The Employment Law Review: Spain
The Spanish Constitution serves as the foundation of the Spanish legal system. It is the fundamental national law; all other legal provisions are subordinate to it and may not contradict it. More specifically, the following legislative framework, listed in order of priority of application, governs Spanish employment legislation:
- the Workers' Statute: the basic employment legislation that includes the minimum rights of ordinary employees;
- employment legislation approved by the government;
- collective bargaining agreements: agreements negotiated and formalised by and between employers and trade unions (or workers' representatives if within the company) to govern employees' employment conditions within a specific context. A collective bargaining agreement can be applicable to a specific sector or activity, at national or provincial level, of general application at a company or for a specific workplace;
- an individual employment contract formalised with a particular employee;.
- case law from the Spanish and European courts; and
- a company's own traditions and customs.
The following public bodies exist within Spanish labour jurisdiction, whose main role is to apply and enforce employment law:
- employment courts: labour courts, high courts and the Supreme Court;
- the Employment and Social Security Inspectorate: a state body that ensures compliance with employment and social security legislation. It is authorised to visit companies, impose penalties in the event of non-compliance and even commence, at its own initiative, legal proceedings against companies. Unlike the courts, the Inspectorate can perform its functions as a result of anonymous complaints or at its own initiative; and
- other institutions: for example, the Spanish Women's Institute.
Year in review
Spanish employment legislation underwent several amendments in 2019, mainly as a result of the political situation, elections and changes in government. The ultimate aim of these amendments has been to foster employees' work–life balance and equality between men and women in the professional arena.
The most notable changes are the following:
- the gradual alignment of paternity leave with maternity leave;
- the right of employees with a child under the age of 12 or with a person in their care to request adjustments to their working day or working hours, without a reduction in the number of hours worked or their salary;
- an obligation on employers to record their employees' working hours every day;
- digital disconnection right; implementation of this legislation is pending; and
- the negotiation of an equality plan with the workers' representatives, if any, at companies that employ more than 150 employees (gradual application until 2022).
In addition to the changes noted in Section II, most of the hot topics have arisen from claims before Spanish employment courts. One that grabbed everyone's attention was a decision handed down by the Catalonia High Court in June 2019. The Court ruled that merely suspecting irregularities was not a sufficient ground for secretly installing video surveillance systems. However, when there are reasonable suspicions that serious irregularities of a significant scope have taken place, such as in the case in question, it can be considered that grounds exist for the installation of video surveillance systems. On 17 October 2019, the European Court of Human Rights confirmed this case law.
Another noteworthy topic in 2019 was the question of whether food delivery riders are considered company employees or self-employed individuals. Spanish employment courts have handed down rulings with contrasting conclusions, but the large majority uphold the consideration of this type of work as bogus self-employment. The Asturias High Court handed down one of the most recent rulings in this regard (July 2019).
Basics of entering into an employment relationship
i Employment relationship
In Spain, any service between the person rendering it, on behalf of and under the organisation and management of another, and the recipient of that service in return for remuneration requires an employment contract to be executed.
In this regard, employment contracts may be written or oral, although it is highly advisable for contracts to be executed in writing. For certain employment contracts, such as fixed-term or trainee contracts, employment law requires the contract to be in writing, otherwise it will be presumed to be an indefinite-term and full-time contract, unless evidence can be provided to the contrary.
For a written contract to be enforceable, it must be signed by the employee. Otherwise, the employment contract will be considered to be oral.
Under Spanish employment law, the following terms and conditions must be included in employment contracts:
- place and date;
- nationality of the employee and the date on which the employee takes up employment;
- nature of the services and place where they will be rendered;
- agreed remuneration;
- number and distribution of working hours; and
- other provisions agreed by the parties.
Under Spanish employment law, if an offer letter includes all the terms and conditions listed above, it could 'lose' its non-binding effect and be considered an employment contract.
Employment contracts may be entered into for an indefinite period or for a fixed term. Spanish law establishes the following temporary grounds for entering into a fixed-term employment contract:
- when the performance of specific work or a particular service requires additional personnel. This work or service must be of a temporary, specific and substantial nature within the context of a company's activity and be executed within a limited period which, in principle, is of uncertain duration (e.g., a specific project awarded to a company);
- when required by market conditions, a backlog of tasks or excess orders, including as part of a company's normal activity (e.g, sales); or
- when the contract is for substituting employees who have the right to have their position safeguarded (e.g., employees on maternity leave).
