I INTRODUCTION

Laws and regulations governing employer–employee relationships and working conditions in Spain are set out in the Workers' Statute, and in all national employment and social security laws and regulations, and collective bargaining agreements, which have to comply with European Union regulations and directives of direct application, the Spanish Constitution, international treaties and the international labour standards of the International Labour Organization (ILO).

Spain is organised at the level of towns, provinces, autonomous communities and central government. The state is divided into 17 autonomous communities, which are geographical regions with political autonomy over many aspects of governance. In relation to employment, the state has exclusive competence for labour and employment legislation. However, most autonomous communities have assumed responsibility for the implementation and execution of labour legislation, as allowed for by the Constitution.

The main piece of legislation is the Workers' Statute, which regulates individual employment relationships, including types of employment contracts, working time, termination and suspension of the employment contract, collective representation rights, collective bargaining and labour infractions.

As well as the Workers' Statute, there is a wide array of laws and regulations that govern employment relationships. The most important of these govern social security, prevention of occupational hazards, gender equality, temporary employment agencies, infringements and penalties related to employment and social security obligations, the jurisdiction of the social courts (labour disputes), legal freedoms in relation to trade unions, strike law, and special regulations applicable to specific employment relationships, such as senior management relationships.

Under the Spanish legal regime for labour and employment, collective bargaining agreements are those contracts negotiated between workers' representatives and employers or employers' representatives to regulate working conditions in certain sectors or in companies operating nationally or at regional levels. These agreements can only stipulate employment conditions that improve on those established in the Workers' Statute and they usually regulate working time and the work system (i.e., whether it is a rotational system); remuneration, including yearly increases and benefits; job descriptions for each professional group; vacation time; disciplinary procedures; requirements for the hiring of new employees; and certain obligations regarding temporary employment contracts.

Employment contracts at the level of the individual also constitute a source of regulation of employment relationships. Individual employment contracts must necessarily respect all conditions established both in laws and regulations and in applicable collective bargaining agreements.

Finally, the social security system provides coverage for a number of contingencies, including unemployment, temporary or permanent disability, retirement and death, salary guarantee funds in case of company insolvencies, and for widows and orphans. To pay for this coverage, every employer and employee must make contributions to the social security system. Contribution amounts are proportionate to the salary each employee receives. The social security system also provides universal healthcare coverage.

II PROCEDURE

Under Spanish employment law, disputes between employers and employees may be resolved through individual or collective procedures, mainly depending on the specific nature of the dispute and the number of employees involved.

i Individual procedures

Individual procedures are the most common type of litigation procedure in Spain. They are usually initiated by employees, although employers may also initiate them under certain circumstances (usually to claim amounts from employees, such as back pay compensation or damages arising from a breach by the employee of a post-contractual non-compete covenant)

To initiate an individual procedure, the employee must first file an administrative claim before the relevant regional conciliation service requesting a conciliation hearing with the company. (Note that exceptions to this process are made in the case of certain specific procedures, such as annual leave procedures or procedures for the modification of working conditions.) The filing of a claim prior to the start of the formal procedure before the employment courts is mandatory. The administrative claim shall include the main terms of the lawsuit that will be pursued in court and will result in a conciliation hearing, with both parties summoned to try to settle the case. In practice, a significant number of disputes are resolved by means of agreements reached through the conciliation services, which helps reduce the number of court procedures.

If no agreement is reached through the conciliation service, the claimant is entitled to file his or her lawsuit with the employment court. The employee must include in the written claim the arguments that will be used at the trial in court, so that the defendant is apprised of them prior to the court hearing and is therefore able to defend the case.

The parties can reach an agreement and settle the case at any time before the court hearing takes place, otherwise they shall appear before the court on the date of the hearing. On that date, prior to the hearing, the parties will again be asked to hold a mandatory conciliation hearing before the judge to try to settle the case. Should there not be a conciliation between the parties, the hearing will take place subsequently.

During the court hearing, the claimant must explain his or her position and the defendant will answer the claimant's arguments orally (no written reply to the claimant's lawsuit is allowed in employment procedures). Moreover, both parties will submit their evidence before the court, which includes not only documents but also witnesses' testimony or experts' reports. Finally, the parties will explain their conclusions to the judge and the trial will finish.

