Employment 2021

Last Updated September 07, 2021

Spain

Law and Practice

Authors



Allen & Overy LLP is an employment practice that stands out for its wide experience and knowledge of employment law, pensions, benefits and incentives, providing and developing individual and creative solutions to all workplace issues, from working terms and conditions, employee relations and HR policies, to restructuring and dispute resolution. The firm's approach is very much that of a partnership, working in collaboration with clients to develop individual and creative solutions to their workplace and benefits needs. It is accessible, pragmatic and hands-on, with expertise in communicating directly with workers, employee representatives and regulatory authorities on HR and reward issues.

The employment-related changes approved throughout 2020 have been mainly those indicated in 1.2 COVID-19 Crisis.

However, due to the COVID-19 situation, the government has been analysing teleworking and it is expected that a legal development regulating teleworking will be approved in the next few months.

Permanent Measures

Royal Decree-Law 6/2020 of 10 March 2020 equates the situation of employees in preventive isolation, or those who are sick or infected with COVID-19, to medical sick leave due to professional contingencies.

Temporary Measures

Dismissals

Currently, the measures adopted in the workplace to mitigate the effects of COVID-19 cannot be understood as justifications for the termination of the employment contracts. The prohibition has been extended until, at least, 30 September 2021. The consequence of this restriction would mean that any dismissal based on grounds related to COVID-19 will not be considered fair (see 7.2 Notice Periods/Severance).

Preferential nature of remote work

Royal Decree-Law 8/2020, of 17 March 2020 on extraordinary urgent measures to face the economic and social impact of COVID-19 (RD 8/2020) introduced a strong recommendation for companies stating that they had to establish organisational systems, particularly through remote working procedures, provided that this measure was technically and reasonably possible and the effort involved in its adoption was proportionate, being an exceptional norm of limited validity.

Law 2/2021, of 29 March 2021 on urgent prevention, containment and co-ordination measures to face the health crisis caused by COVID-19 provides for a series of urgent measures aimed at guaranteeing the right to life and health protection while the health crisis caused by COVID-19 lasts. Among the mandates provided for in the aforementioned regulation, it is worth mentioning the obligation of companies to adopt measures for the progressive reincorporation of employees to their job positions and the promotion of the use of remote work when possible.

Return to the office

Law 2/2021 entered into force on 31 March 2021. Chapter II of the aforementioned Law, made up of Articles 6 to 16, contemplates the obligation for companies to adopt of certain preventive measures in the work environment, such as:

  • adopting adequate ventilation, cleaning and disinfection measures;
  • making soap and water – or hydroalcoholic gels or disinfectants – available to employees for hand cleaning;
  • adapting working conditions, including the arrangement of jobs and the organisation of shifts, as well as the use of common places in such a way as to guarantee the maintenance of a minimum interpersonal safety distance of 1.5 metres between employees;
  • adopting measures to avoid the massive coincidence of people in work centres during the hours of foreseeable greater influx; and
  • adopting measures for the progressive reincorporation of employees to their job positions and the promotion of the use of remote work when possible.

Recourse for employers to temporarily suspend employment contracts or reduce employees' working hours (Expediente de Regulación Temporal de Empleo or ERTE) with a proportional reduction of salary

As with RD 8/2020, there have been several new regulations implemented in Spain to streamline and simplify the ERTE processes already regulated by the Workers’ Statute (WS). The processes vary depending on the period as well as the grounds.

Force majeure

ERTE based on force majeure grounds requires a previous request to the labour authority by submitting a report explaining the reasons and enclosing any existing supporting documentation. The employees’ representatives and the employees have to be informed about both the request and the resolution.

Regarding this type of ERTE, Royal Decree-Law 30/2020, of 29 September 2020, on social measures in the interest of employment has introduced the regulation of two new force majeure situations linked to COVID-19 (ERTE based on impediment or ERTE based on activity limitations) with exemptions to social security and special protection of employees.

RD 11/2021 provided for the possibility of applying for new ERTE based on force majeure and other grounds linked to COVID-19 until 30 September 2021.

Economic, technical, organisational or productive grounds

ERTEs based on economical, technical, organisational or productive (ETOP) grounds related to the COVID-19 do not require prior authorisation from the Labour Authority (merely for the start and end of the process to be notified). This kind of ERTEs require a prior announcement of the company’s intention to the company’s workers representative or or to the relevant unions and a negotiation period for a maximum term of seven days, with the aim of reaching an agreement.

For the processing of this ERTE it is essential to prepare several legal documents including a technical report accrediting the legal grounds. If the employer does not reach an agreement with the negotiation body during the negotiation process, it could apply the ERTE unilaterally, but their decision could be challenged before the labour courts.

In general (subject to objectively justified exceptions), while an ERTE is in force, no overtime, new employment contracts, or outsourcing activities may be implemented.

Since the entry into force of RD 8/2020, the government has been approving different beneficiary measures for both employers and employees while the ERTEs are in force with regard to Social Security contribution quotas as well as unemployment benefits respectively.

Companies that have implemented ERTEs taking advantage of exemptions or reductions in social security contributions must assume a commitment to maintain the applicable level of employment during the six months from the date of resumption of the relevant activity.

Right of adaptation of schedule and reduction of working hours

RD 8/2020 strengthened the rights to work/life balance already regulated in the WS, introducing additional measures to guarantee the reconciling of work and family life as well as the rights linked to it for those employees with duties to care for a spouse or partner and family members, up to the second degree of kinship, in exceptional circumstances related to the activities needed to avoid the spread of COVID-19 (legally listed). The Spanish government has progressively extended the duration of this right.

