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15 April, 2010 - 23:00 By Staff Reporter

Guide to employing staff in Spain


In Spain, the general rule is that employment contracts are signed for an indefinite term.

1. Employment and DismissalContracts can be made for a fixed term only under certain requirements.Termination at will is not possible under Spanish Law. There must always be a legal reason: expiry date (in case of temporary contracts) disciplinary or objective reasons (economical, organisational, productive or technical). In the case of objective dismissals when the number of employees affected exceeds the legal limit it is considered a collective dismissal and the termination of the contracts is subject to a previous authorization by the Labour Administration (after a negotiation period with the employees representatives).

2. DiscriminationNon-discrimination in employment, or once employed, by reason of sex, marital status, age, race, social standing, religious or political ideas, union membership, etc, is a basic right of every worker in Spain.

However, when a company is recruiting personnel, it is possible to express preferences, which have a reasonable connection with the position or the kind of work to be done.

3. Employee benefitsThe employer must take into account certain points when hiring someone in Spain:

* Ensure the remuneration is at least the Interprofessional Minimum Salary (SMI). * Ensure the working time does not exceed the maximum number of hours according to the Law (40 hours a week), or applicable collective agreements. * Ensure at least 30 days paid holidays per year. * Ensure the payment for Social Security (which includes healthcare). The rate depends on the amount of the salary, but it is around 30% of the salary. * If the employee is not an EU citizen, a work permit must be obtained prior to the employment.4. Disciplinary dismissalDisciplinary dismissal do not need any prior notice. Should the employee think his dismissal is unfair, he can sue the Company and the labour Court is able to make any of the following decisions:

* The dismissal is fair and legal, and the contract is terminated with no compensation for the employee. * The dismissal is unfair. In this case, the employer can choose between paying the employee an indemnity of forty five days salary per year of service, plus the salary from the day of the dismissal until the date of the notification of the judgment or reemploy him/her. * The dismissal is void, because it has been based on discriminatory reasons. The employer must reemploy the employee, and there is no option to pay an indemnity instead.5. Objective dismissal

5.1. Collective dismissalIf the dismissals apply to over 10% of the staff, or over 29 employees in those companies with more than 300 workers, the termination of the contracts must be previously authorised by the Labour Administration.

To implement a collective dismissal, the Law requires a previous thirty days negotiation period between the employer and the unions. If an agreement is reached within such period, the role of the Labour Authority is just to validate the agreement. If no agreement is reached, then the Labour Authority has to decide whether the measure proposed by the Company is justified and is in accordance with legal requirements or not.

The minimum compensation is twenty days salary per year of service, although most of the agreements stipulate higher amounts.

5.2. Individual dismissalThe Company must give the employee thirty days prior written notice, and pay an indemnity of twenty days salary per year of service. This severance must be paid at the moment the termination takes effect.

Should the employee decide to make a claim for unfair dismissal, the Court can make any of the decisions as are applicable to disciplinary dismissals.

6. Restrictive covenantsNon-competition clauses, refraining the employee from working for competitors after the contract termination, are permitted in Spain, but they must comply with certain requirements to be valid:

* The term of enforcement is limited to a maximum of two years after the contract termination. * There must be a real industrial or commercial interest in prohibiting the employee to work for a competitor. * An adequate compensation must be paid to the worker concerned. Payment can be made during the time the employment contract was in force or once it is terminated, and it also can be made in one or several instalments. Judges generally understand that “adequate” is any amount or way of payment agreed by both parties.

In the case of a breach of the non-competition clause, the employee would have to return the money he/she was paid in compensation for the non-competition. The Employee is also liable for the damages caused to the employer for the breach of his/her obligation.

As a common rule, the new employer does not incur any liability, except in cases where the hiring has been made with the purpose of eliminating a competitor, obtaining secrets or confidential data from its competitor, or any other behaviour implying disloyal competition which, in practice, is difficult to prove.

7. Transfer of a businessIn 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 take on all the labour rights and obligations of the former employer, and the workers shall maintain their working conditions without any changes.

Should the employer wish to adopt any labour measures because of the transfer, it is compulsory to follow a consultation process, which must take place “in good time”. Both the employer and unions are obliged to hold meetings in order to reach an agreement.

Where the measures require:

A relocation to another workplace that requires to move from your normal place of residence; orA substantial variation of working conditions,

The employer must provide economic, technical or organisational reasons to justify the measures, but in contrast with collective dismissals, the employer is not required to obtain  previous authorisation when there is no agreement, although of course, workers can sue if they disagree with the measures.

8. Senior management contractAccording to Spanish Law, senior management contracts are separately regulated. This regulation is restricted to the top executive levels (CEO, Managing Director, general Manager, etc), and it requires that the manager actually manages and supervises the company’s business, acting on behalf of the company in dealings with third parties. Full liability is limited only by the criteria and direct instructions given by the company’s owners or its Board of Directors.

A senior manager can be dismissed at will. The termination notice is three months, and the manager is entitled to receive a severance pay of seven days’ salary per year of service, unless otherwise agreed in the contract.

The employer may also terminate the contract for disciplinary reasons (based on a serious or negligent breach of the manager’s obligations), or for objective reasons (based on economical, technical or organizational problems of the company). In practice these options are seldom used because in these cases the payable will often be higher than for a dismissal at will.

9. Collective agreementsMany of the working conditions of 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.

Companies may also negotiate their own collective agreement.

10. Employee communications on employer equipmentEmployee emails sent over the employer’s system are protected by privacy regulation. It is recommended that employers 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 professional tools.

Taylor VintersWebsite: E-mail: tim.hill [at] This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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