The court will then deliver its judgment, deciding whether to accept the claimant's arguments, totally or partially, or reject them. Exceptions are made for certain specific procedures, but most court decisions are subject to appeal before the superior courts (either the high court of justice of the appropriate autonomous community or the Supreme Court) by any of the parties involved. Appeals are made in written form and not orally.

ii Collective procedures

From a procedural standpoint, collective procedures basically follow the same rules as those set out for individual procedures. The main difference from individual procedures lies in the subject matter of the dispute or in the nature of the claimant. In this connection, collective procedures are raised in relation to the following:

  1. lawsuits that have an impact on the general interests of a group of employees (e.g., interpretation or application of a specific law, a collective bargaining agreement or a company policy);
  2. claims against company decisions of a collective nature (e.g., significant modifications of working conditions that have a collective impact); and
  3. challenges to collective bargaining agreements.

The parties entitled to initiate collective procedures are workers' representatives, trade unions, companies, company associations or the national or regional labour authorities. Collective procedures are subject to the same rules as individual procedures, with minor specificities due to the collective nature of the dispute. This means that the initial phase will be oral, with any subsequent appeal made in written form.

III TYPES OF EMPLOYMENT DISPUTES

There are several types of procedures to be followed in employment-related disputes under Spanish law. The specific type of procedure depends on the nature of the dispute, and the following are the most notable of these:

  1. Ordinary procedure: this is the general procedure covering all areas not included in other types of procedure. Ordinary procedures cover claims for pending amounts (e.g., salaries, bonuses and overtime) or requests for specific conditions.
  2. Termination procedure: this procedure involves claims against any kind of termination of employment (e.g., redundancy, disciplinary dismissal or collective redundancy).
  3. Protection of fundamental rights: this procedure aims to protect employees from any violation of their fundamental rights by their employer (e.g., retaliation, breach of trade union freedom or discrimination at work).
  4. Social security: certain procedures regarding social security matters that were previously held before administrative courts are now held before the employment courts. These include certain social security benefits of employees, claims for amounts (social security contributions), or social security fines imposed on companies by the public administration.
  5. Other procedures: procedures regarding challenges to disciplinary measures imposed on the employee by the employer, annual leave, professional classification, relocation, changes to working conditions, or reconciliation of family and professional life.

On top of the above-mentioned types of procedures, the existence of collective procedures, as explained in the previous section, must also be considered.

Finally, most significant contentious issues with regard to employment matters in Spain are those regarding termination of employment, particularly where an employee claims that a dismissal is unfair or null and void, with the aim of being reinstated or receiving the statutory severance payments set out under applicable law.

In this regard, termination in Spain can be implemented through a disciplinary dismissal based on the employee's misconduct or through redundancy based on economic, technical, organisational or productive reasons. In cases of disciplinary dismissal, there is no implied duty for the employer to pay any severance on the termination date, whereas redundancy entails the right of the employee to statutory severance pay, equal to 20 days of salary (salary includes base salary plus commissions plus some benefits paid either in cash or in kind, such as a company car or stock options) for each year of service (capped at 12 months' pay) together with the delivery of the termination letter.

However, if the employee does not agree with the reasons for termination (regardless of the type of termination undertaken by the employer), he or she can challenge the decision through the termination procedure before the employment courts. As a consequence of the employee's claim, the court shall decide whether the termination is:

  1. justified (i.e., the grounds justifying the termination are deemed to be valid and the legal procedure has been followed);
  2. unjustified (i.e., the grounds justifying the termination are not well founded, which in turn would imply an obligation for the employer to pay the employee severance pay of 45 days' salary per year of service until 12 February 2012 and 33 days' salary per year of service after 12 February 2012, with any amount already paid in the event of redundancy to be deducted from the overall severance payment); or
  3. null and void (which would entail the obligation for the employer to reinstate the employee with back pay); this finding of lack of justification would occur in the case of certain employees who are specially protected against termination, such as workers' representatives, pregnant women, employees who have taken maternity or paternity leave, or where the termination is due to retaliation.

