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12 June, 2012 - 16:28 By News Desk

Employment Law Guide - Spain

Valencia

1 What terms govern the employment relationship? In particular:

1.1 Is a written employment contract or statement of employment terms required?

There is no general requirement for an employment contract to be in writing, Spanish Law presumes that an employment contract exists between anybody that provides services on behalf of another and subject to its instructions and organizational power.

There are some employment contract modalities that have to be in writing to be valid:

•          Part-time contracts;

•          Formative contracts;

•          Employees working at their home address;

•          Contracts for a fixed work or service;

•          Employees hired in Spain by Spanish companies to provide services abroad; and

•          Temporary contracts lasting more than four weeks.

Employers have to give a copy of these contracts to the employee’s representatives.

If the contract is not in writing, either of the parties are entitled to request the written form from the other party, at any time.

1.2 Are there any terms implied by law into the employment contract?

The following are basic duties for the employee implied into the employment contract:

•          Fulfil his obligations according to the rules of trust and confidence.

•          Carry out Health & Safety rules.

•          Obey the employer's instructions.

•          Contribute to productivity.

1.3 Are collective agreements with trade unions or employee representatives common (generally or in specific industries)?

Many of the working conditions of the employees vary depending on the business sector in which the company operates. There are different collective agreements negotiated between the unions and the employers’ associations setting the main employment conditions: working time, salary, disciplinary procedures, benefits, etc. The provisions in collective agreements apply regardless of the terms in the employment contract.

Most sectors of activity have their own collective agreement, and every company can also negotiate their own collective agreement.

2 Is there a minimum wage? If so, please give details, in particular whether it applies to all employees, regardless of their age and experience

Yes, in Spain there is a minimum wage that applies to all employees, regardless of their age and experience. The amount is established every year by Spanish Government. For 2011, it is €641.40 per month.

3 Are there restrictions on working hours? If so, please give details

In general, working time in Spain can’t exceed 40 hours a week on an annual average. Working time can also be governed by collective agreements, which often will set a more restrictive limit on working hours.

There are other general limits, like not working more than nine hours a day or resting at least 12 hours between one working day and the next one.

However, there are exceptions for certain industries and activities, which have their own regulations.

4 Is there a minimum holiday entitlement? If so, please give details. How many public holidays are there in a year and are they included in the minimum holiday entitlement?

All employees are entitled to, at least, 30 calendar days' paid holiday every year or if a more beneficial amount as governed by a collective agreement. Holiday entitlement can only be replaced by payment in lieu when the contract is terminated and there is accrued but untaken holiday.

There are also, 14 public holidays every year that are not included in the minimum holiday entitlement.

5 What rights do employees have to time off in the case of illness or injury? Is that time off paid? Can an employer recover from the State sick pay granted to its employees?

Employees are entitled to a maximum of 18 months' sick leave in the case of illness or injury, which can be extended in some cases. During sick leave, the employee will receive a sickness payment from the employer, which is approximately 75% of the employees' salary. If the sickness or injuries are due to an accident at work, Social Security will pay from the first day, but if it is due to a common illness or accident the employer can only recover the payments from the Spanish Social Security from the 16th day of absence.

Some collective agreements establish a supplement payment so the employee's receive 100% of their salary.

If Social Security, at any time, declares the employee as permanently ill the employment contract will terminate and the employee will receive a social security pension.

6 What are the statutory rights of employees who are parents or carers (including those of disabled children and adult dependants)? How is employee’s pay affected during periods of leave?

Maternity rights

Employees can take a maximum of 16 weeks' maternity leave. At least six weeks must be taken immediately after the birth.

Maternity leave is increased when there are:

• Multiple births (by two weeks for each additional child).

•          Medical complications.

•          Maternity leave can also be increased when the child is disabled.

If the mother dies, the remaining leave is transferred to the father.

Pregnant employees and those who have recently given birth are entitled to time off for, among other things, attending antenatal clinics and breastfeeding, this is in addition to the 16 weeks' maternity leave, until the baby is nine months old.

Social security benefits are payable to employees on maternity leave. Employees must generally satisfy a qualifying period of paid employment to receive benefits, depending on their age:

•          Employees under 21 years old: no qualifying period needed.

