Firms' financial struggles 'no excuse' for not paying workers on time, Supreme Court rules

COMPANIES struggling financially have no excuse not to pay employees' wages, nor to pay them late, the Supreme Court has ruled.

Under Article 50 of the Workers' Statute, salaries are sacred and a firm may not use its own financial difficulties to accumulate months of non-payment to its staff.

A situation that has affected many workers in Spain since the start of the economic crisis – including, famously, employees of the now-defunct transatlantic carrier Air Comet, who protested in the street after they had been working for eight months with no pay – many companies have used the state of the country's economy as a pretext even when they could have paid staff on time, effectively financing themselves by delaying salaries.

Local authorities also financed themselves by paying their suppliers and outsourced workers as late as possible, which the government has attempted to rectify with its town councils' reform.

The Supreme Court, which passed the verdict in a recent case involving a worker who was awarded 94,789 euros in back wages plus interest, also said that prior agreements between staff and their companies to reduce costs did not imply acceptance of late or unpaid wages.

The worker in question and other employees of the firm reached an agreement in September 2011, in light of the firm's economic struggles, which included fixed job contracts being changed to 'fixed discontinuous' contracts – where the employee has the same rights as a permanent member of staff but has set 'down times' throughout the year when there is little or no work – together with 'laying off' periods subject to incentives, and in the case of five employees, an early retirement agreement.

Yet when these measures were discussed and approved by staff at the firm, there was no mention of delays in payment of salaries.

The firm claimed the worker in question had automatically agreed to indefinitely-delayed salary payment in light of the other measures approved, which a court in Málaga upheld, but the employee's appeal to the Supreme Court found that under Article 50.1b of the Workers' Statute, the poor financial situation of a business may not give rise to non-payment or continued delay in payment of wages.