These are individual rights. Each of the parents or caregivers may request the right with respect to the persons for whom it is a duty to care.

Regarding the right of the employees to adapt their working hours. 

  • The terms, scope and content of this right correspond to the employee if they are justified and reasonable.
  • The organisational needs of the company should be taken into account for the purpose of a possible refusal of the right; however, there is a presumption of the justification, reasonableness and proportionality of the request, unless there is proof to the contrary, while the company and employee are urged to reach an agreement in case of disagreement.
  • The right to adaptation is not limited to the arrangement of working hours but may refer to the distribution of working hours, changes in shifts, changes in the working hours, "flexitime", continued or discontinued working days, change in the workplace, change in duties, change in the form of work provision, including the provision via teleworking, or any other change in conditions that may be available to the company or that may be implemented reasonably and proportionally.

The right to reduce the employee’s working hours with the proportional reduction of salary is regulated by the provisions of the WS, with the following particularities:

  • it must be notified to the company 24 hours in advance;
  • it may reach up to 100% of the working hours; and
  • the worker’s right must be justified, reasonable and proportional to the company’s situation.

Generally, companies hire the employees through an ordinary employment relationship. There are some distinctions between senior executive’s employment contracts and ordinary employment relationships. 

Executive contracts are regulated under Royal Decree 1382/1985 of 1 August 1985; executives are defined as managers who exercise powers inherent to the legal ownership of the company and relating to its general purpose, limited only by the criteria and instructions from the governing person in charge of the company. These employment relationships have fewer regulated rights.

There are different types of employment contracts depending on the form, duration and nature of the relationship. Employment relationships may be distinguished by the number of hours worked by the employees (eg, part-time or full-time employment contracts with the same rights).

Form of the Employment Contract

The principle of freedom of form applies to employment contracts, which may be entered into either verbally or in written form. Verbal employment contracts are generally considered to be indefinite.

However, the following employment contracts must be made in writing:

  • temporary contracts;
  • contracts for employees hired through temporary employment agencies;
  • relief contracts to replace partially retired employees (contratos de relevo);
  • part-time contracts;
  • indefinite contracts that may be subject to interruption;
  • permanent employment contracts to support entrepreneurs;
  • contracts with employees hired in Spain for Spanish entities operating abroad;
  • the transformation of temporary contracts into indefinite contracts;
  • contracts for associated assistance (contrato de auxilio asociado);
  • co-operation contracts and
  • contracts of employees who work remotely.

In relation to employees working remotely, the Spanish Government approved Law 10/2021, of 9 July 2021, on remote working that validates the Royal Law-Decree 28/2020, 22 September 2020. This law regulates labour relationships that are developed remotely on a regular basis (the work must be performed for at least 30% of the work period over a three-month reference period). Its main characteristics are:

  • remote working is voluntary for employees and companies;
  • companies must assume the cost of the expenses that employees have to work remotely and must provide their employees everything they need to carry out the services;
  • employees have at least the same labour rights as if they were working on site; and
  • there are several issues related to this type of work that have to be negotiated with the worker’s representatives.

Duration of the Employment Contract

The general rule is that all employment contracts have an indefinite duration. Temporary employment contracts are only possible when specific and detailed grounds exist. The most commonly used temporary contracts are set out below.

Temporary contracts for the performance of a specific task or service

This type of contract may be entered into to carry out a particular project or service different from the company’s normal activity, and in circumstances where the term of the employment contract is uncertain. It terminates when the relevant project or service rendered is complete. In any event, the maximum term for a temporary employment contract is three years, which may be extended for a further period of 12 months by the applicable collective bargaining agreement (CBA).

Temporary employment contracts for exceptional market circumstances

This type of contract may only be entered into when there is an unexpected workload or a need to provide services that fall within the company’s ordinary business activities. This type of employment contract has a maximum duration of six months within a period of 12 consecutive months from the moment the need arises and may be extended once, subject to an applicable CBA, up to a maximum term of 12 months within a period of 18 consecutive months. Fixed-term contracts to temporarily replace an employee who has a right to return to work.

Training contracts

This type of contract can be used to hire employees who graduated no more than five years ago (or seven years in the case of disabled employees) for a period of six months to two years at a wage of 60% to 75% of the standard salary set out in the applicable CBA.

Fixed-term employment becoming indefinite

Without prejudice to the periods established above for each fixed-term employment contract, Spanish law considers the majority of contracts to be indefinite if, within a period of 30 months, the same employee has been hired for more than 24 months for the same or different positions by the same company through two or more temporary employment contracts.

Formal Requirements

Specific information must be included in a contract of employment, such as:

  • the identity of the parties;
  • the initial date of the employment relationship;
  • the registered office of the company;
  • the place of work;
  • the applicable CBA;
  • the employee’s professional group;
  • remuneration;
  • hours of work;
  • probationary period (if any); and
  • holday entitlement.

Maximum Working Hours and Flexible Arrangements

Weekly maximum working time is 40 hours; however, this may be reduced by an applicable CBA or employment contract. As a general rule, daily working time cannot exceed nine hours unless a longer duration is provided for in a CBA.

Both employers and employees must comply with the minimum rest periods:

  • a minimum of 12 hours between working days;
  • one and a half days uninterrupted per week;
  • 14 bank holidays; and
  • 30 calendar days of vacation per year.

Companies may agree with workers’ representatives on an irregular distribution of working hours.

Part-Time Employees

Part-time employees cannot work overtime, but they can sign a complementary-hours agreement.

Overtime

Those hours worked over the maximum duration of ordinary working hours shall be considered overtime, which must be compensated with time off or payment in cash.

