Case C-86/14, Medialdea – the voice against being the perfect precarious public worker

One quirk of Spanish labour law is that where a state body abusively employs someone on a temporary contract without fully complying with the law, Spanish case law will deem that person to be working on the basis of ‘a non-permanent contract of indefinite duration’. The problem is that some judgments of the Spanish courts permit the employer to terminate that working relationship without so much as paying a cent of compensation to the dismissed worker. So is the worker entitled to protection and compensation under the EU’s fixed-term worker Directive 1999/70/EC?

Facts
In 2001, Ms. León Medialdea began working for the local authority of Ayuntamiento de Huétor Vega. She was an editor of the local newspaper,’The Voice of Huétor Vega’ [La Voz de Huétor Vega] and a presenter on the radio station. After three years of being on a three-year fixed-term contract, her contract expired in October 2004.

One month passed before the local authority concluded the another contract with her. It was a purpose-based contract designed to ensure that the claimant consolidated the next phase in the running of the newspaper and the radio station. Eight years of uninterrupted labour ensued.

Faced with an austerity drive, the local authority decided to reduce the number of staff working at the newspaper, and to shut down the radio station altogether. Just before Christmas 2012 it was announced that jobs were to be shed, and the claimant duly lost hers. She was told that her work would cease a fortnight later, namely, on New Years Eve 2012. The local authority offered no compensation.

The claimant went to the local court seeking the annulment of her employer’s decision to terminate her contract. After hearing the parties, Judge Rodríguez Alcázar of the Granada District Labour Court eventually decided to refer a number of questions to the CJEU but before he did so he identified the salient points of the dispute before him, the gist of which runs as follows.

The general rule in Spanish labour law is that an employee works on the basis of a permanent contract. Temporary forms of employment are the exception to this general rule with the consequence that these types of contract are subject to the employer justifying the need for such a contract.

There is also a general presumption in Spanish labour law that if the employer does not comply with the law when employing someone, then that employee is deemed to be working as a permanent employee.

However, this legal regime is different for those working in the state sector. If there are any procedural irregularities with a temporary employment contract – for example, the duration of temporary contracts is exceeded, then the law will make the employment contract with the state void ab initio. It becomes a work relationship governed by the law applicable to commercial agreements.

The legal position of the worker is however rather peculiar. Such a worker cannot be set to work on a footing akin to that of a civil servant because the worker has not passed the requisite civil servant exam, there has been no appointment on that basis, and the principle of equality enshrined in Spanish constitutional law would seem to prevent the person from being engaged on the basis of a permanent civil servant.

Consequently, the Spanish labour courts have created something of a new sui generis legal position for the worker in this predicament. The specific chamber of the Spanish Supreme Court which is specialised in labour law created the legal novelty of a person working on the basis of ‘a non-permanent contract of indefinite duration’.

Despite creating a legal new legal mask for this type of person, a 2002 Supreme Court judgment denied any compensation being paid to this type of person in a situation where: the employer decided unilaterally to fill the post; he organised a selection procedure; and thereafter appointed another employee (RJ 2002\9893).

This rule in the 2002 judgment continued to be applied even as recently as 2013. A 2013 judgment of the Supreme Court not only reaffirmed the earlier rule that no compensation needed to be paid to this type of worker in cases where the employer decided to fill the post with another employee but the rule was even extended to cover situations in which the employer simply decided to eliminate the post altogether.

Nor was that the only rule to be squirrelled away in the 2013 judgment. The Spanish Supreme Court also made it clear that an employer who subjectively believes that the job of the person working on the basis of ‘a non-permanent contract of indefinite duration’ has become ‘superfluous’, is precluded from relying on a statutory provision of Spanish labour law that permits redundancy for the ‘objective’ reasons of an economic, technical, organisational or production nature.

Consequently, workers who were on ‘a non-permanent contract of indefinite duration’ do not qualify for the compensation which is paid to those workers who are made redundant for the above-mentioned ‘objective’ reasons. And the amount of compensation which those workers receive equates to 20 days of pay for every year worked.

The 2013 rule was however subsequently refined in another judgment handed down later on in the year (JUR 2013\381783). The court in the later judgment indicated that it seemed rather unfair for a worker on a ‘non-permanent contract of indefinite duration’ to receive no compensation when workers who had been made redundant for ‘objective’ reasons were entitled to compensation. Thus, the court permitted the worker to claim an amount of compensation which was equivalent to that which a temporary employee whose contract had been correctly terminated, would have received – a sum equivalent to just 12 days of pay for every year worked.

In that context, the court in the later judgment also recalled the effectiveness of EU law in temporary contracts. There was EU legislation, namely, Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP (OJ [1999] L175/43).

