Assignment of rights after termination

Several former employees of a company have been given the right to transfer or assign their consolidated rights in the internal fund of the company on the date they left to a Pension Plan of their choice. In a previous collective labor case on this issue the Supreme Court declared the right of the employees of a company to transfer or assign their consolidated rights on the date they cease employment. Although the defendant company openly admitted the application of this decision, it objected to the individual claim of the workers for three reasons:

  • There was an agreement with the trade unions, declaring that the benefits of the company's social regime would be applied to employees who were working on the date of retirement.
  • The effect of the limitation of action.
  • The releasing effect of the final payment signed by the workers.

The Labor Court rejected the arguments of the company on the following grounds:

  • The agreement with the trade unions did not state anything about former participants in the pension funds. The establishment of benefits is voluntary for employers, however, once established, that right cannot be annulled or limited, unless the rules governing the recognition of the rights so allow.
  • The Labor Court stated that the employees have a term of five years to claim such a right in accordance with the Social Security Law and not one year (which applies to other employment debts).
  • The Labor Court rejected the releasing effect of the final payment signed by the workers, because voluntary Social Security benefits are compulsory.

Source: Decision of Labor Court number 12 of Barcelona, of 18th June, 2001. Uría & Menéndez

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