The number of overtime hours may not exceed 80 per employee in a year, but overtime hours compensated with time off in the subsequent four months do not count towards the maximum yearly limit, but shall in any event be considered as overtime.

Certain categories of employees are not permitted to work overtime:

  • employees under 18 years of age;
  • employees rendering services on a part-time basis;
  • employees who are hired to work during night hours;
  • employees whose work hours have been reduced due to a decision of the company in respect of ETOP reasons; and
  • employees hired on a trainee contract.

Under Spanish employment law, companies must register the daily working hours of each employee, setting out the start and end time, including overtime. This obligation does not apply to the working hours of senior executives.

A minimum wage is fixed every year by the government which must be paid in cash. However, applicable CBAs regulate the minimum wage to be paid to each job position in each specific sector, to which increases are applicable each year. 

Salaries must be paid in 12 monthly instalments, plus two extraordinary payments (in July and December).

Vacation

Employees are entitled to a minimum of 30 calendar days (22 business days) of vacation per annum. Annual vacations have to be enjoyed within the calendar year and cannot be carried forward unless otherwise agreed with the employer. Vacation cannot be paid in lieu except in case of termination of employment. The employee's remuneration during the vacation period must be the same they are entitled to receive during ordinary working days. In addition, employees are entitled to 14 bank holidays per year.                                                                                                                                         

Other Paid Leave

In addition to the above, employees are also entitled to the following paid leaves (which may be enhanced as per the applicable CBA).

  • For the time strictly necessary to undergo prenatal tests and childbirth preparation training and – in the case of adoption, custody with adoption purposes or fostering – for the attendance of information sessions and for undertaking the psychological and social reports necessary for the declaration of suitability for adoption; provided that these have to be done during the working day.
  • In the case of a birth, adoption, custody with adoption purposes or fostering, employees are entitled to one hour (or two fractions) of absence from work per day to breastfeed a child aged less than nine months; the duration of such leave shall be increased proportionally in cases of multiple childbirth and could be accumulated in full days as long as a collective agreement or the employer allows it. In addition, one of the parents will also be entitled to enjoy this leave as long as the child is aged between nine and 12 months, with a proportional reduction in salary
  • In the case of the birth of a premature child who has to remain hospitalised, the mother or the father shall have the right to be absent from work for one hour per day.
  • Two days absence will be provided for in the case of a death, accident or serious illness, hospitalisation, or surgical operation without hospitalisation but requiring home rest.

Should the employee need to travel due to one of the above-mentioned situations, the leave shall be extended by two additional days.

Furthermore, employees are entitled to:

  • 15 calendar days in the case of a marriage;
  • one day in the case of change of residence;
  • the time strictly necessary to comply with an unavoidable duty of public and personal character;
  • the time necessary to perform union or employee representative tasks; and
  • a reduction of their working hours if they are the victims of gender violence or terrorism, in order to make effective their protection or social assistance. 

Maternity leave

Employment for mothers is suspended for 16 weeks due to the birth of a child, this is extended in the case of multiple births by two weeks for each additional child. The first six weeks following the date of birth are compulsory. 

Paternity leave

This leave has been gradually increased and since 1 January 2021, paternity leave is 16 weeks due to the birth of a child, being extended in the case of multiple births by two weeks for each additional child. Employees are obliged to enjoy, at least, the first six weeks following the date of birth. After those six first weeks, paternity leave can be enjoyed on a part time basis.

Social security covers maternity and paternity payments up to the 100% of the contribution base.  Several Collective Bargaining Agreements obliges companies to complement the social security allowance until 100% of the employee’s salary. 

Unpaid leave to take care of children or family members

Employees may take up to three years' leave from the date of a child's birth, or from the administrative resolution in cases of adoption. Employees may also request unpaid leave, with a maximum duration of two years, to take care of family members who due to their age, accident or illness cannot care for themselves. In both cases employees have the right to be reinstated in the company after taking such leave.

Reduction of working hours

Employees with a child aged under 12 or who are responsible for a person with a physical, mental or sensory handicap are entitled to a reduction in working hours with the proportionate reduction in salary of between at least, one eighth and a maximum of a half of the normal duration of the working day. This reduction in working hours constitutes an individual right of any employee.

Restrictive covenants are enforceable if certain requirements are met.

A non-competition clause in the course of employment is an employment obligation, no special regulation is needed.

Exclusivity restrictions must be adequately remunerated in order to be enforceable. The law does not make provision as to how much is "adequate" for this purpose.

Post-contractual non-competition restrictions may not exceed two years for technicians and six months for other employees. Post-contractual non-competition restrictions must meet the following requirements:

  • there must exist a real industrial and commercial interest in such a restriction; and
  • adequate compensation must be provided.

The law does not make provision as to what is adequate for these purposes although, on the basis of case law and depending on how restrictive the covenant is, the compensation should range from 70–100% of the employee’s fixed salary.

A post-contractual non-competition restriction is deemed to be a bilateral covenant, the waiver of which requires the agreement of both parties.

Non-solicitation of customers is considered to be included within the scope of a non-competition clause.

However, non-solicitation of employees is not regulated in Spain, therefore this type of clause could raise enforceability issues.

The Organic Law 3/2018 of 5 December 2018 on the Protection of Personal Data and the Guarantee of Digital Rights (Organic Law on Data Protection) sets out a number of specific provisions that apply when processing an employee's personal data.

Surveillance and Recording in the Workplace

Employers may process data collected through camera or video camera surveillance systems to supervise employees or public employees, as established by Article 20.3 of WS and by public service legislation, provided that these functions are exercised within their legal framework and within the limits inherent therein. The WS permits an employer to adopt such measures (having regard to the employees’ dignity and the capacity of workers with disabilities) to verify that employees are fulfilling their employment obligations. Employers must provide advance, express, clear and concise notification to their employees or public employees and, where appropriate, to their representatives about the use of camera surveillance systems.

