Spain: Expired collective bargaining agreement may remain applicable

The Spanish Supreme Court's judgment of 22 December 2014 has recently been published, establishing binding legal precedent with regard to the extended application of collective bargaining agreements (known as ultractividad) and the impact on employment relationships of the expiry of a collective bargaining agreement and failure to negotiate a new one.

Act 3/2012, of 6 July, established a mechanism to limit excessively lengthy processes to negotiate collective bargaining agreements. According to that law, if a collective bargaining agreement has reached its agreed expiry date and a new collective bargaining agreement has not been signed and no broader-scoped collective bargaining agreement is applicable, the expired agreement would continue to apply for a maximum of one year beyond the expiry date. If a collective bargaining agreement had expired when the new law entered into force (on 7 July 2012), the one year period would run from that date.

A company decided to rely on this provision following the expiry of its collective bargaining agreement: as a new agreement had not been reached within the relevant one year period from expiry and there was no broader-scoped agreement applicable to its business, it chose to apply the employment conditions established in the Spanish Workers' Statute.

A collective claim was lodged, which ultimately reached the Spanish Supreme Court. In its judgment, the Supreme Court established that the rights and obligations of the workers that had previously been governed by the no-longer-applicable collective bargaining agreement must be maintained as they are an integral part of the employees' contracts, on the basis of two principal arguments:

• employment conditions in employment contracts tend to be regulated by reference to the collective bargaining agreement applicable at that time; it can therefore be understood that they become a part of those contracts;
• employment contracts are adjusted and perfected throughout their life, according to the terms of the Workers' Statute (basically, according to the rules applicable to them at any given time).

Actions for employers

Employers should be aware that, as a result of this ruling, the apparent legal certainty afforded by limiting negotiation processes as a result of Act 3/2012 is misleading. Although one year may elapse since a collective bargaining agreement has expired, with no agreement on renewal and no broader collective bargaining agreement in place, the employment relations of the employees affected will remain unchanged.