IV YEAR IN REVIEW

i Overview

During 2019, there were some significant legislative changes in relation to equality and the obligation to record working time.

On 8 March 2019, Royal Decree-Law 6/2019 on equality2 came into force, with the following key elements:

  1. The obligation to prepare equality plans is to be gradually extended to companies with 50 or more employees.
  2. Every company must compile a register of disaggregated salary information by gender and professional classification. This register is to be accessible to employees through their legal representatives, and all employees carrying out equal-value jobs must receive the same salary.
  3. Companies with 50 or more employees that identify a pay gap of 25 per cent or more between employees of either gender must provide an objective and reasonable justification for this disparity.
  4. Objective dismissal in specially protected cases requires proof of the specific need to terminate the employee's contract.
  5. The suspension of the employment contract due to paternal leave is to be gradually extended to 16 weeks for each parent in 2021.
  6. The right to adjust and rearrange working hours and the way of working to achieve a work–life balance, without having to reduce working hours and salary, is strengthened. This aspect is proving to be controversial and has given rise to a substantial number of judicial conflicts in the lesser courts.

Furthermore, on 12 May 2019, Royal Decree-Law 8/20193 came into force. This Decree-Law expressly introduces the obligation for all companies to keep a daily register of all employees' standard working day, with their start and finish times. According to the ruling of the European Court of Justice (ECJ) of 12 May 2019,4 this obligation extends to all Member States and requires employers to set up an objective, reliable and accessible system registering the effective daily working time for each employee.

In accordance with this new ordinance, companies must negotiate with employees' representatives on how to organise and maintain that register, which must be kept for four years. Employees, their representatives and the labour inspectorate are entitled to access these registers.

Directive 2019/1937 on the protection of persons who report breaches of union law was published in November 2019 and entered into force on 17 December 2019, and it requires that Member States implement the following:

  1. the obligation for companies with 50 or more workers to establish internal reporting channels; and
  2. protection for persons who report breaches of European Union law who have obtained their information in the context of their work-related activities, and provide a series of safeguards against possible retaliation.

ii Case law

As regards case law, there have been significant rulings issued by both national and international courts and affecting the following areas: video surveillance; discrimination against sick employees; termination for objective reasons based on justified absenteeism; consideration of working time; severance compensation for temporary employment contracts; tax exemption of severance compensation of senior management relationships; digital platforms and the gig economy; and compensation and benefits. These topics are discussed further below.

Video surveillance

Regarding video surveillance, the Grand Chamber of the European Court of Human Rights (ECHR) issued a ruling on 17 October 20195 revoking its prior ruling of 9 January 2018. The case concerned the disciplinary termination of several employees (supermarket cashiers) who by means of temporary security camera coverage had been recorded helping customers and other co-workers to steal items and stealing items themselves. The ECHR ruling of 2018 declared that the employees' privacy rights had been violated by the filming, which was done with temporary covert security cameras.

In its second ruling, however, the ECHR declared that the employees did not suffer a violation of their privacy rights. The ECHR relied heavily on the fact that the surveillance was temporary and carried out in response to suspicions of misdemeanours (irregularities in the shop's stock and its sales, and losses over several months), and that notification of the surveillance would have rendered it useless. This decision reinforces previous rulings and case law from the Spanish Supreme Court.

However, the facts of this case happened before the General Data Protection Regulation6 and Spain's Organic Law 3/2018 on Data Protection and Guarantee of Digital Rights came into force, so it remains to be seen whether the answer would be identical under the current regime.

Discrimination against sick employees

An employee assigned to the processes of assembly and shaping of plastic pipes suffered from epicondylitis, a condition considered an 'occupational disease', and accordingly the employee was categorised as being among 'employees particularly susceptible to occupational risks'. The employee attended the company's medical centre on several occasions complaining of pain and sent various letters to the medical centre and to the employer requesting that her workplace be adapted to her physical condition. At each medical assessment, the employee was declared 'fit with limitations'. The company dismissed the employee and nine other employees on objective grounds, citing economic, technical, production and organisational reasons.