In the event that a flagrant commission of an unlawful act by an employee or public employee has been captured by such a system, the duty to inform shall be understood to have been fulfilled when an information notice has been placed in a suitably visible location, which gives notice of the processing, the identity of the controller and the data subjects’ rights. In no case shall the installation of sound recording or camera/video camera surveillance systems be permitted in places intended for the rest or leisure of employees or public employees.

The use of sound recording systems will only be admitted if such use is relevant to the protection of installations, goods and persons in the workplace and adheres to the principles of proportionality and minimum intervention. The data must be deleted within a maximum period of one month from its capture, except when it must be kept to prove the commission of acts that threaten the integrity of persons, goods or facilities. In this case, the images and sounds must be made available to the competent authority within a maximum period of 72 hours from the existence of the recording becoming known.

Digital Devices in the Workplace

Employees and public employees shall have the right to protection of their privacy when using digital devices made available to them by their employer. The employer may only access content from such digital media for the purpose of monitoring compliance with work or statutory obligations and maintaining the integrity of such devices. Employers shall establish criteria for the use of digital devices, always respecting the minimum standards for the protection of employees' privacy. The employees' representatives shall participate in establishing such criteria.

The employer's access to the content of digital devices shall precisely specify the authorised use thereof and establish guarantees to preserve the privacy of workers, such as, where appropriate, those periods when the devices may be used for private purposes. Employees shall be informed of the said criteria.

Geolocation Systems in the Workplace

Employers may process data collected through geolocation systems to supervise employees or public employees as explained above. The employer must expressly, clearly and unequivocally inform employees or public employees and, where appropriate, their representatives about the use of geolocation systems. They shall also inform employees about their right to access and rectify data gathered through geolocation systems and restrictions on the processing and erasure of that data.

Whistle-Blowing Systems

Employers may process data to facilitate the reporting of cases of misconduct committed within the company or through the actions of third parties. The employees and relevant third parties must be informed of the existence of such systems. Access to the data contained in these systems shall be limited exclusively to those who, whether or not employed by the entity, carry out internal control and compliance functions and are in charge of the processing that may be designated for that purpose. However, access by other persons, even their communication with third parties, shall be lawful when it is necessary for the adoption of disciplinary measures or for the processing of legal proceedings.

Without prejudice to the notification to the competent authority of acts constituting criminal or administrative wrongdoing, it is only when disciplinary measures are to be taken against an employee that access to the systems shall be granted to personnel with managerial and HR functions. Necessary measures must be taken to preserve the anonymity and guarantee the confidentiality of the data relating to the persons affected by the information supplied, in particular the person who brought the facts to the attention of the entity. The data relating to the complainant, and of employees and third parties, shall be kept in the complaints system only for as long as is necessary to decide whether it is appropriate to initiate an investigation into the alleged facts.

Data Storage and Removal

The data shall be removed from the system after a period of three months has elapsed, unless kept for evidential purposes. Thereafter, the data may be investigated by the appropriate body. Complaints that have not been dealt with may only be recorded in anonymised form unless an obligation to block the data applies.

Contact Details

The processing of personal data in the form of the contact data of individuals who work in a legal entity and individual entrepreneurs and freelance professionals shall be assumed (unless proven otherwise) to have a lawful basis, provided that the processing relates only to data necessary for professional purposes and the purpose of the processing is to maintain relations with the legal entity in which the data subject works.

There are no maximum or minimum hiring quotas for foreign employees.

Non-EU citizens require a work and residence permit to work. Simplified procedures apply to specially qualified employees.

EU Regulations relating to social security and social security bilateral agreements signed between Spain and other countries must be considered to determine the social security obligations applicable to temporary employees who have been hired by a foreign employer.

As general rule, any foreign employee rendering services in Spain shall pay into the Spanish social security system unless they are entitled to make contributions in their country of origin, whether under EU Regulations or a bilateral agreement on social security matters signed between the country of origin and Spain. In the latter case, a formal communication must be submitted to the labour authorities.

A foreign employee will need to apply for a social security number before the beginning of the contract, which will enable their employer to register them for social security purposes.

Unions and their rights are regulated under the Spanish Constitution and in the Organic Law of Freedom of Union Association 11/1985, 2 August 1985 (LOLS). Unions have the right to appoint their own representatives in the company concerned.

The two national representative unions in Spain are CCOO and UGT. However, there are also other representative unions in specific autonomous communities. CCOO and UGT are entitled to represent employees and perform the following functions:

  • institutional representation before public administrations;
  • CBAs;
  • to determine working conditions with the government;
  • to participate in non-jurisdictional systems for the resolution of labour disputes;
  • to promote elections for personnel delegates and company committees and corresponding bodies of the Public Administration;
  • to obtain temporary assignments of the use of public assets under the terms established by law; and
  • any other representative function established by law.

There is a dual representation system within companies:

  • unitary representation, composed of works’ councils/personal delegates; and
  • trade union representation.

It is not compulsory to appoint employees representatives; it is the right of the employees and the trade unions, who may or may not exercise their right to elect and appoint representatives.

Unitary Representation

Unitary representation covers all employees in the work centre or the company. The number and type of employees’ representatives depends on the number of staff, ie:

  • individual delegates may be appointed in companies or work centres with more than ten but less than 50 employees or even with six to ten employees if decided by majority; and
  • Works Councils may be appointed in work centres with at least 50 employees (the number of members of the works council will depend on the number of employees in the work centre).