The parties may modify the terms and conditions of the employment contract by means of an addendum to the contract at any time during the employment relationship. However, if no agreement is reached, Spanish employment law provides that economic, technical, organisational or production causes must be proven by the employer.
ii Probationary periods
Employment law in Spain recognises the possibility of arranging in writing a probationary period that should be subject to the term limits negotiated with the workers' representative. If no agreement is reached between the parties or with the workers' representative, the legislation lays down the following limits that should be respected in all cases: (1) six months from the commencement of the employment contract for qualified line personnel; and (2) two months for other employees.
Both parties would be free to terminate the employment contract during the probationary period without needing to allege or evidence any grounds whatsoever, and without needing to provide any prior notice.
In this connection, a new wording of the Workers' Statute, which has recently entered into force, establishes that terminating the employment contract of a pregnant employee would automatically render the dismissal null and void, unless it can be evidenced that the termination is based on valid grounds unrelated to the pregnancy.
ii Establishing a presence
In accordance with Spanish legislation, companies are not initially required to be registered to hire an employee, since employees can be registered at the company of origin and be subject to a remote working agreement in Spain. In this connection, the alternative of hiring employees through an agency or third-party undertaking could represent a high risk for a company, because it could be considered that personnel are being illegally transferred. These situations would need to considered separately in each individual case.
As a possible alternative, the foreign company could enter into a service agreement with a self-employed person, respecting at all times his or her autonomy and independence. In this situation, if the self-employed person provided services on an ongoing basis, it could give rise to a risk of a permanent establishment being deemed to exist, which in turn would entail tax liabilities.
Being registered with the tax and employment authorities (social security system) is an essential requirement for hiring employees in Spain, since it is the employer's obligation to withhold tax and pay in the legally applicable amounts.
Spanish employment legislation provides for the establishment of exclusivity covenants that are effective both during the employment relationship and after it has been terminated; both parties must voluntarily agree to such a covenant, either in the employment contract or in an addendum thereto.
In relation to the exclusivity covenant, it is possible to establish various types of restrictions on entering into agreements during the employment relationship; prohibitions on both (1) providing services to other companies simultaneously when it could be considered that unfair competition is taking place, and (2) working simultaneously for any other company (i.e., agree to provide services exclusively). For such a covenant to be deemed valid, the employer must compensate the employee economically for the restrictions on his or her ability to enter into agreements with other companies, particularly if the parties have agreed to an exclusive provision of services; otherwise, the covenant could be deemed null and void.
With respect to the post-contractual non-compete covenant, a restriction will be established on the employee preventing him or her from entering into an agreement following the termination of the employment contract that bound the employer and employee. For such a covenant to be valid and effective, the following cumulative requirements must be taken into account: (1) a maximum period of two years for line personnel and of six months for other employees; (2) the industrial or business interests of the company; and (3) appropriate and reasonable economic compensation that makes up for any losses suffered as a result of the employee ceasing to perform the employment activity he or she had previously carried out.
The absence of the foregoing requirements will render the covenant null and void and unenforceable.
i Working time
Employment legislation in Spain establishes certain limits on the duration of the working day, namely a maximum of 40 hours per week of effective work, calculated as an average across the full year, and a maximum working day of nine hours of effective work; in any event, a minimum period of rest of 12 hours between the end of one working day and the beginning of the following working day must be respected. The maximum number of working hours per year in each employment activity is determined by the industry-specific collective agreement.
The above-mentioned limits do not apply to employees who are not of full age. The working hours of employees between the ages of 16 and 18 are limited to eight hours of effective work per day. For people doing night shifts, their working hours are limited to an average of eight hours a day over a reference period of 15 days.
Employment legislation establishes the possibility for employees to do overtime subject to the following limits: (1) it must be voluntary, except for cases of force majeure; (2) it must be compensated, either through leave or economically; and (3) an employee may not work more than 80 hours of overtime a year.