The relevant provisions of the Framework Agreement provide:

Purpose (clause 1)
The purpose of this framework agreement is to:
(a) improve the quality of fixed-term work by ensuring the application of the principle of non-discrimination;
(b) establish a framework to prevent abuse arising from the use of successive fixed-term employment contracts or relationships.
…
Definitions (clause 3)
1. For the purpose of this agreement the term “fixed-term worker” means a person having an employment contract or relationship entered into directly between an employer and a worker where the end of the employment contract or relationship is determined by objective conditions such as reaching a specific date, completing a specific task, or the occurrence of a specific event.
2. For the purpose of this agreement, the term “comparable permanent worker” means a worker with an employment contract or relationship of indefinite duration, in the same establishment, engaged in the same or similar work/occupation, due regard being given to qualifications/skills.
Where there is no comparable permanent worker in the same establishment, the comparison shall be made by reference to the applicable collective agreement, or where there is no applicable collective agreement, in accordance with national law, collective agreements or practice.
…
Measures to prevent abuse (clause 5)
1. To prevent abuse arising from the use of successive fixed-term employment contracts or relationships, Member States, after consultation with social partners in accordance with national law, collective agreements or practice, and/or the social partners, shall, where there are no equivalent legal measures to prevent abuse, introduce in a manner which takes account of the needs of specific sectors and/or categories of workers, one or more of the following measures:
(a) objective reasons justifying the renewal of such contracts or relationships;
(b) the maximum total duration of successive fixed-term employment contracts or relationships;
(c) the number of renewals of such contracts or relationships.

With all of this Spanish labour law and the provisions of the EU Framework Agreement in mind, Judge Rodríguez Alcázar of the Granada District Labour Court – who was hearing Ms Medialdea’s case – was also aware that the EU Framework Agreement had itself been interpreted by the CJEU, and this needed to be taken into account too.

For example, there was Case C-212/04, Konstantinos Adeneler in which the CJEU had reasoned:

54 With a view to giving a helpful answer to the questions submitted, it should be made clear at the outset that Directive 1999/70 and the Framework Agreement can apply also to fixed-term employment contracts and relationships concluded with the public authorities and other public-sector bodies.
…
105 Accordingly, the answer to the fourth question must be that, in circumstances such as those of the main proceedings, the Framework Agreement is to be interpreted as meaning that, in so far as domestic law of the Member State concerned does not include, in the sector under consideration, any other effective measure to prevent and, where relevant, punish the misuse of successive fixed-term contracts, the Framework Agreement precludes the application of national legislation which, in the public sector alone, prohibits absolutely the conversion into an employment contract of indefinite duration of a succession of fixed-term contracts that, in fact, have been intended to cover ‘fixed and permanent needs’ of the employer and must therefore be regarded as constituting an abuse.

That approach had been applied in another case, Case C-180/04 Vassallo, but the CJEU in Vassallo had also remarked:

42 In the light of the foregoing considerations, the answer to the question referred must be that the framework agreement must be interpreted as not in principle precluding national legislation which, where there is abuse arising from the use of successive fixed-term employment contracts or relationships by a public-sector employer, precludes their being converted into contracts of indeterminate duration, even though such conversion is provided for in respect of employment contracts and relationships with a private-sector employer, where that legislation includes another effective measure to prevent and, where relevant, punish the abuse of successive fixed-term contracts by a public-sector employer.

The Spanish judge considered those planks of CJEU reasoning but realised that the case before him did not fit squarely into that framework. For whereas the national rule of labour law collided with the EU rule, the situation in the present case was not like that in Vassallo. Namely, there was no alternative effective measure in Spanish law to prevent and punish the abuse of successive fixed-term contracts by the public-sector employer. Indeed, Spanish law allowed the employer to decide to eliminate a post unilaterally, it left the state free to conclude another contract with someone else, and the state did not need to pay any compensation.

A further issue troubled the judge, namely, if compensation should be paid, then was Spanish case law really right to say that the amount owed was to equate to the amount which would have been paid had a temporary contract of employment been properly concluded in the first place – after all, was there any deterrent effect in that amount to stop public sector employers from abusing their position?

Judge Rodríguez Alcázar of the Granada District Labour Court concluded that here was a case about ‘the perfect precarious worker’ – one who was not on a permanent contract, one who would work for as long as the administration saw fit, one who could be fired whenever it suited the administration, and one who could be fired without compensation. It was an abuse perpetuated by Spanish labour law. The judge decided to refer a number of questions to the CJEU.

Questions Referred
According to the Curia website, the Spanish court has asked:

1. Is a worker employed under a non-permanent contract of indefinite duration, as envisaged by the legislation and the case-law, a fixed-term worker within the meaning of the definition set out in Directive 1999/70/EC? […]

2. Is it compatible with EU law for the national court to interpret and apply national law in such a way that, as regards fixed-term employment contracts in the public sector entered into in circumvention of the law which are transformed into non-permanent contracts of indefinite duration, the public authorities may fill or eliminate the posts held by persons employed under such contracts unilaterally, without paying any compensation to the worker, where the legislation does not lay down other measures to limit the misuse of temporary contracts?

3. Would the same conduct by the public authority be compatible with EU law if, in filling or eliminating the post, the worker concerned was paid the compensation provided for in the event of termination of temporary contracts entered into lawfully?

4. Would the same conduct by the public authority be compatible with EU law if, in order to fill or eliminate the post, it was required to have recourse to the procedures and grounds provided for in the event of dismissal for objective reasons and to pay the same compensation?