Elections for workers’ representatives can be promoted by:

  • the most representative trade union;
  • a trade union with a minimum of 10% of the workers in the company; or
  • employees in the work centre (by majority agreement) and following a specific procedure.

Trade Union Representation

Trade unions have the right to designate union delegates where there is a minimum workforce of 250 employees in any company or work centre. The number of union delegates will depend on the number of employees in the company.

Union delegates have the following information and consultation rights:

  • to be informed on a quarterly basis of the company’s economic situation and other special matters;
  • to be informed at least once a year about the implementation of rights to equal treatment and equal opportunities between men and women and to participate in the negotiation of the equality plan;
  • in the event of a transfer of undertaking and the subcontracting of employees, to be informed of:
    1. termination documents;
    2. serious sanctions imposed;
    3. individual terminations;
    4. substantial modification of working conditions: and
    5. balance sheets, profit and loss accounts, annual reports and other documents provided to the company’s shareholders;
  • to be informed and consulted about the situation and structure of employment in the company or work centre and about the adoption of measures designed to reduce risks at work;
  • to issue a non-binding report prior to the company carrying out decisions on the following matters:
    1. restructuring of the workforce or when terminations are implemented;
    2. reductions in working hours;
    3. a total or partial relocation of the company’s facilities;
    4. a merger process or amendments to the company’s legal status; and
    5. organisational and work control systems;
  • to check that the company is complying with all labour and social security obligations;
  • to participate in measures of inspection and control of health and safety; and
  • to negotiate collective measures (collective agreements, redundancies, suspension of employment, geographical mobility, substantial amendment of terms and conditions, etc).

Other rights and guarantees of union representatives include:

  • the ability to commence an appeal in the event of sanctions due to serious breaches of obligations;
  • the possession of seniority over other employees in cases of suspension or termination due to technical or economic reasons;
  • not being dismissed or sanctioned during the exercise of their representative tasks or during the year following, provided that the basis for the dismissal or sanction was grounded in the acts of the employee in the exercise of their mandate;
  • freedom of speech and the ability to publish and distribute publications on matters of labour and social interest; and
  • the right to paid leave to carry out their representative tasks.

Statutory CBAs, which carry the force of law, are negotiated by the workers’ representatives and the employer. Statutory CBAs are directly applicable to all employees and employers included within their scope and who are bound by them. These agreements regulate matters such as minimum salaries, annual working hours, professional groups, probationary periods, holidays and paid leave, and disciplinary measures, among others.

There are various types of CBAs.

  • Sectorial CBAs negotiated between the most representative unions and the employer’s associations, examples include:
    1. state and national sectorial agreements;
    2. regional sectorial CBAs;
    3. provincial sector CBAs; and
    4. interprovincial sectorial CBAs.
  • Company CBAs negotiated between the unitary workers’ representatives in the company and the employer; company CBAs have priority over sectorial ones.

This section is concerned with dismissal based on an employee’s serious and wilful non-compliance with their contractual duties. Legal causes for this type of dismissal are explained in 7.3 Dismissal for (Serious) Cause (Summary Dismissal).

Objective Dismissal

Termination of employment for objective reasons can be based on the following grounds.

  • The incompetence of the employee, discovered after recruitment.
  • The employee’s inability or failure to adjust to reasonable technical changes in their position; however, the employer must have offered the employee a training course aimed at facilitating adaptation to such changes, and termination cannot be considered until at least two months have elapsed since the changes were introduced or the training begun.
  • A proven objective need to amortise an employment position if there are technical, economic, organisational or production reasons; if a specific number of employees affected is reached, the collective dismissal process will be triggered.

Collective Dismissal

A collective dismissal occurs if a company terminates employment contracts on the basis of economic, technical, organisational or production grounds, and if within a period of 90 days such a measure affects at least:

  • ten employees in companies with less than 100 employees;
  • 10% of the workforce in companies with 100 to 300 employees;
  • 30 employees in companies with more than 300 employees; or
  • all the employees of the company, provided the number of employees affected is over five and is based on the total cessation of the company’s activities.

However, according to the latest case law, which takes into account the case law of the European Court of Justice, a collective dismissal will also arise where the number of redundancies within a single work centre affects:

  • ten or more employees in work centres with 20 to 100 employees;
  • at least 10% of the staff in work centres with 100 to 300 employees;
  • 30 or more employees in work centres with more than 300 employees, within a period of 30 days; or
  • at least 20 employees within a 90-day period.

Grounds

If dismissal is based on economic grounds, it is understood that those grounds exist when there are current or foreseeable losses or a persistent decrease in the level of income or sales. A decrease qualifies as persistent if it takes place over three consecutive quarters compared to the same period in the previous year. The performance of the group as a whole is also relevant if the group can be considered to act as a single employer.

It is understood that the technical grounds that justify dismissal apply when there are changes in the scope, means or instruments of production. Organisational grounds are those which justify the dismissal whenever there is a change in the scope of the working systems or in the way production is structured, among others. Finally, justification may be based on productive grounds whenever there are changes in the demand for the products or services that the company offers to the market.

The dismissal process is different depending on the employee status, the grounds for the termination and the number of employees impacted.

Individual Dismissal

Disciplinary dismissal

See 7.3 Dismissal for (Serious) Cause (Summary Dismissal).

Objective dismissal

The employer must communicate the dismissal to the employee in writing, which should include a detailed description of the grounds, statutory notice must be served (or longer if contractually agreed). Alternatively, the company may pay the employee a sum of money in lieu of notice. On the date of communication of the dismissal, the employee shall be entitled to statutory compensation equivalent to 20 days’ salary per year of service, up to a maximum of 12 months’ salary.