Under the collective bargaining agreement or a clause in the individual employment contract, the parties will either agree to the overtime being compensated economically, stating the amount, which under no circumstance may be less than the amount paid for normal working hours, or by means of equivalent periods of paid leave. If there is no clause, it shall be understood that overtime must be compensated by means of leave within the four months following its performance; overtime duly compensated with leave will not be included in the calculation for the aforementioned annual limit of 80 hours.
There is no legal obligation in Spain to keep a record of foreign employees over and above the common record of a company's employees.
The employer may hire the number of foreign workers it deems appropriate, provided that the foreign workers have the corresponding official permits (normally permits to work and reside in Spain). For employees from EU Member States, no special permit is required.
With regard to obligations regarding tax and social security contributions, the bilateral double tax treaties applicable to each case must be adhered to. Also, the maximum duration of foreign workers' postings must adhere to the content of the bilateral treaties, and the employee will not be entitled to social security benefits until he or she pays into the Spanish social security system.
The legislation applicable to foreign workers will be that agreed in the employment contract or agreed with the employee, without prejudice that foreign workers should at least benefit from the same rights as local employees.
Employees are governed by the Workers' Statute and any applicable collective bargaining agreement, both of which include events deemed to be breaches, the corresponding penalties and the employer's ability to sanction employees.
There is no legal provision entitling companies to approve a specific internal disciplinary regime. However, companies are free to publish a code of ethics or a code of conduct that employees are required to follow.
In this regard, there is no requirement to notify the state employment authority of such codes or to specifically include their content in employment contracts.
With respect to internal policies, companies are advised to have an anonymous whistle-blowing channel, a sexual harassment protocol, and policies on the use of email and computer hardware. Also, companies that have more than 150 employees in 2020 are required to negotiate an equality plan with the workers' representatives.
In Spain, an express consent from employees for each internal policy is not required; it is sufficient that their existence is made known to employees. However, in the event of disciplinary action based on a breach by the employee, it will be necessary to prove that the employee was previously informed of the relevant policy by duly authenticated means.
In practice, an internal policy is communicated by email to each employee or published on the company's intranet, or both.
With respect to language, case law considers that a company policy must be drawn up in a language that the employee can understand, otherwise compliance therewith may not be enforceable and, accordingly, a breach by the employee could not be penalised. It is therefore recommended that policies be drawn up at least in Spanish to leave no room for doubt as regards their full comprehension.
Besides being regulated in the Workers' Statute, the right to balance work with personal and family life is also established in other legislation aimed at enabling this. Among others, leave may be granted for the following:
- the birth of a child and care of minors (maternity, paternity, adoption, breastfeeding, legal guardianship); and
- health and safety matters arising during pregnancy.
Paternity leave has recently been modified and will be increased gradually until it equals maternity leave (16 weeks) in 2021; 12 weeks' leave has been established for 2020.
Under employment law, the following social security requirements must be met to access the aforementioned leave: the employee must (1) be registered and notified as being hired for social security purposes, (2) have contributed for a minimum period based on their age, and (3)≈be up to date with social security contributions.
Employees who have met these requirements will be entitled to apply for maternity or paternity leave and receive a state benefit, which will be equivalent to 100 per cent of their contribution base.
Under no circumstances may the exercise of this right be punished or pursued by the company. Should this occur, the company's decision would most likely be declared null and void owing to an infringement of the employee's fundamental rights.
Although Spanish employment law does not expressly require internal policies to be drafted in a specific language, according to case law, a company cannot demand compliance with a regulation drafted in a language other than that commonly used by its workforce, on the grounds that the employees might not understand it. Therefore, although it is not mandatory to translate policies and communications, it is advisable so as to ensure enforcement and penalisation in the event of a subsequent breach.
Additionally, with respect to action brought before the Spanish courts or public authorities, these bodies require documentation to be submitted in Spanish or, where applicable, accompanied by a certified Spanish translation.
Employees in Spain are entitled to participate in companies through various representative bodies. Any representative body established will depend on the size of the workforce in the workplace (or company, if it has just one workplace) and is as follows:
- Employee representatives in companies with fewer than 50 employees:
- in companies with up to 30 employees: one representative; and
- in companies with between 31 and 49 employees: three representatives.
