There is no compensated termination of the employment contract in the event of transfer without change of address

Written on 30 May 2019

The Supreme Court, in its ruling dated 12 March 2019, ruled on an appeal for unification of doctrine regarding the consequences of the transfer of the worker, when it does not entail a change of residence. The ruling establishes that this transfer is covered by the ordinary managerial power of the employer and that, therefore, it does not generate the right to the indemnified termination of the employment contract.

The judgments subject to contradiction concern two workers in the same workplace, who are informed of a transfer decision (understood as a permanent change of workplace) that does not imply a change of address. In both judgments, the workers oppose the transfer and request the termination of the employment contract, in accordance with the provisions of Article 40 of the Workers’ Statute, which is granted in one case and not in another.

In its ruling, the Supreme Court decides whether the business decision to relocate, when it does not involve a change of domicile, should qualify as a substantial modification of working conditions (it is this which alters and transforms the fundamental aspects of the employment relationship), or whether it falls within the scope of the decisions of the employer’s organisational power. From the point of view of compensation, the difference lies in the fact that, while the former allows the worker to request the indemnified termination of the employment contract (receiving a compensation of 20 days per year worked, with a maximum of 12 monthly payments), the latter does not generate any type of compensation.

To resolve this issue, the Supreme Court (hereinafter “SC”) analyses the two regulations applicable to the matter: the applicable Collective bargaining agreement and the Workers’ Statute (hereinafter “WS”).

With regard to the first, the applicable Collective bargaining agreement (rule of preferential application) does not provide for the right to an indemnified termination of the contract in cases of transfer without change of residence. The WS includes the worker’s right to request the indemnified termination of the contract only when the transfer implies the worker’s change of domicile (article 40.1 WS).Likewise, the WS requires that, in these cases, the measure be based on economic, technical, organizational or production causes, and requires advance notification to the workers’ legal representatives.

In applying these legal provisions, and reiterating its doctrine, the Supreme Court rejects the idea that the worker has the right to terminate the employment relationship and receive compensation for substantial changes in working conditions for this type of transfer. To this effect, the SC puts forward three arguments.

Firstly, the SC considers that Article 40 WS does not apply to transfers without a change of residence. In this case, the transfer, when it does not require a change of residence, is regarded as a case of weak or non-substantial geographical mobility and is interpreted as an expression of the employer’s managerial power. Therefore, the supposed change of work centre from one centre to another, within the same locality, would be excluded from art 40 WS, because they would be considered part of the employer’s ius variandi.

Secondly, the judgment analyses what is understood to be a substantial modification of working conditions, and establishes that, in order to consider a modification as substantial, it must alter and transform the fundamental aspects of the employment relationship, transforming it into a different employment relationship. The non-substantial modifications will be considered as accidental and, therefore, as manifestations of the power of management and of the business ius variandi.

Finally, the SC points out that the WS does not impose any requirement on the manifestations of managerial power (e.g. to provide casual reasons or to communicate them to the employees’ representatives), requirements that do apply in the case of transfer with change of residence (Article 40 ET). Therefore, following the reasoning set out in the judgment, it can be concluded that geographical mobility which does not entail a change of domicile falls within the scope of the decisions of the employer’s organisational power , from which, in no case, an action for indemnified termination on the part of the worker can be derived.