i Employment law framework
Employment relations are ruled by a vast group of regulations that have different origins. Essentially, these regulations can come from the Spanish state (parliament and government), the international community, collective or individual bargaining agreements and professional traditions.
The Spanish legal sources for employment law are as follows:
- a the Spanish Constitution;
- b the law: laws are passed by the Spanish parliament, and are of two different types:
• organic: these laws need an absolute majority of the parliament to be approved. The Constitution reserves certain subjects to be ruled by organic laws; and
• ordinary: used for other subjects, these laws do not need an absolute majority to be passed;
- c the Spanish government is entitled to pass decrees with the power of law under certain circumstances:
• decree-law: when there is an extraordinary and urgent situation; and
• legislative decree: basically a delegation instrument from the parliament to the government for it to create law;
- d ordinances: administrative regulations passed by the government, with the objective of completing the law;
e international regulation;
- f collective bargaining agreements: agreements reached between the employers and the employees’ representatives. The Spanish Constitution considers collective bargaining agreements to be legally binding for the parties that subscribe to them; and
- g common usage.
ii Courts and tribunals
The tribunals dedicated to labour issues and relevant courts are as follows:
- a Labour courts: these are composed of a single judge who has responsibility for ruling on all the labour claims and disputes in the court’s jurisdictional area. Some labour issues are restricted to higher courts. Usually labour courts’ jurisdictional competence is confined to the city limits.
- b High Courts of Justice (HCJ): HCJs are composed of several divisions. The labour division will rule the labour claims and disputes that affect a wider territorial area than the labour court’s jurisdiction, but within the limits of the autonomous community. Therefore, there is one HCJ per autonomous community in Spain (Spain is divided into autonomous communities or regions). HCJs also rule on the challenged decisions from the labour courts of the corresponding autonomous community. HCJs are composed of one president and several judges, depending on the autonomous community.
- c The National High Court (NHC): the NHC is also composed of several divisions. The labour division will rule labour claims and disputes affecting two or more autonomous communities and some issues restricted to its authority. The NHC is based in Madrid.
- d The Supreme Court of Justice (SCJ): the SCJ is the highest court in Spain for all matters not pertaining to the Spanish Constitution and is also composed of several divisions. In the labour division, the SCJ is the tribunal of last resort and can provide finality in all legal issues.
- e The Constitutional Court (CC): the CC is the highest judicial body in Spain for all matters pertaining to the Spanish Constitution, being the supreme interpreter of the Constitution. Individuals whose labour rights are directly relevant to the Spanish Constitution can file a claim before the CC and they can do this only after exhausting other prior judicial appeals.
iii Government agencies with competence for enforcement of employment law
Even though it is not considered a government agency per se, but rather a public agency, the Labour and Social Security Inspectorate is the most important agency entitled to enforce employment law in Spain.
II YEAR IN REVIEW
The changes that have taken place in Spain’s employment legislation following the reform – which has been in force for around five years – were carried out with a view to providing an alternative to unemployment. Although some still criticise this reform on the grounds of the decrease in redundancy costs, what was intended and has largely been accomplished was to prevent dismissals. The knowledge that companies now have of these new mechanisms of internal flexibility makes them disregard prior measures which were far more damaging. In fact, had this Act been passed in 2007, countless job losses could have been avoided.
Fortunately, this positive trend with regard to employment seems to be increasing according to the monthly data provided by the Ministry of Employment and Social Security, which reveals positive figures both in terms of the decrease of the unemployment rate and the increase of registrations with Social Security. As far as unemployment is concerned, from March to July 2016 unemployment was significantly reduced, and an employment rate of 18.91 per cent was registered in the third quarter of 2016. The data shows significant improvement in the employment market, and an unusual post-recession dynamism for Spain.
It takes time for any major reform to show results, but it seems that consensus on the effectiveness of these changes has been achieved, Spain now being one of the countries in the eurozone where more jobs are created, while in other countries unemployment is still on the rise.
Nonetheless, there is still much to be done, so the current challenge is the implementation of active employment policies, making training the focal point of such policies. In Germany, France and Italy, the recession has been solved by applying measures related to internal flexibility and a reduction in wages or working hours, instead of carrying out redundancies. This is what is specifically being pursued in Spain.
III SIGNIFICANT CASES
i Resolution of the Employment Division of the Supreme Court dated 30 June 2016
This judgment focused on the holy-day pay and partially rectified the Supreme Court’s case law to adapt it to the ECJ’s doctrine after the Lock and Bollacke cases (C-139/12 and C-118/13, respectively). This new case law aims to determine what a ‘normal or average remuneration’ (Article 7, ILO Convention 137) is, and is characterised by two main points. On the one hand, it states that all components of total remuneration relating to the professional and personal status of the worker must continue to be paid during his or her paid annual leave, whereas those intended exclusively to cover occasional or ancillary costs are not be taken into account. On the other hand, the ‘normal or average remuneration’ must be guaranteed in all ways and be determined case by case. This includes comparing the annual pay leave with normal remuneration according to the collective bargaining and is to be correct if the holy-day pay assures the average of normal remuneration over a reference period.
Within this framework, the Court focused on determining whether some components excluded by the collective bargaining in order to calculate holy-day pay must be considered ‘normal remuneration’ and, consequently, included. According to its decision, night-work bonus, part-time work bonus and Sunday bonus are incorrectly excluded by the agreement because they compensate the personal or physical costs of working at night, part time or on Sundays, which is rather common in the sector, meaning that they do remunerate normal work. The situation is different for the holy-day bonus. When workers voluntarily work on holy days (except for Sundays), they must choose, according to the collective agreement, between an extra day of rest or be compensated economically with this bonus. Consequently, this kind of compensation cannot be considered normal or usual, but extraordinary, because working on holy days is not compulsory, and when this occurs, remuneration is optional for the employee.
ii Resolution of the Employment Division of the Supreme Court dated 14 July 2016
This judgment follows previous decisions (such as the judgment of 15 March 2016) regarding the requirements imposed on individual communication within a collective dismissal procedure. According to the Spanish regulation, when a collective dismissal is agreed or applied, the decision must be communicated individually to each employee affected by letter of communication. Hence, this doctrine states the requirements the communication must follow.