- between 50 and 100 employees: five committee members;
- between 101 and 250 employees: nine committee members;
- between 251 and 500 employees: 13 committee members;
- between 501 and 750 employees: 17 committee members;
- between 751 and 1,000 employees: 21 committee members; and
- more than 1,000 employees: two committee members for each 1,000 employees or fraction thereof, up to a maximum of 75.
The employee representative election procedure is heavily regulated and formalities must be observed. Employee representatives and members of a workers' committee will be elected by the employees to be represented by means of personal, direct, free and secret voting. Their tenure will be for four years, and they will remain in the role until new elections have been promoted and held.
The following guarantees, among others, have been afforded to employee representatives and workers' committee members by law:
- a special procedure in the case of serious or very serious penalties;
- priority over other employees to remain in the company in the event of a collective redundancy;
- freedom to express their opinions on matters relating to their representation functions; and
- special protection in the case of dismissal, on the grounds that this might be in retaliation for their role.
These guarantees are enjoyed for the duration of their tenure and for one year following the expiry thereof.
As regards their powers, workers' representatives are mainly be entitled, among other rights, to (1) call regular meetings with the employees (there is no legally established minimum frequency) and (2) receive a quarterly report on industry trends and the company's financial situation.
i Requirements for registration
Although the most recent data protection legislation does not require personal data filing systems to be identified for the purpose of communicating the processing of personal data, the Spanish data protection agency (AEPD) must be notified of the appointment of a data protection officer (responsible for controlling and overseeing compliance with legislation at the company) at entities which, for instance, perform mass and systematic data processing or that process big data.
Entities must notify employees of the processing of their data at the time when the data are collected, by means of a clause providing them with information on, for instance, the data retention period and the purposes of, and legitimate basis, for the processing.
The processing of employees' personal data is, in general, strictly related to the performance of the employment contract. However, in certain circumstances, and to process the data for other reasons, such as marketing purposes (sending marketing communications with partner offers or discounts), the entity may assess whether to request employees' express written consent. However, this does not prevent the entity from performing additional data processing on other legitimate bases recognised in the EU General Data Protection Regulation (legitimate interest, legal requirements, etc.).
It is very important to bear in mind that the data collected from employees should be adequate, relevant and limited to the purpose for which the data were requested. In this context, it is essential to guarantee that technical and organisational measures are taken to ensure the protection and security of these data.
ii Cross-border data transfers
As a general rule, it will not be necessary to notify the AEPD of international data transfers or request the approval thereof, unless the guarantees provided for carrying out the transfers are, for example, set forth in contractual clauses agreed by the parties and not adopted by the European Commission.
To be able to carry out an international data transfer, adequate guarantees established in the applicable legislation will need to be in place. For example, the following guarantees will be considered valid: (1) the country to which the data are transferred must have an adequate level of data protection (the transfer being subject to a decision as to suitability); (2) the signing of standard contractual clauses approved by the European Commission, codes of conduct and certificates attesting to compliance with the law; and (3) other exceptional guarantees, such as the explicit consent of the employee, vital interests or the public interest.
In any event, any international data transfer carried out subsequently to the transfer of which the employee had initially been notified must have an adequately legitimate basis and the employee must be notified thereof.
iii Sensitive data
Special categories of data are considered to be those that reveal ethnic or racial origin, political opinions, religious or philosophical beliefs, or trade union membership, the processing of genetic data or biometric data that can uniquely identify an individual, data concerning health or an individual's sex life or sexual orientation (for example, medical data may be considered to be sensitive, but data relating to an individual's social security number would not).
As a general rule, the processing of special categories of data is prohibited, except in the following cases (mentioned by way of illustration): (1) when the employee has given explicit consent to the processing (this will not apply in cases where the sole aim is to identify the employee's ideology, trade union membership, religion, sexual orientation, beliefs, or racial or ethnic origin, in which case a different basis for carrying out this processing must be sought); (2) compliance with a legal obligation; and (3) protection of the vital interests of the data subject.
iv Background checks
To check or verify business references submitted by employees, it will be necessary to analyse the specific framework of the job that they will be performing or the information that needs to be ascertained. For instance, if the entity wants to hire a goods vehicle driver, it may ask the employee to show his or her driving licence.
