A court ruling addresses a long pattern of payroll delays exceeding ten days and its impact on employment termination. The Supreme Court holds that such delays carry enough severity to justify ending an employment contract with compensation, reinforcing precedents in this field. The decision associates the delay pattern with the employer’s conduct and the overall seriousness of the breach, even when financial difficulties are involved, and it confirms the obligation to compensate the worker.
The January 10 decision, which was available to El Periódico de España from the Prensa Ibérica group, challenges earlier criteria set by the Madrid High Court of Justice. It holds that the average payroll delay should not be deemed excessive if it aligns with predictable financial strain experienced by the company.
The case centers on a worker employed by an industrial machinery assembly company, earning a gross monthly salary of 2,624.47 euros since 2007. The employee faced payroll delays from April 2019 to March 2020 and filed a lawsuit. The Supreme Court ruled that the average delay was about ten and a half days, noting that the April 2019 salary was paid in two installments, on May 20 and May 31, 2019.
After losing in the Social Court No. 15 in Madrid and on appeal, the worker pursued doctrinal consolidation with the Supreme Court to determine whether payroll delays were sufficiently serious to justify termination of the employment contract with compensation under section 50.1.b) of the Labor Act. The worker argued that the doctrine from a 2008 decision on a similar case had guided the higher court.
The Supreme Court then examined a situation where a bankrupt company faced salary delays and clarified the objective criteria for interpreting the grounds for bankruptcy. The ruling concluded that, regardless of the employer’s fault, sufficiently serious delays can justify contract termination and the associated compensation.
The employer’s basic duty
The Fourth Circuit Court of Appeals previously noted that the employer failed to perform the essential duty required by labor law. The delays were not isolated; they recurred over time, culminating in the installment payment for April 2019 after a period of significant delay.
In the view of the Supreme Court’s Social Division, an employer does not possess unilateral power to modify or evade the obligation to pay wages promptly. The court agreed with the Public Prosecutor’s Office on this assessment, emphasizing that timely payment is a fundamental obligation in labor relations and that persistent delays carry consequences for the employment relationship.