Should the termination be based on technical, economic, organisational or production reasons, a copy of the notice of communication must be provided to the employees’ representative, if appointed.

Qualification of individual dismissals

The employee may take their case to the labour courts to challenge the grounds or reasons given by the employer for the dismissal or contend that the facts do not justify it. The competent labour court may deem the dismissal as:

  • fair – the court considers the dismissal justified;
  • unfair – the court considers that the dismissal was not justified; or
  • null and void – the court considers that the dismissal was based on grounds which violated the employee’s fundamental rights; therefore the employer must reinstate the employee and pay their salary accrued from the date of termination up to the reinstatement date as well as, possibly, damages.

If the court deems the dismissal unfair, the employer is granted the following options.

  • to reinstate the employee, in which case the employer must pay to the employee their salary accrued from the date of dismissal up to the date of reinstatement; in the case of an objective dismissal, the employee would have to return the severance package made.
  • to pay the employee compensation equal to 33 days’ salary per year of service (subject to a limit of 24 months’ salary) for the period of service accrued as from 12 February 2012 and equal to 45 days’ salary per year of service (subject to a limit of 42 months’ salary) for the period of service up to 12 February 2012; in the latter case, the resulting severance payment cannot be higher than an amount equal to 720 days’ salary unless the amount resulting from the calculations corresponding to the first tranche (ie, the calculation of severance corresponding to the period from the start date to 12 February 2012) is higher, in which case the said amount shall apply but it may not be higher than an amount corresponding to 42 months’ salary.

The choice between the two above options will correspond to the employee if it is an employee representative. 

See the special remark on the qualification of individual dismissals in 1.2 COVID-19 Crisis.

Collective Dismissal

Process

Collective dismissals can only be implemented following a formal statutory procedure. The main aspects are as follows.

  • Announcement – the employer must serve notice on the employees’ representatives or, in their absence, the employees, stating an intention to initiate a negotiation period to implement a collective dismissal in order for them to appoint a negotiation body; the maximum period for the constitution of the representative commission will be seven days where employees’ representatives are appointed or fifteen days where no employees’ representatives have been appointed.
  • Starting the negotiation period – the employer must deliver a written notice to the representative commission to open the negotiating process; a copy of this written notice must also be sent to the appropriate labour authority.

Notice

The written notice must include a report on the grounds for collective dismissal, which must enclose the necessary supporting technical documents as well as a technical report.

If the collective dismissal is based on economic grounds, the documents must evince economic and financial changes in the company during the last two years and must be duly audited. Whenever the grounds are based on foreseeable losses, the information provided shall include the criteria used for such forecasts. Also, a technical report on the forecast of losses must be provided, based on data extracted from the annual accounts, the sector in which the company operates and the evolution of the market and the position of the company in the same. Special requirements and documentation need to be included if the company forms part of a group of companies

If the collective dismissal is based on technical, organisational or production grounds, the report must enclose technical reports justifying the dismissal, the measures to be adopted and their impact on the viability of the company.

The written notice must also include:

  • the number and professional classification of employees affected;
  • the number and professional classification of the employees rendering services during the last year;
  • the term envisaged for the implementation of the dismissals;
  • the criteria used to designate the affected employees, which must be objective and non-discriminatory;
  • a copy of the written notification of the company's intention to start a consultation period to implement a collective dismissal;
  • information about the employees who form part of the representative committee; and
  • a request from the representative committee of a report on the collective dismissal.

Once the labour authority has received this notice, it will inform the public entity managing unemployment benefits and apply for a compulsory report to be issued by the Labour and Social Security Inspectorate.

Negotiations

The employer must hold negotiations with the representative committee within a maximum of 30 days, or 15 days in case of companies with fewer than 50 employees. The negotiations must include possible options to avoid the collective dismissal, reduce the number of employees affected or ameliorate its consequences; as well as on the severance packages to be paid. A minimum number of mandatory meetings must be held and a calendar followed unless otherwise agreed.

The parties must negotiate in good faith. The labour authority will safeguard the effectiveness of the negotiation period and is entitled, if appropriate, to send recommendations and warnings, but these will not stop or suspend the procedure.

The negotiation period will be concluded whether or not an agreement between the parties is reached, if sufficient grounds exist the employer can unilaterally execute the terminations.

After the consultation period has ended, the company shall communicate to those employees who were part of the negotiation committee and to the labour authority the decision on collective dismissal. This communication should be made within a maximum period of 15 days from the last meeting held in the consultation period. The company must also communicate notice of dismissal individually to each of the affected employees. The individual communication must follow the formal procedure for individual objective dismissals.

Severance

The statutory payment in case of collective redundancy is 20 days’ salary per year of service up to a maximum of 12 months’ salary. The final amount of severance is negotiated during the consultancy period, which is usually increased by companies in order to reduce the risk of litigation. 

Other obligations to be included in the social plan

Outplacement programmes must be provided for a minimum of six months if the collective redundancy affects more than 50 employees.

Special social security contributions will be made for employees aged 55 and above in the case of employees aged 55 years or above who did not make social security contributions prior to 1 January 1967 and who are included in a collective dismissal process which is not based on an insolvency. The employer must pay their contributions until they reach the age of 61 (in the event of economic grounds) or 63 (in the event of organisational, productive or technical grounds). The application of the special agreement must be made during the collective dismissal procedure.

An additional contribution to the Public Treasury must be paid by companies which make profits and carry out a collective dismissal that affects employees aged 50 or above.

Qualification of collective dismissal

Collective dismissals can be challenged collectively by workers’ representatives on the basis that:

  • the grounds argued by the company to justify their dismissals do not exist;
  • the formal process has not been followed; or
  • the decision has been reached after wilful coercion, fraud or abuse of law.