Concretely, it is not necessary to include or express either the criteria agreed to choose the employees affected by the dismissal or its application to each case. The reasons given by the Court are based on the fact that it is not expressly required by law (Article 53, Workers’ Statute and Article 122 of the Social Procedural Law), there exists a guarantee that is the previous bargaining with workers’ representatives (who should inform them) and its inclusion would make the communication excessively long and complicated.
iii Resolution of the Employment Division of the Supreme Court dated 20 July 2016
This case focused on the legal problems resulting from a collective dismissal by a famous bakery company. Two main points of debate must be underlined regarding this case. First, it considered whether there existed an infringement of the freedom of association, as a large part of the dismissals affected those who were the most active in the strikes and collective actions against the lay-off. Second, it discussed whether it is possible to fractionate and postpone the payment of dismissal compensation.
Regarding the first point, because a fundamental freedom was involved – the freedom of association (Article 28 of the Spanish Constitution) – the burden of proof must be inverted, so the employer should prove that no violation existed. According to the previous instance (Resolution of the National High Court of Justice of 16 May 2014), the employer succeeded in giving objective reasons to justify the dismissal, such as a real bargaining that occurred (reducing the first proposal of employees affected), the weight of this establishment regarding the number of employees and the cost of the contracts that were solved. The Supreme Court agreed with and confirmed such arguments included in the above-mentioned Resolution of the National High Court of Justice.
Considering the second point, the National High Court of Justice considered that it is not possible to split and defer the dismissal payment. It is important to highlight that the agreement between the employer and employees’ representatives includes compensations higher than the legal one but payable in 18 months, owed to the lack of liquidity of the company. The National High Court of Justice considered the agreement was not justified because the lack of liquidity was artificially created, owing to the company preferring to pay other debts rather than this one. The Supreme Court disagreed and stated that a lack of liquidity is not necessary. Therefore, it is possible to agree to split and postpone the compensation, provided that the agreement is not disproportionate, which is not the case. The Supreme Court highlights the split and schedule of payment as a useful tool in case of corporate restructuring, so it must not be hindered except to prevent abuses.
iv Resolution of the Employment Division of the Supreme Court dated 19 September 2016
According to the Workers’ Statute, in case of unfair dismissal, employers should decide between two options: (1) reinstating the employee to his or her position and paying him or her ‘procedural salaries’ – the wages not received between the dismissal and the judicial resolution; or (2) paying the dismissal compensation.
The Supreme Court’s resolution dated 19 September 2016 answered the question of what happens if the employer dies and the employment relationship finishes by objective reasons (i.e., the disappearance of the company). According to the resolution, this situation is comparable to unfair dismissal, as per Article 115.1 b of the Procedural Law, and considering that reinstatement is not possible, the employer (the company as a person or his or her heir) must pay both procedural salaries and dismissal compensation.
v Resolution of the Employment Division of the Supreme Court dated 17 October 2016
According to the Workers’ Statute, a collective lay-off shall take place when, within a period of 90 days, dismissal affects at least:
- a 10 employees in organisations employing fewer than 100 employees;
- b 10 per cent of the number of employees in organisations employing between 100 and 300 employees; or
- c 30 employees in organisations employing more than 300 employees.
To this effect, the new judgment of the Supreme Court dated 17 October 2016 modifies the reference of the affected employees. Indeed, instead of taking into account the whole organisation, after this judgment the reference will be the work centre (i.e., the single, physical place where employees perform their labour duties and render their services) when it has more than 20 employees and the redundancies take place only in this work centre, and the reference will be the organisation when the redundancies happen throughout the whole company.
vi Resolution of the Employment Division of the Supreme Court dated 26 October 2016
One of the most remarkable novelties of the last labour market reform concerns ‘ultra-activity’, that is, the automatic continuation of collective agreements beyond their expiry date. The traditional rule was that, absent an agreement to the contrary, the collective agreement continued to be in force until a new collective agreement was reached. After the labour market reform in 2012, the legal rule is that, absent an agreement to the contrary, the collective agreement continues to be in force one year after its expiry date. After that, the higher sectoral collective agreement would be applied.
This case focused on the expression ‘absent an agreement to the contrary’ included in the present regulation. A public company, which had signed a collective agreement before the 2012 reform, decided to continue applying the company’s agreement after one year of negotiations without result, on the basis that it sets out that if no new agreement is achieved, the former one will continue to be in force. Trade unions opposed to this solution argue that, according to the new law, after one year of negotiations without a new agreement, the former one expires.
The Supreme Court admits the company’s decision. According to its case law: (1) the ‘agreement to the contrary’ may be included in the collective agreement itself; (2) clauses agreed prior to the reform, which set the unlimited duration of the agreement, are lawful; and consequently, (3) the collective agreement negotiated before the reform that establishes its own unlimited duration will continue in force until a new agreement is achieved.
vii Resolution of the Employment Division of the Supreme Court dated 7 November 2016
The ‘indefinite non-fixed contract’ is a controversial contract created by the Supreme Court’s case law. It is based on the idea that, whereas the infringement of the legal provisions of a fixed-term contract is sanctioned by its conversion into an indefinite contract, access to a position in a public administration requires passing certain legal procedures, this being the reason why in this case, conversion into an indefinite contract does not apply. Accordingly, the Supreme Court gives, in this case, the same rights as an indefinite employee, but without achieving a stable position in the administration.
