be allowed to report employers without the risk of being prosecuted for helping someone stay in the country illegally. If the guilty employer is a subcontractor, the contracting firm could also be held liable if it knew they were acting illegally.

The good news for UK employers is that the UK is not obliged to sign up to the directive when it comes into force. The government’s position to date has been that, while it supports the general purpose of the directive, it does not believe the EU has the authority to impose the criminal sanctions it envisages and is therefore not opting in.

If approved, member states will have two years within which to implement the directive

Belgium places curbs on executive pay

The Belgian Government plans to introduce legislation that will restrict payments to departing executives of listed companies. The changes are being introduced in response to a public outcry over the level of recent payments made to senior executives.

On termination executives will be entitled to a maximum payment of 18 months’ salary. These provisions are proving controversial as they are intended to override existing contractual rights that may be more generous.

The new legislation, if enacted, will also require listed companies to set up remuneration committees for the purpose of fixing the remuneration packages of directors. Information about pay and benefits will then have to be disclosed in an annual report, together with details on how variable pay elements have been calculated.

Portugal’s labour code gets red card

Proposed amendments to the Portuguese Labour Code have recently been held to be unconstitutional by the country’s Constitutional Court. One of the key proposals rejected by the court as disproportionate was an attempt to double the probationary period for unskilled workers from 90 to 180 days.

Euro zone declines

The recession in the Euro zone deepened at a record pace in the final three months of 2008. Output across the 15-nation single currency zone fell by 1.5% between October and December, worse than economists had expected. It was the third successive quarter of contraction and the fastest decline since the Euro zone was created in 1999. Analysts at Capital Economics said the “recession in the region is deepening at an alarming rate” and forecast a 3% decline this year.

One to watch

As wildcat strikes break out in the UK, the European Trade Union Confederation has called for the Posted Workers Directive to be amended over concerns that it is indirectly driving down terms and conditions for local workers. Recent legal rulings mean that foreign workers sent to other member states do not have to be employed on the same terms as local staff covered by collective agreements, provided certain national minimum standards are upheld. Vladimir Spidla, the European Commissioner for Employment and Social Affairs, has so far ruled out any changes, claiming that the free movement of workers is vital to the economic success of the European Union.

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