•          Employees between 21 and 26 years old: a qualifying period of 90 days within the previous seven years. However, benefits will be received if the employee has had 180 days' paid employment during the whole of her life.

•          Employees older than 26 years old: a qualifying contribution period of 180 days within the last seven years. However, benefits will be received if the employee has had 360 days' paid employment during the whole of her life.

•          The monthly benefit is equal to 100% of the mother's average monthly salary.

•          Employees can also reduce their workday between 1/8 and ¬Ω with a proportional reduction of their salary until the children is eight years old.

•          They can also take a maximum three years’maternity leave of absence with suspension of the contract and no payment of salary.

Paternity rights

The father of a new-born child can take up to two working days' paid absence immediately after the birth.

Fathers are also entitled to 13 days' paternity leave which can be taken after the two working days' absence. Paternity leave can be increased for multiple births (by two weeks for each additional child). Social security benefits are payable to employees on paternity leave, if the father has had 180 days' paid employment within the previous seven years. The monthly benefit is equal to 100% of the father's average monthly salary.

Male employees can also share their partners' maternity or adoptive leave if either:

•          There is a mutual agreement between the parents.

•          The mother dies.

The parents of the child do not have to be married for this right to apply. If maternity leave is shared, the father can take a maximum of ten weeks out of the full 16 weeks allowed (in addition to the paternity leave period).

Adoption rights

Maternity and paternity rights apply to adopted children.

Carers' rights

Employees that are taking care of disabled children or adult dependants can take a maximum two years’leave of absence with suspension of the contract and no payment of salary.

7 Does a period of continuous employment create benefits for employees?None of the statutory employment protection rights are dependent on a minimum period of continuous employment. However, some social services benefits, such as unemployment benefits, depend on the length of employment.

7.1 If individual employees are transferred to a new entity, are they deemed to retain their period of continuous employment?In general all the obligations concerning the employment relationships from the selling company will be transferred to the buying company. When the purchase implies a change in the identity of the employer, the new one shall become subrogated in all the labour rights and obligations of the former employer, and the workers shall maintain their working conditions without any changes (this includes their period of continuous employment).

A change of ownership includes any legal transaction that alters the employer's legal identity (such as a merger, spin-off, sale or assignment, and split or asset purchase). The ownership change can take place in the company, a specific workplace (or several specific workplaces) or an autonomous productive unit.

However, according to case law, a transaction must be carried out as an asset acquisition to qualify under Article 44. Transfers of shares do not alter the employer's legal identity, and therefore do not qualify as a change of ownership.

8 To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees?Temporary and agency workers are entitled to the same rights and benefits as permanent employees.

9 What statutory data protection rights do employees have?Employees are entitled to receive information from their employer in relation to the processing of their ordinary and sensitive personal data. They also have a right of access to processed personal data and can prevent the processing of data that is likely to cause substantial damage or distress.

10 What protection do employees have from discrimination or harassment, and on what grounds?Discrimination

Discrimination and harassment are illegal if they take place on any of the following grounds:

•          Sex (including marital status, sexual orientation and transgender).

•          Religion or belief.

•          Race.

•          Disability.

•          Ethnicity.

•          Age.

•          Union.

•          Political ideas.

Any action taken by an employer that is viewed as illegal harassment or discrimination is invalid. In these circumstances, the labour authority can also impose administrative fines of between €6,251 and €187,515.

Employees can terminate their employment contract and receive severance pay of 45 days' salary per year of service plus moral damages compensation.

Employees who have been treated less favourably by employers because they have made an allegation of discrimination can file a claim to stop the employer's behaviour and receive compensation.

11 Do whistle-blowers have any protection? If so, please give details.Any action that an employer takes against whistle-blowing employees (for example, dismissing them) is invalid.

12 What rights do employees have when their employment contract is terminated? Please provide information on:

12.1 Notice periodsIf employees are dismissed on objective grounds, the employer must give them at least 15 days' notice before terminating their contracts. The notice period starts to run from when the employees are informed about the decision to dismiss them. Although a breach of this requirement does not invalidate dismissals, it places the employer under a duty to pay employees their salaries corresponding to the number of days omitted from the notice period. Employees are entitled to take six hours a week off work during the notice period to look for another job.

If an employee decides to terminate their employment, they must also give notice if it’s agreed in their contracts or in the collective agreements. Failure to comply with this duty entitles the employer to claim compensation for any loss suffered.