Owing to the lack of regulation, some additional problems derive from this case law. One of them focuses on the situation where dismissal compensation is due in case of termination of the employment relationship (for example, because the position is given to another subject after the dismissal). This judgment solves this issue, setting compensation for fixed-term contracts to be paid. The reason is that the termination of the employment relationship is produced by an objective and previously known reason included in the contract, as in the case of fixed-term contracts, so the same regulation should be applied by analogy.
The Court mentions that the CJEU’s Del Cerro Alonso case is not applicable here because ‘the appealer is the defendant and the amount of the compensation is not on the debate.’ A huge discussion on the application of the Del Cerro Alonso case is monopolising the Spanish labour law scene.
viii Resolution of the Employment Division of the Supreme Court dated 22 November 2016
Article 33 of the Workers’ Statute (Article 33) created a public entity to pay salaries and compensations in the case of an employer’s insolvency. This entity is called FOGASA. These payments are limited by Article 33, which sets the maximum quantity and the concepts included.
This case was related to the scope of Article 33, and it referred to a collective agreement that regulated the compensations in case of termination of fixed-term contracts, and set an amount higher than the legal limit. The Supreme Court considered that FOGASA is obliged to pay up to the maximum legal limit. Despite no express regulation existing, the judgment argued: (1) the rule mentioned that FOGASA must pay the compensation ‘according to the law’; and (2) if the amount of the salary guaranteed is limited (double the minimum wage per day for a maximum of 120 days), there is no reason to extend the payment beyond the legal limits.
IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP
i Employment relationship
The employee must give his or her consent to enter into an employment contract. The parties may nominate the form of the contract, whether oral or written. This is called the ‘freedom of form principle’. There is a presumption that the contract exists if there is a provision of services under the direction of the employer in return for remuneration.
Strictly speaking, there is no legal obligation for the employer to provide a written contract to the employee. However, either party may request a written form of the contract during the employment relationship. Work contracts must be reflected in writing whenever a legal provision so demands and, in any event, in the case of apprenticeship and training contracts, permanent employment contracts to support entrepreneurs, part-time contracts, fixed-term contracts and for specific work or services, and contracts of workers hired in Spain at the service of Spanish companies abroad. Contracts for a specific term in excess of four weeks shall likewise be reflected in writing with the signature of the employee.
The work contract may be entered into for an indefinite period of time or for a specific duration. Contracts for a specific duration may be formalised, for example:
(1) when the worker is contracted to perform a specific independent work or service with its own substance within the activity of the company, the execution of which – limited in time – is of uncertain duration; (2) where market circumstances, the accumulation of tasks or the excess of orders thus require, even where this concerns the normal activity of the company; or (3) when dealing with the substitution of workers with a right to the reservation of their work posts, provided that, inter alia, the name of the worker substituted and the reason for substitution are specified in the work contract.
The following items must be included in the statement:
- a the identities of the employer and employee;
- b the start date of the employment relationship;
- c whether the relationship is permanent or temporary and its anticipated duration;
- d the registered office of the company and the address of the employer or the workplace where the employee usually provides services. If the employee provides services on a regular basis in different work centres, the contract must contain this information;
- e the employee’s category or professional group and a summary job description;
- f the amount of the basic and wage supplements and frequency of payment;
- g the duration and distribution of a normal working day;
- h the applicable collective bargaining agreement;
- i holiday allowance; and
- j the notice period for termination of the contract by either party.
ii Establishing a presence
The activity of hiring employees through an agency must be made exclusively by the duly authorised temporary work companies in accordance with Section 16.3 of the Workers’ Statute Law (the Worker’s Statute). This activity must be for a limited time.
A foreign company not officially registered in Spain and incorporated abroad may engage an independent contractor for business purposes in Spain but subject to the laws of their country with regard to their capacity to contract and pursuant to the provisions of the Commercial Code.
A well-established business outside Spain that does not have a physical office in Spain must register with the Spanish Social Security in order to engage employees.
The contracting of workers for their temporary transfer to another company may only be undertaken through duly authorised temporary work companies under the legally established terms.
An independent contractor can create a permanent establishment in another company, but there is a risk of illegal transfer of workers under Section 43 of the Workers’ Statute. The transferring company must have a stable activity and means to carry on the business.
An illegal transfer of workers is understood to take place where any of the following circumstances is present:
- a the purpose of the service contracts between the companies is limited to a mere deployment of the workers of the transferring company to the benefiting company; or
- b the transferring company has no stable activity or organisation of its own, it does not have the means necessary to undertake its activity, or it does not exercise the functions inherent to its status as an employer.
iii Probationary periods
Employment can be subject to a probationary period. Employers use this to assess the employee’s suitability and performance. A probationary period should be specified in the contract of employment. It will generally last:
- a six months for certified technicians;
- b two months for unqualified employees or three months in companies with fewer than 25 employees; or
- c one year at the start of a permanent contract to support entrepreneurs.
The employer can terminate the contract during a probationary period without reason, without notice and without compensation. If, however, an employee performed the same functions under a different prior contract with the same company he or she cannot be dismissed without reason, notice or compensation, as the current probationary period will be considered void. If the contract is terminated for a discriminatory reason, the termination will be considered void.
V RESTRICTIVE COVENANTS
Spanish law permits non-compete clauses in employment contracts. The employer and employee can agree an exclusivity clause in the employment contract. This restricts employees from carrying out any work-related activities or jobs for any other employer or on their own account. The employees must be specifically compensated during the term of employment for agreeing to the exclusivity clause.
