A business practice that has long been demanded and, in many cases, applied, using various different formulas, despite its rejection by the National Social Security Institute and to a large extent by the Spanish courts, is that of concentrating the working hours corresponding to the entire duration of partial retirement, in a single period.
Interest in this practice is based on practical and personal reasons. As far as practical reasons are concerned, in many workplaces it is difficult to employ a worker for five years only for a percentage of his working hours, usually equivalent to a month and a half or two months (15% of working hours), particularly if the worker who has been hired to take over the position (i.e. the hand-over worker) has been hired on a full-time basis. As to the personal reasons, the partially retired worker himself also finds it difficult to manage his partial annual working hours when he has lost daily contact with the world of employment.
The recent judgment by the Labor Chamber of the Supreme Court of March 29, 2017 has addressed the issue.
Prior to this judgment, the Supreme Court had issued another judgment on January 19, 2015, but it did not expressly resolve the issue. Instead it ruled on the legality of hand-over workers’ contracts despite concentration of the working hours of partially retired workers in a single period, but not on the legality of this concentration.
However, the judgment of March 29, 2017 does expressly rule on the practice, concluding that it is not illegal if the partially retired worker agrees. The Supreme Court’s judgement is based on the following arguments:
- The absence of specific legislation on concentrating the working hours of a partially retired worker in a single period is not illegal at all, but rather, based on the principle of freedom of contract that underpins our legislation, illegality can only be upheld in the event of fraud, which does not occur in the case analyzed, for the reasons we will see below.
- The purposes of partial retirement that relate to the employment market and to financial needs are fulfilled. In relation to the former, the validity of the hand-over contract until the partially retired worker reaches the ordinary retirement age is maintained and regarding the latter, contributions are paid for the entire partial retirement period until the ordinary retirement of the partially retired worker, as well as those of the hand-over worker until the end of his contract.
- The purpose of gradual access to retirement is also deemed to be fulfilled. In this case the judgment indicated that this purpose is envisaged solely for the benefit of the person entering retirement and it is precisely this worker who is waiving the right to this staggered end to his contract.
- Finally, in a situation of partial retirement, even if the entire partial retirement period is concentrated in the first year, the partially retired worker continues to receive his remuneration, remains registered for social security purposes, and the social security contributions are paid, all on a pro rata basis for the entire period of partial retirement.
In short, the judgment supports the legality of the practice of concentrating the working hours of the entire duration of the partial retirement in the first year, provided that, if the partially retired worker agrees, the other requirements of partial retirement are met (maintenance of the contract of the hand-over worker until the ordinary retirement of the partially retired worker and that the partially retired worker continues to receive his remuneration, remains registered for social security purposes and the contributions are paid, all on a pro rata basis for the entire partial retirement period).
Garrigues Labor and Employment Law Department