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Before handing down the judgment in the matter of De Diego Porras, the Plenary Session of the Fourth Chamber (Labor) of the Supreme Court decided to refer a preliminary ruling to the CJEU on October 25, 2017. The Supreme Court asked the CJEU to clarify its judgment of September 14, 2016 (commented here) on the consequences of severance for ending a substitution contract and, by extension, that of fixed-term contracts. The preliminary ruling coincides with the Government’s initiative to reform the law (see article here) with the aim of fighting job instability in two ways: penalizing temporary hiring and reducing the gap between permanent and temporary employees.

The CJEU ruling issued in the De Diego Porras case has generated multiple, disparate interpretations by labor judges on this core matter. In application of the CJEU judgment, there are many court rulings that have equated the termination of a substitution contract to the termination of a contract on objective grounds (article 52 of the Spanish Workers’ Statute), recognizing for the worker severance of 20 days of salary per year of service. Likewise, the effects of this judgment have been extended to cases of termination of other temporary contracts (such as the seasonal contract or the contract for specific works or services), ordering companies to pay the difference in compensation between 12 and 20 days of salary per year of service.

To stop the legal uncertainty generated in this matter, the Supreme Court justifies the clarification of the CJEU ruling by considering that the dilemma does not arise from a difference in treatment of temporary workers compared to permanent workers, but from the fact that severance of 12 days of salary per year of service is granted only for two of the three legally recognized temporary contract types (specific works or services and seasonal contracts) and excludes substitution contracts.

For the Supreme Court, there is no difference in treatment between permanent workers and temporary workers, since Spanish law determines the amount of severance according to the cause or grounds of termination. Therefore, termination owing to expiry of the time agreed or completion of the works or service under the contract, set out in article 49.1 c) of the Spanish Workers’ Statute, can never arise in a permanent contract. Conversely, severance provided by Spanish regulations for contract termination on disciplinary grounds (article 56 of the Spanish Workers’ Statute) or objective reasons (article 53 of the WS) is exactly the same, irrespective of whether the terminated contract is temporary or permanent.

  • First question

Based on the above, the Supreme Court focuses the debate on asking, first, whether domestic law, which does not provide any severance for termination of a fixed-term, substitution contract but does provide it when the contract ends for legally provided reasons, contradicts clause 4 of the Framework Agreement on fixed-term employment, which is annexed to Directive 1999/70.

  • Second question

If the answer to the first question is no, the Supreme Court goes further, rephrasing the petition with support from clause 5 of the Framework Agreement, which seeks to impose limits on the successive use of fixed-term labor contracts or relations. On this occasion, the Supreme Court questions whether the measure established by Spanish law setting severance of 12 days of salary per year of service on contract termination but excluding substitute workers fits within clause 5 of the Framework Agreement.

  • Third question

Lastly, if the answer to question two is a yes, in case domestic lawmakers opted for severance of 12 days of salary per year of service as a measure to dissuade abuse of temporary hiring, the Supreme Court asks whether domestic law distinction of different temporary contract types and exclusion of substitution contracts is contrary to clause 5 of the Framework Agreement. This query arises in relation to whether the specific features of the substitution contract in which two workers converge (the substitute and the substituted worker) with respect to a single job, which is not lost when the substitute worker’s contract ends, would justify a different severance approach.

We must now hope that the response of the CJEU to the rephrasing of the preliminary ruling by the Supreme Court ends the legal uncertainty generated by such a fundamental issue as is the termination of temporary contracts.

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