Normally, the workers’ representatives only launch a claim against collective dismissal if the negotiation period concludes without an agreement.

The subsequent judgment will render the company’s decision:

  • fair – where the company has complied with the legal procedure and has evinced the existence of the grounds for the dismissal;
  • not according to law – when the company has not proved the grounds justifying the dismissal, in which case the employer will have to pay to the affected employees the same compensation regulated for unfair individual dismissals; or
  • null and void – when the legal process has not been followed or when the company’s decision was taken in breach of fundamental rights or public liberties or wilful coercion, fraud or abuse of law (in this case the employer must reinstate the affected employees and pay them the salaries accrued from the date of termination up to the reinstatement date).

See the special remark on the qualification of individual dismissals in 1.2 COVID-19 Crisis.

Termination of Top Executive Contracts

Top executives’ contracts, regulated by Royal Decree 1382/1985 of 1 August 1985, may be terminated as set out below.

Termination by the employer

The employer can terminate a top executive contract at any time without giving any reason. The company must deliver to the employee a termination letter stating the date of the termination, serve three months’ notice (or a longer notice if contractually agreed) or make payment in lieu of salary. The employee is entitled to the compensation agreed in the employment contract or, in its absence, the legal compensation of seven days’ salary per year of service subject to a limit of six months’ salary.

The employer can terminate a top executive contract for a serious breach of their contractual duties. The company must deliver to the employee a dismissal letter which should include a detailed description of its reasons and the date of termination, which may be immediate. Should the employee challenge the dismissal and the labour court rules it to be unfair, the company will have to pay them severance equal to 20 days’ salary in cash per year of service with a limit of 12 months’ salary.

In the case of objective dismissal, the same procedure applicable to ordinary employees shall apply.

Termination by a top executive with severance entitlement

Top executives are entitled to terminate their contract at will with the right to receive the severance agreed in their contracts, if any, or in the absence thereof severance pay equal to seven days’ salary (in cash) per year of service subject to a limit of six months' salary in the case of:

  • a substantial change to the executive’s employment terms and conditions which resulted in damage to the executive’s professional training or dignity (decided by the employer in a serious breach of contractual good faith);
  • lack of payment or repeated delay in the payment of the remuneration agreed;
  • any other serious breach of contractual duties by the employer; and
  • a transfer of undertaking or relevant change in the ownership of the company which involved the restructuring of senior executive positions, provided that the top executive exercises their right to terminate within three months following the transfer.

A top executive may have to serve the employer with three months’ notice (or a longer period if agreed in their employment contract). Should this not be served, the employer will be entitled to be paid the salaries corresponding to the period in lieu of notice.

Statutory Severance of Temporary Contracts

Upon the termination of temporary contracts, due to the expiry of the time agreed or completion of the work or service subject to the temporary contract, employees are entitled to a severance payment equivalent to 12 days of salary per year of service (except in cases of replacement and training contracts).

This type of dismissal is based on an employee’s serious and wilful non-compliance with their contractual duties. Legal causes for dismissal must be proven by the employer and include the following:

  • unjustified repeated absence or lack of punctuality;
  • lack of discipline or disobedience;
  • verbal or physical offences against the employer or other people who work in the company or to their relatives who live with them;
  • breach of good faith or betrayal of trust;
  • continued and wilful unsatisfactory performance;
  • habitual drunkenness or drug addiction affecting work performance; and
  • harassment on grounds of racial or ethnic origin, religion or belief, disability, age, sexual orientation and sexual or gender-based harassment of the employer or persons working in the company.

Additional causes may be set out in applicable CBAs or individual employment agreements.

Unless further requirements are set out in an applicable CBA or an employment contract, the company shall terminate the employee concerned by way of a written letter of dismissal stating the date on which the termination takes effect as well as the grounds for dismissal. This type of dismissal will not entitle the employee to statutory severance pay. 

Should the employee be an employee legal representative or a union delegate, a contradictory procedure shall be opened in which the membership to which they belong shall be heard. Should the employee be affiliated to a union and the employer is aware of that, it must give a prior hearing to the union delegates.

Disciplinary dismissal is the most serious sanction that a company may impose on an employee and is subject to a statute of limitation of 60 days, as from the date on which the breaches became known to the employer or six months from the date on which the breaches took place

An employment relationship can be terminated by mutual agreement between the employer and the employee. The advantage of this route is that the parties are free to agree the terms and conditions of the termination unconstrained by statutory compensation. The drawback is that the employee shall not be entitled to collect unemployment benefits and the tax treatment of any compensation agreed will be impacted.

Apart from the above, when a company follows the dismissal route and the employee challenges the termination before the conciliation authorities or a labour court, the parties will have the chance to settle the case and avoid further disputes. For such purposes, the employee has to file a conciliation claim within a maximum period of 20 working days from the effective date of termination. Thereafter, the parties shall attend a hearing in which they will have the opportunity to settle the dismissal.

Upon completion of the conciliation process the officials will issue the relevant minutes of the hearing. Should the conciliation process end without an agreement, the employer will have to submit the relevant judicial claim before the labour courts if it wants to pursue its claim, and the court will have to admit the claim and schedule a judicial conciliation hearing and trial. Nevertheless, the parties will have an opportunity to reach an agreement before judgment is issued.

Certain groups of employees are especially protected from dismissal, this includes:

  • pregnant employees and employees during the 12 months following a birth;
  • employees on reduced hours of work to take care of a child or a disabled person;
  • employees in maternity/paternity-related situations during the period of suspension of their employment contract;
  • employees who are victims of domestic violence;
  • employees’ representatives;
  • data protection delegates; and
  • employees who have filed and won a claim against the company.