Where employees are dismissed on disciplinary grounds, there is no duty to give them notice of dismissal.

12.2 Severance paymentsEmployees are entitled to the following severance payments:

•          20 days' wages for each year of service up to a maximum of 12 months' salary, if a dismissal is made on objective grounds.

•          If a dismissal is made on disciplinary grounds and a judge subsequently rules that the dismissal is unfair: 45 days' wages for each year of service up to a maximum of 42 months' salary plus back pay from the date of dismissal to the judge's decision. The employer can reinstate the employee instead of paying the severance payment.

12.3 Any procedural requirements for dismissalThe following procedural requirements are necessary to dismiss an employee on objective grounds:

•          Informing the employee of the reason for dismissal in writing.

•          Offering to pay compensation to which the employee is legally entitled.

•          Giving the employee at least 15 days' notice.

If the dismissal is on disciplinary grounds, a specific procedure must be followed. Under this procedure, the employee must be given written notice specifying the facts giving rise to the dismissal and the date on which the dismissal will take effect. In addition, if any employee representative is being dismissed, proceedings must be held in which both parties are entitled to be heard and receive proper notice.

13 What protection do employees have against dismissal? Are there any specific categories of protected employees?For unfair dismissal, the employers can choose between:

•          Paying severance pay; or

•          Reinstating the employee.

However, the employee can choose between severance pay and reinstatement if he is one of the following:

•          A union representative.

•          A staff delegate (that is, an employee representative).

•          A member of the works council.

14 What rules apply on redundancies?Procedures for business reorganisations and redundancies are driven by collective consultation.

Employers must consult affected employees' representatives if the proposed redundancies concern at least:

•          Ten employees in a business employing fewer than 100 persons.

•          10% of employees in a business employing between 100 and 300 persons.

•          30 employees in a business employing more than 300 persons.

Consultation must begin in good time and last for at least 30 days, or 15 days in companies with less than 50 employees. The employer must disclose the following in writing to the representatives:

•          The reasons for the proposals.

•          The numbers and a description of employees affected by the proposals.

•          The proposed method of selection for dismissal.

•          The proposed method of carrying out the dismissals.

•          A suggested social plan for the employees who are made redundant.

The consultation must:

•          Discuss ways of avoiding or reducing the number of redundancies.

•          Consider ways of mitigating the consequences of redundancy.

•          Be undertaken with a view to reaching an agreement with the representatives.

Employers proposing business reorganisations or redundancies must be aware of the following actual or potential costs:

• Statutory redundancy payment. Employees are automatically entitled to this if they are made redundant. The payment is equal to 20 days' salary for each year of service, up to a maximum equivalent of 12 months' salary.

• Enhanced redundancy payment. Employees may have the right to a redundancy payment over and above their statutory entitlement. It is common practice to negotiate enhanced redundancy payments during consultation with representatives.

• Protective award. If an employer fails to comply with the collective consultation duties, an employment tribunal can declare the dismissals invalid and order all employees to be reinstated immediately.

15 Are employees entitled to management representation (such as on the board of directors) or to be consulted about issues that affect them?Employees are not entitled to management representation.

Employers must consult representatives of affected employees when they propose any of the following:

•          Collective redundancies.

•          A business transfer.

•          Substantial changes to working conditions.

Employers must also consult employees on health and safety matters.

15.1 Is employee consultation or consent required for major transactions (such as acquisitions, disposals or joint ventures)?Employee consent is not required for most major transactions.

If a business transfer constitutes a change of ownership, both the old and new employers must inform and consult representatives of affected employees. Representatives are elected from the group of affected employees and, if appropriate, delegates of a trade union that the employer recognises. The employees themselves decide whom to elect.

The employer must inform the representatives about the:

•          Reasons for the transfer and when it is expected to take place.

•          Legal, economic and social implications of the transfer for affected employees.

•          Measures that will be adopted to limit adverse effects of the transfer on employees.

•          New employer's proposals that will affect the employees after the transfer.

An employer also has a duty to consult representatives if the transfer involves any other proposals that will affect employees, for example, changes to existing working practices or conditions and redundancies.

Representatives must be informed in sufficient time to enable consultations to take place. However, no formal timetable is laid down for consultation.