The employee sued the company over the termination, and the social court requested a preliminary ruling by the ECJ on several questions arising from the matter.

On 11 September 2010, the ECJ ruled on the case7 that the termination for objective reasons of an employee particularly susceptible to occupational risks within the meaning of national law (as was the case) on the basis of criteria of productivity, multi-skilling in the undertaking's posts and absenteeism may be discriminatory because the worker's condition was considered to be disabled. The ECJ ruled that the concept of 'disability' must be understood as referring to a limitation of capacity resulting in particular from long-term physical, mental or psychological impairments that, in interaction with various barriers, may hinder the full and effective participation of the person concerned in professional life on an equal basis with other employees.

Termination for objective reasons based on justified absenteeism

Spain's Constitutional Court has declared the recurring absences of an employee to be valid cause for termination (even when the absences are justified, as stipulated in Section 52(d) of the Workers' Statute). In its ruling of 16 October 2019, the Court declared that even where absences are due to temporary sickness, the Court's interpretation of the Workers' Statute does not violate either the constitutional right to life and physical integrity nor the right to health and the right to employment. In consequence, employers may terminate employment relationships when the number of absences from work reach a certain threshold within a time frame. In this case, the affected workers were entitled to severance compensation of 20 days' salary per year worked.

Consideration of working time

The Supreme Court declared on 19 March 2019 that time spent with clients at events outside regular working hours (such as accompanying clients to sporting competitions or presentations by journals or magazines) to strengthen the relationship with them constitutes 'effective working time', even where attendance at such events is voluntary for the employees.

Regarding individually mobile workers, such as technicians, on 31 October 2019 the National High Court also declared that the time spent on the journey from the worker's home to the first client and back home from the last client at the end of the day was 'effective working' time. The Court applied the ECJ's doctrine from the Tyco case8 of 10 September 2015. The Tyco criteria were applicable in this case because (1) the worker's activity was carried out exclusively on clients' premises, so the journey to and from those premises was unavoidable; and (2) during the journey, which was controlled by GPS systems, the workers were subject to the employer's instructions and directions, and could not use the time for other purposes.

Severance compensation in temporary employment contracts

On 13 March 2019, the Supreme Court declared that interim workers are not entitled to severance compensation upon regular termination of the interim relationship – thereby closing the De Diego Porras dispute.9 In contrast to its position in previous procedures, which was not clear, the Supreme Court currently considers that Spanish regulation of interim contracts and, according to the ECJ decision in De Diego Porras II,10 their termination does not contravene Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP.

Tax exemption of severance compensation in senior management relationships

On 5 November 2019, another notable ruling from the Supreme Court dealt with the tax treatment of severance compensation for at-will termination of a senior management relationship.

In cases of termination of an ordinary employment relationship, the Workers' Statute stipulates the level of severance compensation, which is tax exempt, while in the case of senior management relationships, the level of severance compensation is agreed between the parties. If there is no agreement between the parties, severance compensation is set pursuant to Royal Decree 1382/1985, which regulates senior management relationships, at seven days' cash salary per year worked, which is the amount the Supreme Court has declared to be tax exempt.

Digital platforms and the gig economy

Rulings on the employment status of 'riders' (i.e., delivery workers who work for digital platforms, including home-delivery apps such as Deliveroo and Uber Eats) continue to generate debate. The latest chapter is the decision of the High Court of Justice of Madrid of 27 November 2019 declaring that workers providing delivery services for a technological platform must be classified as employees and subject to the Workers' Statute. This ruling is significant as it has been issued by the full High Court of Justice of Madrid, assembled specifically for this purpose in view of the contradictory rulings that have been handed down by social courts and other high courts. In agreement with this ruling is the one by the High Court of Justice of Asturias of 25 July 2019, which also declared the relationship between the riders and the company to be in the nature of employment. However, on 19 September 2019, the High Court of Justice of Madrid (not assembled in full, but a section of the Court)declared that there was no employment relationship between riders and digital platform companies.

This issue is expected to reach the Supreme Court, which will have to decide the matter and provide unifying legal doctrine, which will have to be followed by the lower courts.

