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Coherence and complementarity between labor and social security legislation

"Parliamentary control and the leading role of the Toledo Pact must be maintained as the maximum guarantee in the reforms of the Social Security system"

The last 12 of January, Fide raised in the session on Coherence and complementarity between labor and social security legislation, of Pension Group, the debate on how labor and social security regulations address the requirements and needs that arise from social protection systems and the mechanisms used to do so.

Participated in the session: Eva Maria Blazquez Agudo, Associate Professor of Labor and Social Security Law at the Carlos III University of Madrid; John Huts, Of counsel, Auren Abogados and Jesus Lahera Forteza, Professor of Labor Law, Universidad Complutense de Madrid and Consultant Of Counsel to Abdon Pedrajas. Moderated the session: Tomas Arrieta Carrillo, Honorary Professor at the UCM and President of the AGE Foundation. Academic Advisor of Fide. Director of the GT Pensions of Fide.

The analysis of these questions was structured in four parts:

I. Origins and traditional relationship, in which social protection arises and is built in situations that prevent work for reasons of health, age or death. Long period in which the coherence between both legislations is total and exclusive: Either you work -because you have the capacity to do so- or you receive protection -because you cannot work-. The extension of the incompatibility of protection with work as a general rule is a logical consequence of such a situation.

II. New scenarios/new challenges. Social and economic evolution, the appearance of new production processes and forms of business and labor organization (technology as an accelerator), on the one hand, and the prolongation of hope and quality of life, together with the drop in the birth rate and the aging of the population on the other, force a redefinition of the traditional goals and objectives. The situations of need protected by benefits and pensions are being transformed or nuanced towards legal definitions marked by the criteria of the legislator.

III. The need for reforms is raised in this way to all social protection systems –significantly to pensions - in developed countries. Employment continues to be the main element, although not sufficient, in the financing of protection. This fact, together with the modulation of situations of need, points towards full compatibility between pensions and work.

IV. The Spanish case. The Toledo Pact is the institution with which the response of the social security system to these challenges is addressed. Parliamentary consensus is its greatest asset and for years it has been a success story.

The retirement of the baby boomer generation (1957-1977) in the coming years marks the Spanish scenario, which, among other issues, reflects activity and employment rates for those over 60 years of age that are much lower than in the EU countries.

Recommendation 12 of the Toledo Pact advocates redefining the work/protection relationship: “coordination between labor legislation and Social Security legislation must be strengthened with regard to the objective of employment of the elderly”. Based on this premise, we analyze how our legal system regulates the compatibility between work and benefits.

IV.1        Temporary disability. Benefit incompatible with work and legal cause for suspension of the employment contract, characterized by a complex and atypical procedure (autonomous health administrations on the one hand and economic benefit from Social Security on the other), with few mechanisms for business action or control and, above all, which raises doubts about fraudulent actions or deviations.

Absence of work incentive mechanisms compatible with medical treatment and/or rehabilitation of the disabled/sick person and no prior requirement of an attempt to adapt the job or functional mobility compatible with the worker's condition.

IV.2        widowhood. Lifetime pension compatible with work in the field of Social Security, while the labor law determines non-discrimination in employment based on marital status. Without questioning the protection of situations of need, the reflection on the meaning of the pension is raised, once the full incorporation into the labor market has taken place (significantly that of women) and if the general rule of compatibility with work and income from a life annuity is adequate in the current scenario.

IV.3        Permanent disability. Economic performance with different levels of protection and different degrees of compatibility. The regulation moves from full compatibility with the work of Partial Permanent Disability, to a complex combination of factors -decreased ability to work, jobs that caused the disability, age, possible revision of the disability and its degrees...- that, Starting from a general incompatibility with work, it is lowered both by the regulation itself (jobs other than those that generated the disability, compatibility with residual capacity...), and by judicial criteria.

Complex and casuistic regulation, marked by provisional nature, which generates great judicial conflict. Confrontation of protection through lifetime pensions and the need (and legal mandate) for the integration of the disabled in the world of work. The labor legislation indicates non-discrimination due to disability, collects it as a cause of termination of the employment contract and regulates the promotion of employment of the disabled. The same reflections of graduality indicated in the case of IT are possible, in addition to the possible reservation of a preferential job for cases of recovery or rehabilitation. It could be considered whether, in cases of compatibility of IP benefits, the requirements applicable to recipients of unemployment benefit would be required of the beneficiaries, so that they can participate in guidance and training actions. Thus, their retraining and reintegration into the labor market would be sought, compatible with maintaining a partial right to their pensions.

IV.4        Retirement. Life pension with marginal compatibility with work. For labor legislation, it is cause for the termination of the employment contract, while discrimination based on age is prohibited.

Difficulty in understanding the general compatibility scheme due to the multiplicity of figures: Assumptions of early retirement (incompatible with work); Ordinary and delayed (compatibility with income not higher than the SMI); Active (compatible with work); Partial and Flexible (compatible in proportion to part-time work).

Contradiction between the Social Security legal scheme that includes retirement as a worker's right that can be exercised at will and forced retirement included in some collective agreements.

Finally, and in relation to the purpose of the presentation, the modifications of the last reform (Law 21/2021) and the mandate of the Toledo Pact were briefly addressed.

Adequate compliance with this mandate was pointed out in several issues (those aimed at the voluntary extension of active life), doubts were raised about the treatment of others (early retirement, widowhood of unmarried couples and forced retirement in collective agreements) and, positively evaluating the participation of the social partners, it was pointed out that parliamentary control and the leading role of the Toledo Pact must be maintained as the maximum guarantee in the reforms of the Social Security system.

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