Discontinued by unilateral termination in top management public sector reform after 2012

Abstract

The public sector has not remained unaffected by the material changes made by the 2012 labor reform to the Spanish legislative panorama. Royal Decree-Law 3/2012, on urgent measures for reform of the labor market, introduced major limitations related to severance payments for unilateral termination by the enterprise of services contracts and senior management employment contracts in the public sector of the State. Subsequently, Law 3/2012 extended such limits to entities, consortiums, enterprises, bodies and foundations of the autonomous community and local public sectors.

The legislator sought to focus on persons in possession of senior management positions while holding office on managing bodies, to correct certain excesses occurred in past more frequently than would have been desired. To that end, remuneration and severance pay for unilateral termination have been limited. In respect of the severance pay for unilateral termination, the reform does not provide for an interim period, and has effects directly on contracts in effect at the date on which Royal Decree-Law 3/2012 entered into force, declaring their golden parachute clauses null and void.

Certain constitutional principles such as those of non-retroactivity of the laws and legal certainty have been dangerously circumvented. Neither does the implementation in regulations of additional provision eight of Royal Decree-Law 3/2012 shed any light on the matter; quite the contrary it seems to overcast a somber shadow, on complicating even further the complex and controverted concept of senior management in the public sector.

We may state that litigiousness is well served. It is now the judges who, through the interpretation of the law and application of its general principles, must modulate the consequences of the amendment of the law. The following pages provide news on the current state of affairs in this respect.