On the other hand, employers can agree a non-compete clause with employees for a maximum of two years after their employment is terminated. This clause shall only be valid if the employer has an actual industrial or commercial interest in such, and the employee is paid an adequate economic compensation.
i Working time
The duration of the working day shall be that agreed upon in the collective bargaining agreement or work contract. The maximum duration of the ordinary working day shall be 40 hours a week of effective work on average over a year.
The irregular distribution of the working day throughout the year may be established through collective bargaining or, in its absence, through agreement between the company and the workers’ representatives. In the absence of an agreement, the company will be able to distribute unevenly 10 per cent of the working day throughout the year. The distribution must, in any case, respect the minimum periods of daily and weekly rest provided for in the Workers’ Statute. The worker must be informed of his or her work schedule with a minimum notice period of five days.
Between the end of one working day and the beginning of the next, there shall be at least 12 hours of rest.
The actual number of ordinary working hours may not exceed nine daily, unless another distribution of daily working time is established by collective bargaining or, in its absence, an agreement between the company and the workers’ representatives, respecting, in any case, the rest period between working days.
Workers under 18 years old may not work more than eight actual hours a day, including, as applicable, the time devoted to training and, if they work for several employers, the hours worked for each of them.
Work done between 10pm and 6am shall be considered night-time work. Employers regularly performing night-time work shall inform the labour authorities thereof.
The working day for night-time workers may not exceed an average of eight hours daily over a reference period of 15 days. Night workers may not perform overtime work.
Those hours of work done over the maximum duration of the ordinary working day outlined above shall be considered overtime. Through a collective bargaining agreement or, in its absence, an individual contract, a choice shall be made between payment for overtime in a set amount, which in no case may be inferior to the value of the ordinary working hour, and payment in terms of equivalent periods of paid rest. In the absence of an agreement in this respect, it shall be understood that overtime done shall be compensated through rest within the four months following its execution.
Overtime work shall be voluntary, unless its execution has been agreed on in collective bargaining agreements or in individual work contracts.
The number of overtime hours may not exceed 80 in one year, with an exception for excess overtime worked to prevent or repair accidents and other extraordinary or urgent damages.
For the purposes of overtime calculation, the working day for each worker shall be recorded from day to day and summed up in the period set for the payment of compensation, with a copy of the summary provided to the worker in his or her payslip.
The government may suppress or reduce the maximum number of overtime hours for a specific period of time, either generally or for certain sectors of activity or territories, in order to increase the opportunities of placement for workers in a status of compulsory unemployment.
VII FOREIGN WORKERS
Employers must keep a register of their foreign workers and must keep soft or hard copies of the work and residence authorisation; social security enrolment; social security coverage communication; and all other relevant labour documents.
There is no limit on the number of foreign workers a workplace or company may have. There are also no restrictions on the length of a foreign worker’s assignment as long as the work or residence authorisation is renewed accordingly.
There are two legal immigration frameworks currently applicable in Spain:
- a general immigration framework:
• Organic Act 4/2000 of 11 January on the rights and freedoms of foreigners in Spain and their social integration;
• consolidated version of Royal Decree 557/2011 of 20 April, approving the Regulation of Organic Law 4/2000, on the rights and freedoms of foreigners in Spain and their social integration, after its reform by Organic Law 2/2009;
• Royal Decree 240/2007 of 16 February 2007, relating to the entry, free circulation and residence in Spain of EU nationals coming from EU Member States and the EEA; and
• Royal Decree 987/2015 of 30 October 2015, amending the RD 240/2007, relating to the entry, free circulation and residence in Spain of EU nationals coming from EU Member States and the EEA;
- b the Entrepreneurs’ Act framework:
• Act 14/2013 of 27 September on support to entrepreneurs and their internationalisation; and
• Act 25/2015 of 28 July, in its Provision 11 on amendment of Act 14/2013 of 27 September on support to entrepreneurs and their internationalisation.
In the event of a local hire, work and residence authorisation with regard to third country nationals is valid as follows:
- a general framework: the initial work and residence authorisation is granted for one year, the second for two years and the third for two years; and
- b Entrepreneurs’ Act: the initial work and residence authorisation can be granted for a period up to two years and renewed for consecutive periods of two years each while initial conditions are maintained.
In both cases, after five years of legal and continuous residence, the foreign national is eligible to apply for a long-term residence permit valid for five years, allowing him or her to work in the same conditions as Spanish nationals.
In the event of a transnational worker assignment (hired by a company located outside the EU and transferred to the Spanish subsidiary or client), authorisation is granted as follows:
- a General immigration framework: the work and residence permit is usually granted for a period up to one year and can be extended for another year. Exceptionally, it can be extended on an annual basis where the bilateral social security agreement between the sending country and Spain so states and it is formally approved by both the sending state and the Spanish social security departments. If there is no social security agreement between the sending country and Spain, the work and residence authorisation is granted for a period up to one year and can be extended for an additional period of one year.
- b Entrepreneurs’ Act framework: the work and residence permit can be granted for a period up to two years, renewable for consecutive periods of two years each as long as the social security agreement is valid or the social security contributions are being fulfilled.
In both cases and after five years of legal and continuous residence, the foreign national is eligible to apply for a long-term residence permit valid for five years, allowing him or her to work in the same conditions as Spanish nationals.
Non-EU/EEA nationals must obtain work and residence authorisation approval, a consular visa (if applicable) and social security enrolment in order to start working when they are locally hired, and in case they are transferred to Spain and no bilateral agreement on social security is in place. If they are transferred to Spain and a bilateral social security agreement is in place, the third country nationals can start working upon obtaining work and residence authorisation and the corresponding visa if applicable.
In relation to EU/EEA nationals, they can start working upon arrival to Spain provided the registration at the social security system as local hire is in place, or a communication of transfer is submitted to the relevant labour authorities in case of a secondment prior to starting the work activities. No preliminary work permit approval is needed, although the applicant is required to be registered at the local police station if the intended stay is longer than 90 days.