16 What are the remedies that are available if an employer fails to comply with its consultation duties?If employers do not comply with their consultation duties, they may be subject to administrative fines and the measures taken can be declared invalid.

16.1 Can employees take action to prevent any proposals going ahead?If employers fail to consult employee representatives when appropriate, employees can file a claim in an employment court to prevent the action going ahead.

17 Is there any statutory protection of employees on a business transfer? In particular:

17.1 Are they automatically transferred with the business?Employment contracts are automatically transferred with the business to the new employer. All the old employer's rights, powers, duties and liabilities under, or in connection with, the contract are also transferred.

17.2 Are they protected against dismissal (before or after the disposal)?

A dismissal is automatically unfair if it is solely or mainly due to the transfer, or a reason connected with it. However, a dismissal is fair if it can be shown that it was for an economic, technical or organisational reason that required changes in the workforce, provided that the employer acted reasonably.

17.3 Is it possible to harmonise their terms of employment with other (existing) employees of the buyer?It is only possible to harmonise the employment conditions of all employees through negotiations with the employee representatives, or if these do not exist, by an agreement with employees individually or collectively. Negotiations can take place before or after the transfer, and must last at least 15 days.

18 Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded? If so, please give detailsBonuses are common and are regulated either by a collective agreement or the employee's individual employment contract. There are no specific guidelines on how bonuses must be awarded. An employer has discretion to decide on the rules and policies that regulate this type of benefit.

19 Is it possible to restrict an employee’s activities during employment and after termination? If so, in what circumstances can this be done? Must an employer pay its former employees remuneration while they are subject to post-employment restrictive covenants?A non-compete duty is implied during employment. In addition, the employer and employee can agree an exclusivity clause in the employment contract. This restricts employees from carrying out any work-related activities or jobs for any other employer or on their own account. The employees must be specifically compensated during the term of employment for agreeing to the exclusivity clause.

Employers can agree a non-compete clause with employees for a maximum of two years after their employment is terminated. The employee must be compensated for agreeing to the non-compete clause.

20 Are there any proposals for major reform of employment law or pensions law in your jurisdiction?There has been a recent reform of retirement pension’s regulation, increasing the age of retirement and the period of contribution to the Social Security.

21 Does an employer need to have a subsidiary company, branch or other legal entity to employ people? If so, is there a requirement for a general manager or other key personnel?To employ people the employer needs to establish subsidiary or to have a permanent branch in Spain.

22 Does salary need to be paid in the country in which the work is done?Within the EU, the salary can be partially or totally paid abroad.

23 Do meetings and documents need to be in your local language even if both parties speak good English?Meetings and documents don’t need to be in Spanish, but it is recommended that they are.

24 What legal limitations are there on the notice period the parties can agree (for example minimum notice periods)?There are no legal limits, except for in relation to some temporary contracts.

25 What benefits does the employer have to provide in addition to salary?In addition to salary every employer has to provide Social Security. Other benefits could be established by the collective agreements or in the contract.

26 Are there circumstances where it is possible to engage someone as a consultant rather than an employee? If so, what are those circumstances?It is possible in theory, but as long as the ‘consultant’s is subject to instructions and organizational power of the company it could be declared an employment contract regardless the name given by the parties to the contract.

26.1 Where applicable, what are the advantages and disadvantages of engaging as a consultant rather than an employee?The advantages are the costs of Social Security contributions and severance pay in the case of termination.

27 What other key issues should a company employing someone be aware of?Employee emails sent over the employer’s system are protected by privacy regulation. It is recommendable for employer to have a policy or procedure warning employees that using the company’s email for personnel purposes is not allowed, and advising that communication systems are not subject to privacy as far as they are considered to be professional tools.

 

For further information please contact:

Roger James

DDI: +44 (0) 1223 225286

Email: roger.james [at] taylorvinters.com

www.taylorvinters.com

Articles in this publication are intended as an overview of the subject area and should not be relied on as legal or other professional advice. You should seek specific legal advice before taking action on any of the issues raised.

Taylor Vinters is a trading name of Taylor Vinters LLP. Taylor Vinters LLP is a limited liability partnership registered in England and Wales (registered number OC343503) which is authorised and regulated by the Solicitors Regulation Authority and is authorised and regulated by the Financial Services Authority for investment business. A list of members is available from our registered office.

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