Courts are very protective towards these employees and dismissals affecting them are presumed to be contrary to their fundamental rights unless otherwise evidenced by the company. If the employer is unable to provide objective criteria and adduce strong and sound evidence to justify termination, the dismissal will be rendered null and void. This will entail an obligation on the part of the employer to reinstate the employee so affected and pay to then a procedural salary (ie, the salary accrued from the date of termination up to the reinstatement date).

See 7.2 Notice Periods/Severance.

It is unlawful to directly or indirectly discriminate against employees or potential employees on the grounds of sex, marital status, age, race, ethnic or racial origin, social status, religious or political beliefs, sexual orientation or condition, trade union membership, language or disability, or employees who have familial relationships with the employer.

Filing Claims

Employees who consider they have been discriminated against may file a claim against such discriminatory treatment and be awarded compensatory damages. The burden of proof lies with the employer who should objectively and sufficiently demonstrate that the decision was not based on discriminatory grounds. If the court finds evidence of discrimination, the judgment may provide for compensation and nullify the company's discriminatory action, order the immediate cessation of the discriminatory action and order the reinstatement of the employee under the same conditions that applied prior to the episode of discrimination. If an employee's termination of employment is nullified, the employee will be reinstated to their role and be paid the salary accrued – but not paid – from the termination date for the length of the judicial process.

The prejudicial treatment of employees on the basis that they requested that their rights be upheld or have reported anomalies within the company is not permitted. Any sort of claim (which need not be a judicial claim) may be sufficient to argue the existence of retaliation, even if done through an informal procedure. Dismissals and any other detrimental employment measures adopted on the basis of retaliation shall be null and void. The affected employee can also claim for damages.

In cases of discrimination, the company may be sanctioned with:

  • a penalty of between EUR6,251 and EUR187,515;
  • the automatic loss (proportional to the number of employees affected) of subsidies, rebates or bonuses or any state benefit granted in the context of employment programmes; and
  • loss of access to the above-mentioned subsidies, rebates or benefits for a period of six months to two years.

Royal Decrees Related to Equality

The Spanish Government approved two Royal Decrees related to equality between men and women in companies.

  • Royal Decree 901/2020, of 13 October 2020, which regulates equality plans and the obligation to register it. This RD entered into force last 14 January 2021, with the aim of promoting effective equality between men and women, eliminating any discrimination that may exist, through the obligation to develop and apply an equality plan in those companies who employs more than 50 employees. The equality plan has to be negotiated with the worker’s representatives and will consist of three phases:
    1. Diagnosis of the company situation;
    2. preparation of an equality plan; and
    3. monitoring, evaluation, and review of the equality plan.
  • Royal Decree 902/2020, of 13 October 2020, on equal pay between women and men. This RD entered into force last 14 April 2021, with the aim that there are equal salaries for jobs of equal value, without any discrimination based on gender. By virtue of this RD, employers must keep a record with the average values of salaries, salary supplements and extra-salary perceptions of their workforce, disaggregated by gender and distributed by professional groups, professional categories or jobs with equal value. Workers may access this registry through their legal representatives, or directly if they do not have legal representation of the workers.

Judicial proceedings deal with several areas of conflict, these include ordinary dismissals, collective conflicts, the breach of fundamental rights, holidays, workers’ representative elections, professional classifications, amendment of working conditions, geographical mobility and social security.

Depending on the geographical scope of the claim and/or the number of employees impacted, different competent courts deal with the matters raised.

  • Labour courts of first and unique instance – these courts resolve individual and social security claims. 
  • Superior courts (one per autonomous community) – these courts resolve appeals filed against judgments of the labour courts as well as certain collective conflicts in the first instance phase.
  • National Audience – this Audience hears, at first instance, collective conflicts that affect employees based in more than one autonomous community.
  • Supreme Court – the Supreme Court resolves appeals filed against judgments of the superior courts and the National Audience, and even judgments issued by the Supreme Court at first instance.

Prior to the filing of a judicial claim, there is a general requirement to file a claim for conciliation (some matters are excluded from this preliminary conciliation hearing).

Collective matters are subject to a compulsory mediation process. If that ends without agreement, the parties may expressly agree to submit the collective case to arbitration as an alternative to the judicial process.

Pre-dispute arbitration agreements are not enforceable in Spain.

Under Spanish employment law, employees are beneficiaries of so-called free justice; they are entitled to an appointed lawyer, free of charge. In view of this, there can be no award of legal fees.

A judgment may impose costs on the prevailing party in an appeal, except where the party enjoys the benefit of free justice or in the case of unions or public officials or statutory personnel. Such costs shall include the fees of the lawyer of the opposing party that had acted in the appeal with a maximum limit of EUR1,200 in the appeal phase before the superior court and EUR1,800 in the appeal phase before the Supreme Court.

The above does not apply in cases involving collective conflict; each party is responsible for their own costs. However, the court may impose the payment of costs on any party who has acted with recklessness or bad faith.

Allen & Overy LLP

Serrano 73
28006, Madrid

+34 917 82 9800

allenoveryspain@allenovery.com www.allenovery.com
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Allen & Overy LLP is an employment practice that stands out for its wide experience and knowledge of employment law, pensions, benefits and incentives, providing and developing individual and creative solutions to all workplace issues, from working terms and conditions, employee relations and HR policies, to restructuring and dispute resolution. The firm's approach is very much that of a partnership, working in collaboration with clients to develop individual and creative solutions to their workplace and benefits needs. It is accessible, pragmatic and hands-on, with expertise in communicating directly with workers, employee representatives and regulatory authorities on HR and reward issues.

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