The company must pay taxes and social security costs for a foreign worker when applicable.
Every worker who performs labour activities in Spain, whether locally hired, transnational or completing an internship or training, is protected under local employment laws.
Locally hired workers are also protected by the collective agreements applicable to the specific activity business area in the same terms as Spanish workers.
Transnational workers assigned by a foreign company to a Spanish branch, client or project are specifically protected by Law 45/1999, even if the contract was originally signed under the home country specific labour regulation. Law 45/1999 guarantees the minimum labour conditions such as basic salary, the protection of privacy and dignity and the rights to join a union, to strike and of freedom from discrimination.
VIII GLOBAL POLICIES
There is no obligation in Spanish law to implement internal discipline rules. Section 58 of the Workers’ Statute states that employees can only be sanctioned according to the disciplinary procedures established in the Workers’ Statute and the applicable collective bargaining agreement. Any global policy regarding disciplinary procedure will not be applicable in Spain if it states something different than the applicable collective bargaining agreement or the Workers’ Statute.
Employers can negotiate with the workers’ representatives the disciplinary procedure and sanctions; however, this negotiation must be within a collective bargaining agreement negotiation. According to the Spanish legislation, employers and workers’ representatives are entitled to negotiate the disciplinary procedures included in the applicable collective bargaining agreement; therefore, the agreement reached in this issue is not submitted to any government control.
To avoid any discrimination between male and female employees, Spanish law states that companies employing more than 250 employees must create an anti-discrimination policy regarding men and women. For other companies this policy is voluntary unless it is foreseen in the applicable collective bargaining agreement.
The rules must be always written in the local language since it will be the speaking language of the employees.
Notwithstanding the above, some international companies introduce global codes of conduct. For these to be applicable, and considering that their content must not oppose what is stated in the law and the applicable collective bargaining agreement, the employer must prove that the code of conduct has been made known to the employee. Therefore, even though there is no such legal obligation, this kind of code should be signed by the employees. Another common way to prove that the employees are aware of the code is to introduce a statement clause in the employment contract.
It is widespread practice to post this code of conduct on the company’s intranet; however, the main point is to prove that the employees know that the code has been posted on the intranet. This could be stated in the employment contract or in another computer use policy.
As mentioned above, disciplinary rules cannot be incorporated in the employment contract and must be included only by applicable collective bargaining agreement and law.
There are no rules about the language of employment contracts between the parties themselves. However, employment contracts and employment documents must be registered with the Public Administration drafted in an official language, that is, Spanish or the official language of an autonomous community (Spain is divided in autonomous communities or regions and some of them have a different language from Spanish that is considered official).
The contract can be signed in two different languages. In such case, it is recommended to include a clause in the employment contract stating which version will prevail for interpretative purposes.
The employee must understand the terms and conditions of the labour relationship he or she has entered into so the documents should be drafted in an understandable language. However, to enforce such documents before the Public Administration or Courts, they must be translated in Spanish.
If a court does not understand the document then the agreement will not be taken into account in a judicial proceeding, but there are no criminal penalties established for not having the employment document translated.
X EMPLOYEE REPRESENTATION
Employee representation in Spain is structured in two different ways – union representatives and employee representatives – both with similar rights.
Employees affiliated with a trade union may set up union divisions within a company to represent their interests. In companies or work centres with 250 employees or more, employees may elect their trade union delegates by and among employees affiliated with a labour union. The number of such union representatives for each union division is related to the number of employees in the company or work centre, as follows:
- a up to 250 employees in the company: one union delegate for each union division when they obtain between 5 and 10 per cent of votes in the election to the works council;
- b 250 to 750 employees in the company: one union delegate for each union division with 10 per cent of votes in the election to the works council;
- c 751 to 2,000 employees in the company: two union delegates for each union division with 10 per cent of votes in the election to the works council;
- d 2001 to 5,000 employees in the company: three union delegates for each union division with 10 per cent of votes in the election to the works council; and
- e more than 5,000 employees in the company: four union delegates for each union division with 10 per cent of votes in the election to the works council.
The number of union delegates may be increased by collective bargaining agreements.
In companies with 50 employees or more, a works council may be established to act on behalf of employees and to negotiate with the employer. The number of the members of the works council depends upon the number of employees in the company, as follows:
- a 50 to 100 employees: five representatives;
- b 101 to 250 employees: nine representatives;
- c 251 to 500 employees: 13 representatives;
- d 501 to 750 employees: 17 representatives;
- e 751 to 1,000 employees: 21 representatives; and
- f more than 1,000 employees: 21 representatives plus an additional two for every extra 1,000 employees up to a maximum of 75.
In companies employing between 11 and 49 employees, no works council may be established, but employees can elect employee delegates to represent their interests. In companies employing between six and 10 employees, employees may also elect employee delegates if they so decide by majority agreement.
The most representative labour organisations, those having at least 10 per cent among the representatives in the company, or the workers of the work centre by majority agreement, may advocate elections for employees’ delegates and the works council.
Unions with the capacity to advocate elections shall have the right of access to the registers of the public administration containing data on the registration of companies and the enlistment of workers, to the extent necessary to carry out such a purpose in their respective areas.
The proponents shall notify the company and the public office subordinate to the labour authorities of their proposal to hold elections with a minimum advance notice of at least one month prior to the start of the electoral process. In the said notification, the proponents must exactly identify the company and the work centre in which the electoral process is intended to be held, as well as the date it is to start, which shall be that of the organisation of the polling station, and which, in any case, cannot begin before one month or after three months counted from the registration of the notice in the public office subordinate to the labour authorities. Within the following working day, this public office shall display the prior notifications on its bulletin board, providing a copy thereof to the unions that may request it.