Compensation and benefits

The National High Court has declared in its ruling of 24 May 2019 that compensation for paid leave must include all salary concepts, regardless of whether they have their basis in personal circumstances (academic titles, languages) or functional circumstances (night work, multitasking, etc.). The Court also declared that when the paid leave was due for reasons of work–life balance not doing so would constitute discrimination (both direct and indirect).

V OUTLOOK AND CONCLUSIONS

Looking at developments on the horizon for the next 12 months, it is almost certain there will be significant events.

From a legislative viewpoint, after a year with hardly any developments (and following previous years with little legislative work) and two general elections, the government newly elected in November 2019 has announced its intention of reformulating certain aspects of the labour reform implemented in 2012, namely (1) repealing the preferential application of company bargaining agreements over sector bargaining agreements, and (2) modifying the rules regarding the temporary non-application of collective bargaining agreements and their enforceability even when their temporary validity has lapsed.

Moreover, it is presumed that the new government may continue its proposed outsourcing and subcontracting reform (a reform initiated in 2016 and yet to be concluded) aiming at equal salaries and essential conditions of employment in contractor and contracting companies. It also intends to fight gender inequality in the workplace and tackle fraudulent temporary employment. The control and reduction of overtime is also one of the government's objectives.

The government and the trade unions have also announced the need to review current legislation and assess whether it should be adjusted to accommodate the new ways of working brought about by digital platform companies and the gig economy. There is a division of opinions on this issue, because, as seen in the rulings issued so far, some believe these new ways of working are covered perfectly well by the current legislation, while others believe it is not adequate and should be reformed accordingly.

Regarding union whistle-blowing, Directive 2019/193711 affords Member States broad discretion in transposing the Directive into national law, so it is possible that the protection it grants may be extended. The deadline for transposing the Directive is 17 December 2021.

As to case law developments, the ECJ has yet to rule on when paid leave commences – either on the first working day after the event triggering the leave takes place or on the day after the event.

It is also foreseeable that more rulings on the consideration of 'effective working time' may be issued, as this topic has regained pre-eminence as a source of conflict in employment relations because of recent legal reform and recent rulings.

Considering the economic prospects for 2020, there will possibly be an increase in the number of the types of collective procedures that tend to lead to judicial disputes, such as downsizings and modifications of employment conditions. Rulings in these disputes will help settle some controversial issues, such as how to manage those procedures in complex companies, including in groups of companies.

Furthermore, as previously mentioned, the Supreme Court seems certain to rule on the nature of the relationships between digital platforms and gig economy workers, as there have been contradictory rulings on this issue. A ruling by the Supreme Court would surely be significant, and may affect any subsequent new regulation of these relationships.

Finally, regarding the reform on gender equality introduced by Royal Decree-Law 6/2019,12 it is expected that rulings will continue to be handed down and a body of doctrine formed on the more controversial issues raised by the Decree-Law, such as the right to adjust and rearrange working hours, and ways of working to achieve a work–life balance without having to reduce working hours and salary. It is expected that some of these shall reach the Supreme Court and consequently it will ultimately issue unified doctrine on these topics.


Footnotes

1 Jorge Aranaz Benito is a partner, Ana Campos Rodríguez de Tembleque is a senior associate and Lucas Peiro de la Rocha is an associate at Cuatrecasas.

2 Royal Decree-Law 6/2019 of 1 March on urgent measures to guarantee equal treatment and opportunities for men and women in employment and occupation.

3 Royal Decree-Law 8/2019, of 8 March on urgent measures for social protection and to combat job insecurity in the workplace.

4 Case C-55/18.

5 Case López Ribalda II, applications 1874/13 and 8567/13.

6 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation).

7 Case C-397/18, Nobel Plastiques.

8 Case C-266/14, Tyco.

9 ECJ 14 September 2016, C-596/14, De Diego Porras.

10 ECJ 21 November 2018, C-619/17, De Diego Porras II.

11 Directive (EU) 2019/1937 on the protection of persons who report breaches of Union law.

12 Royal Decree-Law 6/2019 on urgent measures to guarantee equal treatment and opportunities for men and women in employment and occupation.