Fri 10/22/2021 12:08 PM
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Relevant Documents:
Sept. 27 Ruling (in Spanish)
FY’20 Report


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Spanish real estate debt servicer Haya Real Estate could end up disbursing about €12.6 million in employee bonuses following a Sept. 27 ruling from Spain’s National High Court (Audiencia Nacional) revoking a company decision not to pay staff bonuses for 2020.

Haya did not accrue any provisions related to bonuses in 2020, according to the annual report, while in 2019, the company provisioned €12.6 million for staff bonuses.

Head Judge José Pablo Aramendi Sánchez, along with judges Ramón Gallo Llanos and José Luis Niño Romero of the Social Chamber of the National High Court, determined that enduring a negative impact from the Covid-19 pandemic was not sufficient grounds to stop paying bonuses to staff, the ruling states.

The claim against Haya was filed by subsections of Spanish workers unions CGT, UGT and CCOO on April 23. On March 25, Haya announced it would “retroactively suppress” the payment of variable remuneration, or bonuses, corresponding to 2020, for 117 workers of its subsidiary Divarian.

The company justified the annulment of 2020 bonuses “given the extraordinary and unpredictable circumstances that have taken place during 2020 as a consequence of the pandemic,” the ruling states.

At the hearing, which took place on Sept. 23, Spanish workers union CCOO argued that the bonuses of the Divarian workers were not dependent on the company’s EBITDA, which was slashed by half during 2020 by the pandemic. CGT and UGT supported the argument.

In February, the unions and the company attempted to reach an agreement regarding variable compensation, but negotiations fell through. At the time, the company recognized the workers’ right to receive bonuses for their 2020 performance, but still was looking to modify the terms of work conditions, also known as a MSCT in Spain, to modify bonuses for 2020 and beyond.

Haya Real Estate argued that there were two systems of bonus attribution in place, both dependent on reaching an 80% of foreseen EBITDA, a figure that was not achieved in 2020, the ruling reads. In June 2020, Haya reached out to workers and unions to announce its intention to renegotiate the bonus conditions through an MSCT. Haya wanted the new terms to affect future remuneration but also to apply to the 2020 bonuses, which the company deemed not to be payable (since the EBITDA threshold had not been reached) but was a point of contention with workers and the unions.

At the hearing, the company proceeded to call upon the rebus sic stantibus clause, a moratorium on financial obligations justified by an unprecedented or unavoidable event such as the Covid-19 pandemic.

In their ruling, the judges said that there was no disagreement between the unions and Haya regarding the MSCT, only the 2020 bonuses.

The court recognized that there were indeed two variable retribution systems in place for Haya and Divarian employees during 2020, before the company changed the terms in 2021. The Divarian employee bonuses, as established in May 2019, are the result of multiplying the target bonus by the weighted sum of four components linked to global volumes, area KPIs and individual KPIs.

In addition, the ruling states that the group’s global sales would generate bonuses for employees starting at an annual volume of €440 million worth of loans serviced. As such, there is no mention or connection to EBITDA figures in relation to bonus payments, and Haya did not present documents stating its 2020 global volumes results to the court, the judges said.

Haya also recognized that the 117 workers were entitled to receive bonuses for 2020, which was evidence for the court that the company surpassed the global volumes threshold for the year that entitled staff to receive compensation.

The judges considered that article 41 of the Statues of Workers Rights, which regulates the MSCT, recognizes a company’s capacity to substantially modify working conditions - including salaries and bonuses - but it does so with the purpose of repairing any economic, technical, organizational or production issues that hinder or prevent the development of the business activity in the future. However, “in no case can the MSCT be considered as a tool to avoid commitments acquired in the past.”

The court also dismissed Haya’s rebus sic stantibus argument, saying that although the company may have been negatively affected by unforeseen circumstances that hindered its balance sheet, it cannot make unilateral decisions with retroactive effects without following the legally established procedures.

In conclusion, the court validated the workers’ unions claim, and revoked Haya’s March 25 decision that abolished payment of 2020 bonuses to the 117 Divarian employees.

Haya can appeal the court’s decision, the ruling states. Spanish daily Cinco Días reported on Oct. 21 that the company filed the appeal.
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