The holding of general elections in one or several functional areas or territories may only be advocated subject to a majority agreement between the most representative unions or the unions considered representative in accordance with Organic Law 11/1985 dated 2 August, on the Freedom of Association. Such agreements must be communicated to the public office subordinate to the labour authorities for their deposit and publication.
Where elections are recommended to renew representation owing to the end of a mandate, the recommendation may only be actioned three months before the end of the mandate.
Partial elections may be advocated due to resignations, revocations or adjustments in representation due to an increased workforce. Collective bargaining agreements may make provisions for the need to accommodate workers’ representation to any significant decreases in workforce that may take place in the company. By default, the said accommodation may be carried out by virtue of an agreement between the company and the workers’ representatives.
The duration of the mandate for workers’ delegates and works council members shall be four years, with the understanding that they shall remain in office exercising their competences and guarantees until such time as new elections may be advocated and held.
Under Section 64 of the Workers’ Statute the works council shall have the following competencies:
- a To receive information, which shall be provided to it at least every quarter, on the general evolution of the economic sector to which the company belongs, the situation of production and sales in the entity, its production programme, the probable evolution of employment in the company, and the employer’s provisions regarding the signing of new contracts, indicating the number of these and the modalities and types of contract to be used, including part-time contracts, on the performance of additional hours by the part-time workers contracted, and the premises of subcontracting.
- It shall also have the right to receive information at least once a year regarding the application of the right to equal treatment and opportunities between men and women in the company, which shall include data on the proportion of men and women on the different occupational levels, along with information, as the case warrants, on measures that may have been adopted to promote equality between men and women in the company, and, if an equality plan has been projected, on the application thereof.
- b To receive the basic copy of the written contracts and the notification of extensions and dissolutions thereof within 10 days following the date on which these take place.
- c To know the balance, profit-and-loss accounts, management report and – should the company take the form of a stock or share company – the other documents made available to the shareholders, under the same conditions as these.
- d To issue a report before the employer’s enforcement of decisions regarding the following matters:
• workforce restructuring and total or partial, permanent or temporary cessations in this;
• reductions in the working day as well as total or partial transfer of installations;
• professional training plans of the company;
• the implementation or revision of organisational and work control systems; and
• time studies, the establishment of bonus or incentive systems and workplace evaluations.
- e To issue reports when the merger, absorption or modification of the company’s legal status implies some effect on the volume of employment.
- f To know the written forms of work contract used in the company as well as the documents regarding the termination of labour relations.
- g To be informed of all sanctions imposed on very serious offences.
- h To be informed, at least on a quarterly basis, of the statistics regarding absences and the reasons for them, work accidents and professional illnesses and their consequences, accident indices, periodic or special studies on the work environment, and prevention mechanisms employed.
- i To exercise the tasks of:
• vigilance in the fulfilment of the labour, social security and employment regulations in force, as well as all other standing pacts, conditions and practices of the company, formulating, as the case warrants, the appropriate legal action with respect to the employer and the competent agencies or courts;
• vigilance and control over the safety and hygiene conditions in the company’s work procedures; and
• vigilance for the respect and application of the principle of equal treatment and opportunities between men and women.
- j To participate in the management of the social work established in the company for the benefit of the workers or their family members, as set forth in the collective bargaining agreement.
- k To collaborate with company management towards the establishment of whatever measures may procure the maintenance and increase of productivity, as agreed on in collective bargaining agreements.
- l To collaborate with company management in establishing and initiating conciliation.
- m To give general information to the employees.
Except for what is provided for in the collective bargaining agreements, works council members and employees’ delegates, as the legal representatives of the workers, shall have the following guarantees:
- a Opening of an inter partes case in the event of sanctions for serious or very serious offences, where, apart from the interested parties, the works committee or other workers’ delegates shall be heard.
- b Priority for continued employment in the company or workplace with respect to the other workers in cases of suspension or job losses for technological or economic reasons.
- c Not being dismissed or sanctioned during the exercise of his or her functions or during the year following the expiry of his or her mandate, unless this is caused by revocation or resignation, provided that the dismissal or sanction is based on the acts of the worker in the exercise of his or her mandate of representation. Likewise, he or she may not be discriminated against in his or her economic or professional promotion precisely by reason of the exercise of such representation.
- d Freely expressing – jointly, if the committee is concerned – his or her opinions on matters concerning the sphere of his or her representation, being able to publish and distribute publications of labour or social interest without disrupting the normal progress of work, communicating this to the company.
- e Each committee member or workers’ delegate shall receive a credit of paid monthly hours for the exercise of their representative functions, in accordance with the following scale: workers’ delegates or works committee members:
• up to 100 workers, 15 hours;
• from 101 to 250 workers, 20 hours;
• from 251 to 500 workers, 30 hours;
• from 501 to 750 workers, 35 hours; and
• 751 workers and over, 40 hours.
The accumulation of hours on the part of the different work council members and, as applicable, of the employees’ delegates, in one or several members, may be negotiated in collective bargaining, by which these may be relieved from work, without prejudice to their compensation.
The committees shall meet every two months, or whenever one-third of its members or one-third of the workers it represents petitions it.
XI DATA PROTECTION
i Requirements for registration
A company is responsible for all files containing personal data of its employees and must comply with all the obligations that the data protection legislation foresees. Inter alia, there is an obligation to notify the files to the Spanish Data Protection Agency (AEPD) to have them registered.
The employer must identify what information is being processed in order to apply the corresponding level of protection in accordance with the law.
The employee’s consent will not be necessary as long as the data filed is necessary for the fulfilment of an employment contract. However, the employee may oppose the treatment of certain personal data in the event of a reason based on a particular personal issue.
The employee has the right to know about all his or her personal data that the company collects. Therefore, the Personal Data Protection Law foresees that the employee can require the company to provide all the personal data filed regarding him or herself. This access right cannot be limited in any way by the company.
