The Wage Guarantee Fund must pay any applications not processed within three months
In its judgment of March 16, 2015, the Supreme Court ruled that FOGASA must pay out any amounts referring to claims that are not settled by it within three months of a formal application being made.
The Spanish Wage Guarantee Fund (FOGASA) was created as a public fund to guarantee that workers would receive their salaries and severance payments in cases where the employer could not honor such payments due to technical or formal insolvency. However, the recent financial crisis and difficult situation faced by Spanish companies has led to an increase in applications, leaving FOGASA swamped.
As a result, FOGASA has accumulated a significant backlog of applications, taking much longer to issue decisions, in many cases, than the three months stipulated by legislation.
The judgment ruled on whether FOGASA’s failure to issue a decision within three months should be interpreted as approval or dismissal by administrative silence. The result? Approval. In the court’s view, FOGASA must recognize the worker’s right to receive the requested amount in cases where FOGASA has taken more than three months to issue a decision. Moreover, according to the judgment, even if FOGASA issues an express decision dismissing the application after the end of the three-month period, the worker will not forfeit the right to receive the amount, since the right has already been recognized by administrative silence.
The Supreme Court judgment constitutes a major new development for any workers who have requested payment from FOGASA and, in particular, those who have waited more than three months for FOGASA to issue a decision regarding their application, since such applications must be considered approved by administrative silence. The judgement may also lead to an increase in claims brought against FOGASA, since many of the individuals whose applications are dismissed by an express decision of FOGASA issued after the three-month deadline will now be able to go to court, citing this new Supreme Court judgment.
Garrigues Labor & Employment Department