Also, it will be legally impossible to ask employees to show a criminal record certificate detailing criminal convictions and infringements, except in exceptional cases authorised by law and, in all cases, subject to the proper guarantees. In principle, it will likewise not be possible to ask employees to furnish information about their credit history, unless so permitted by a legal obligation.
Under Spanish employment law, dismissal must be duly justified on either disciplinary or objective grounds, since otherwise it may be declared unjustified, the main consequence of which would be the payment of the corresponding termination severances to the employee.
However, there are certain groups that are subject to special protection under employment law, such as (1) pregnant employees and employees who have given birth within the previous 12 months or (2) those who work reduced hours for family reasons. In the event that an employee belonging to either of these groups is dismissed, the dismissal will automatically be declared null and void, unless sufficient legal grounds can be demonstrated.
Other employee groups are protected against dismissal, namely (1) employee representatives, who are subject to a special dismissal procedure, and (2) employees who have filed complaints against the company. Unless sufficiently valid grounds can be demonstrated, dismissal could be considered null and void on the basis that it constitutes retaliation for the employees' specific situations.
Except in respect of collective redundancies, it is not necessary to notify any employment authority of the decision to dismiss an employee. However, it will be necessary to notify the workers' representatives at the company.
Following the dismissal, the parties have the option of reaching an agreement before resorting to court action, so as to avoid the cost of legal proceedings and to prevent the procedure from becoming protracted.
Employment legislation in Spain provides for two types of individual dismissals, namely disciplinary grounds and objective grounds. The formal requirements are different for each, as follows:
- Dismissal on disciplinary grounds:
- a written communication to the employee sets out the facts prompting the dismissal and the date on which it will take effect (other requirements may be established by a collective agreement);
- no termination benefit or notice period is provided for; and
- payment of outstanding salaries.
- prior notice of 15 days (this may be more under a collective agreement) or payment in lieu;
- a written communication to the employee stating the reason;
- a termination benefit of 20 days' salary for each year worked at the time of notification of the dismissal; and
- payment of outstanding salaries.
However, in the event that the legally established thresholds are exceeded, the dismissal will be considered a collective redundancy and a different course of action must be followed:
- must be preceded by a period of consultation with the workers' representatives, the duration of which cannot exceed 30 days;
- the employment authority must be notified of the commencement of the procedure and negotiations;
- the employees must be notified individually and in writing of the agreement reached with the workers' representatives, or the employer's decision, accompanied by the agreed termination benefit;
- the offer of an outplacement plan; and
- possible costs over and above termination benefits (special agreements, public treasury contribution agreements, etc.).
Transfer of business
The Transfer of Undertakings Directive applies in Spain as it does in numerous other EU Member States. A change in ownership of a company, workplace or independent production unit resulting from a commercial transaction in Spain will not terminate the employees' employment relationship by itself; instead, the new employer will be subrogated to the labour and social security rights and obligations arising prior to the transaction for three years, and to the other labour and social security obligations arising after the transaction.
For a business succession to be deemed to have taken place, the following requirements must be met: (1) subjective element: a change in ownership of the company or of a significant part thereof; and (2) objective element: the effective transfer of an economic entity that maintains its identity, in respect of which all the elements required for the business activity to continue must effectively be delivered.
Employment legislation is undergoing numerous reforms as a result of the changes in the Spanish government. These labour reforms are therefore expected to continue in 2020, with a primary focus on continuing to promote a good work–life balance, increasing paid leaves of absence and achieving gender equality.
We also consider that the obligation on employers to disclose the existence of a gender pay gap will be subject to heavy debate at both company and legislative levels, since it entails a change in the culture of many business organisations.
Another issue assessed by the new government is the implementation of an obligation to bring the salaries of subcontracted companies into line with the salaries paid by the principal company.
Without any doubt, 2020 will be an uncertain year from an employment law standpoint. Companies should therefore engage the appropriate employment advisory services and be duly informed of any legislative changes that might arise.