The company must adopt all the adequate and necessary measures in order to guarantee the safety of the personal data.
According to the Spanish legislation there are three different safety levels depending on the data filed, with different safety procedures: basic level, medium level and high level, the three levels linked to the level of protection needed for the personal data filed.
ii Cross-border data transfers
According to the Spanish legislation, the general rule is that cross-border transfers of data must require the authorisation of the Director of the AEPD. There are, however, some exceptions to this rule, which are: (1) the data is transferred to a country with an adequate level of protection; and (2) legally excluded situations.
The countries considered by the Spanish legislation to offer an adequate level of protection are: Andorra, Argentina, Canada, EU Member States, the Faroe Islands, Guernsey, Iceland, the Isle of Man, Israel, Jersey, Liechtenstein, New Zealand, Norway, Switzerland and Uruguay.
All employees whose personal data will be transferred must be informed of this before the transfer. The law also establishes that the way to perform this obligation must be in a way that allows verification that it has been fulfilled (e.g., in writing or via email). In some cases employees’ consent must be obtained.
Onward international data transfers are foreseen and allowed in Spain, under certain circumstances. Should the original transfer be carried out to a country offering an adequate level of safety according to the Spanish legislation, onward transfers must be foreseen, this possibility being included in the contract signed between companies. Another possibility for carrying out onward transfers is that the Spanish company requests a special authorisation from the Director of the AEPD to carry out an onward transfer.
iii Sensitive data
Spanish legislation differs between personal data and specially protected data. Specially protected data needs to be treated in a different way, involving higher protection standards, not only during its collection, but also during its treatment.
Section 7.1 of Organic Law 15/1999 of Personal Data Protection distinguishes three different categories of special protected personal data:
- a data regarding politics, religion, beliefs and union affiliation;
- b data regarding race, origin, health and sexual orientation; and
- c data regarding criminal records and administrative sanctions.
Data regarding politics, religion, beliefs and union affiliation
Section 16.2 of the Spanish Constitution states that no one can be forced to reveal this data. Therefore, regarding an employment relationship, these kinds of data can only be collected if there is a company interest that justifies it.
If the collecting of these data is allowed, the processing can only be done with express and written consent of the employees.
Data regarding racial origin, health and sexual orientation
According to the Spanish legislation, the general rule for collecting and processing this personal data is that it must be done with the consent of the employee.
However, there are two main situations where the employees’ consent is not mandatory: (1) when a law so provides; and (2) when it is considered as essential information for any occupational risk-prevention plan.
Data regarding criminal records and administrative sanctions
These kinds of personal data can only be included in files that are property of the public administration; therefore an employer must refrain from collecting or processing them.
iv Background checks
It is perfectly legal to check the references included in an employee’s CV with his or her former employers.
Regarding credit checks, it is possible to check at the public registers if there is any note regarding a candidate. However, it is not possible to ask for a credit check on a candidate, unless it is allowed by a law or collective bargaining agreement.
An employer asking for a criminal record check in a general way is against the law; an employer cannot ask for a criminal record from all of its employees and without any specific reason to do so. It may be different, and it would be needed to be studied on a case-by-case basis, if the criminal record requirement is limited to certain job posts with a specific condition.
Women cannot be asked if they wish to have children in the near future, if they are pregnant or any other personal aspect that has no relevance to the job post. Women also have the right not to inform the employer about their pregnancy. In addition, employees are not obliged to inform an employer of whether they would be willing to strike or not.
XII DISCONTINUING EMPLOYMENT
An employee may not be dismissed without cause since the employer must support the disciplinary dismissal on a specific cause reflecting in the written dismissal letter the facts that justify it and the date on which it will take effect.
Even though notifying a works council or trade union is not a requirement for the validity and fairness of the dismissal, its non-fulfilment will be considered as an administrative infraction to be punishable accordingly. Further, collective bargaining agreements could state specific requirements for it.
Certain categories of employee, other than employee representatives, are protected from dismissal. Dismissals shall be null and void in the following cases:
- a workers during a period of work contract suspension owing to maternity, risk derived from pregnancy, problems derived from natural breastfeeding, illnesses caused by pregnancy, childbirth or natural breastfeeding, adoption or fostering or paternity, or of workers notified on such a date that the timeline for prior notice ends within that period;
- b pregnant workers, starting from the date of the start of the pregnancy up to the beginning of the period of suspension mentioned before;
- c workers who have requested leave to breastfeed children, leave to take care of children who have to remain hospitalised after childbirth or leave to take care of a child less than 12 years of age or a person with a physical, mental or sensory disability who does not perform any paid activity; or are currently on any of the above kinds of leave, or have requested or are currently using the leave for childcare;
- d workers who are victims of domestic violence exercising the rights to reduction or reorganisation of their working time, geographical mobility, or change of work centre or suspension of labour relations, in the terms and conditions acknowledged by law;
- e workers after reinstatement at work at the end of the period of contract suspension for maternity, adoption, fostering or paternity, provided that not more than nine months have elapsed from the date of birth, adoption or fostering of the child;
- f workers who have requested a reduction in their working hours; and
- g workers who have already initiated proceedings against the company, protected by the ‘indemnity guarantee’. This guarantees that the exercise of an action at law, or of preparatory acts prior to such an action, does not carry damaging consequences for the claimant in his or her public or private relations. In the field of labour relations, the indemnity guarantee protects employees from reprisals relating in any way to the exercise of their legal rights.
What is set forth above shall be applicable unless the dismissal is declared fair in such cases for reasons not related to the pregnancy or the exercise of the right to the leave and permissions outlined or grounds mentioned above.
