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Workers of Gig-Economy Platforms are Employees, Madrid’s Court of Justice Rules

Precedential Decision by Judiciary or Regulatory Agency

Authors: Juan Bonilla, Partner and Ana Campos, Senior Associate - CUATRECASAS

On November 27, 2019, the Superior Labor Court of Madrid issued a binding decision on the legal nature of a contractor rendering services under a services contract with a gig-economy platform that offers delivery services. In concluding that the contract has a labor, and not a commercial nature, the Court reiterated the principle that the formal appearance of a commercial relationship between the parties is not relevant if the factual situation during the rendering of services creates a labor relationship. Factors the Court took into consideration include: (1) services were compensated with a specific amount per work unit, fixed by the platform (company); (2) the platform unilaterally agreed with the restaurants on the prices to pay for the services; (3) the platform owned the infrastructure required for the means of work (e.g., the App and the Algorithm); (4) the individual working for the platform does not assume any commercial risk; and (5) the individual is in a dependent position, as he or she must strictly follow the platform’s instructions (e.g., how orders need to be carried out, the permanent control by geo-localization, daily evaluation of performance, and no autonomy to choose the timeframe for rendering services, as this is assigned based on the daily evaluation).

Dismissal Based on Short-Term, Intermittent Absences

Precedential Decision by Judiciary or Regulatory Agency

Authors: Juan Bonilla, Partner and Ana Campos, Senior Associate - CUATRECASAS

The Spanish Constitutional Court recently validated a dismissal under Section 52.d) of the Workers Statute, consisting of the occurrence, under certain circumstances, of justified, short-term, intermittent absences of employees due to illness. In its ruling dated October 16, 2019, the court considers that this type of dismissal is covered by the freedom of enterprise and productivity, and it does not infringe the fundamental rights to physical and mental integrity or health and safety in the workplace. In these cases, the company needs to pay severance compensation to the dismissed employee of 20 days’ salary per year worked, to a maximum of 12 monthly installments. However, the court does not rule on whether this would amount to discrimination if the absence were due to disability caused by long-term illnesses with an uncertain cure.

Severance Payment to Senior Managers Due to Business Withdrawal is Tax-Exempt

Precedential Decision by Judiciary or Regulatory Agency

Authors: Juan Bonilla, Partner and Ana Campos, Senior Associate – CUATRECASAS

The Spanish Supreme Court issued a ruling on November 5, 2019, modifying its previous case law and considering that, in the event of termination of senior management contracts due to business withdrawal, the legal severance payment of seven days’ salary in cash per year of service, with the limit of six monthly payments, is considered the minimum legal compensation and, therefore, tax-exempt income for personal income tax. Consequently, it opens the possibility for senior executives who have received compensation for business withdrawal to request that the tax authorities reimburse the tax paid in the nonprescribed years.