Severance and other dismissal indemnities are not required. However, if the dismissal is declared unfair, the employer must choose between the employee’s reinstatement, with the right to procedural salary, or the payment of an indemnity equivalent to 33 days’ salary per year worked and a maximum of 24 monthly payments. This compensation will affect all new indefinite employment contracts signed since 12 February 2012.
However, unfair dismissal indemnity corresponding to contracts signed prior to 12 February 2012 will be calculated based on 45 days’ salary per year worked for the time of services rendered afterwards. The amount of indemnity will not be more than 720 days’ salary unless the calculation for the period worked before 12 February 2012 resulted in a larger amount, in which case that amount will be used as the upper limit, and the amount will not be higher than 42 months’ salary in any case.
On the other hand, null and void dismissals shall result in the immediate reinstatement of the worker, along with the payment of those wages that he or she stopped receiving with the possibility to pay an additional indemnity if damages are proven before court.
Parties can enter into a settlement agreement; however, such agreement must be settled before extrajudicial conciliation authorities or judicial authorities.
To make an employee redundant the company must be able to support the dismissal on economic, technical, organisational or productive reasons. In the case of collective redundancies (collective lay-offs), a different procedure must be followed by the employer, which involves a consultation period with the workers’ legal representatives.
The company is only required to comply with a consultation period with the worker’s legal representatives and notify the government of redundancies where, in a period of 90 days, the lay-off affects at least:
- a 10 workers in companies that employ fewer than 100 workers;
- b 10 per cent of the number of workers in the company in those employing between 100 and 300 workers; and
- c 30 workers in companies that employ more than 300 workers.
Among other formalities, a copy of the notice of the opening of the consultation period shall be sent by the employer to the Labour Inspectorate. Further, at the end of the consultation period, the employer shall inform the Inspectorate of the results thereof.
For individual redundancies (when the thresholds mentioned above are not met), the employer must deliver to the workers’ legal representatives a copy of the dismissal letter. For collective redundancies, at the end of the consultation period with no agreement with the workers’ legal representatives, the employer must notify them of its decision regarding the collective dismissal and its conditions.
A social plan is only required for collective redundancies affecting more than 50 employees. The employee does not legally have rehire rights; however, a social plan could recognise such rights to the affected employees. Offers of suitable alternative employment are similarly not legally required; however, a social plan could recognise such rights to the affected employees. If collective lay-offs affect employees aged 50 years or older, companies shall have to pay an economic contribution to the Spanish Public Treasury, under the terms and conditions stipulated by law.
The company must provide 15 days’ notice to the employee. Pay in lieu of notice is permissible.
In terms of categories of employee that are protected from dismissal, see Section XII.i, supra. Note, however, that workers’ legal representatives shall have priority for continued employment in the company in these cases and collective bargaining agreements or agreements reached during the consultation period could state priority of continued employment for other groups of employees, such as employees with disabilities and workers above a certain age.
Simultaneously with the delivery of the dismissal letter, the employer must deliver to the employee a severance payment equivalent to 20 days’ salary per year of work, with the period of time of less than one year prorated by months to a maximum of 12 months.
Parties can enter into a settlement agreement. For individual redundancies, such agreement must be settled before extrajudicial conciliation authorities or judicial authorities. For collective redundancies, employers can enter into an agreement with the workers’ legal representatives during the consultation period, in spite of the fact that in case of a dismissal claim parties can settle an agreement before the authorities mentioned.
XIII TRANSFER OF BUSINESS
The Transfer of Undertakings Directive 2001/23/EC, which protects the employment contracts of people working in businesses that are affected by mergers, acquisitions or outsourcing transactions, was transposed into Spanish law approving the amended text of Section 44 of the Workers’ Statute in the version following Law 12/2001 of 9 July 2001.
Section 44 of the Workers’ Statute provides that in the event of a transfer of business (either a share sale or asset transfer) the new employer must respect every single right and obligation regarding employees’ working conditions. Therefore, employees are automatically transferred with the same working conditions as they previously enjoyed to the new employer. In addition, the same collective bargaining agreement is applicable for the transferred company in the moment of purchase. However, this obligation can be avoided if an agreement is reached between the buyer and the representatives of the employees transferred. This agreement, in order to be valid, must be reached once the purchase of the company is complete. The obligation of the maintenance of the collective bargaining agreement by the new employer will last until the expiration date of the collective bargaining agreement, or its substitution for a new one applicable to the business transferred.
Section 44 of the Workers’ Statute establishes that both the transferor and transferee companies must inform the representatives of the employees affected by the transfer, at least with regard to the following matters:
- a date of transfer;
- b reasons for the transfer;
- c economic, legal and social consequences for the affected employees; and
- d any measures designed for the affected employees.
This obligation must be carried out before the transfer date. The law does not provide a precise notice period for this obligation; it only states that it must be done an appropriate time in advance. The only precise requirements in the law relate to merger and spin-off procedures.
In case of a merger or a spin-off, both the transferor and the transferee must provide the aforementioned information before or at least at the time when the general assembly of shareholders convenes.
A consultation period will arise between the transferor, the transferee and the workers’ representatives in the event that due to the undertaking any labour measures are planned. The law only establishes that this consultation period must be done sufficiently in advance and that both parties must negotiate according to the principle of good faith in order to reach an agreement.
The main aim of the undertaking process is to protect the affected employees from dismissal. Therefore, the undertaking will never be a dismissal cause by itself. This protection applies to the dismissals made by the one cause of undertaking, but it will be perfectly legal to dismiss employees by any cause stated in the Workers’ Statute.
For 2017, employers should consider upcoming judicial rulings in relation to the working time (including overtime) record, and the equalisation of termination severances between fixed-term contracts and indefinite term contracts.
1 Iñigo Sagardoy de Simón is chairman and Gisella Rocío Alvarado Caycho is a lawyer at Sagardoy Abogados.