Global Employee Consultations at a glance: Spain | White & Case LLP International Law Firm, Global Law Practice
Global Employee Consultations at a glance: Spain

Global Employee Consultations at a glance: Spain

Welcome to the Spain page of our Global Employee Consultations at a glance series. To learn more, please visit our Global Employee Consultations at a glance page.

 

TABLE OF CONTENTS

Transfer of Business

Collective Redundancies

Individual Redundancies 

 

Transfer of Business

Trigger point

In the event of a Transfer of a Business, the contracts of employment of employees who are assigned to the business transferring will be automatically transferred to the Transferee.

Obligations

There is an obligation on the Transferor and Transferee to inform employee representatives (or, where there are no employee representatives, the employees themselves) about the transfer and any measures envisaged being taken. It is customary for the Transferor and Transferee to inform their respective employees separately about the proposed transfer.

Timing

Employee representatives (or, where there are no employee representatives, the employees themselves) should be informed in good time before the transfer. In practice, this should take place at least 15 days before the transfer. However, in the case of mergers and carve-outs involving Spanish companies, that information must be provided prior to, or at the latest, at the time at which the Shareholder Assembly intended to approve such merger/carve-out is announced. A transfer of a business by way of asset sale will not always constitute a merger or a carve-out.

Representatives

Where there is an existing Works Council or other employee representatives, they will need to be informed. If there is no Works Council or other employee representatives, then the employees will be informed directly on an individual basis.

Information/Notification

The following information must be provided to the employee representatives (or, where there are no employee representatives, to the employees themselves) in writing in good time before the transfer:

(i) the proposed date of the transfer;

(ii) the reasons for the transfer;

(iii) the legal, economic and social implications of the transfer for the employees; and

(iv) details as to any proposed measures to be adopted that will affect employees.

However, in the case of mergers and carve-outs, special rules apply, as employee representatives will have access to the information provided to the shareholders for the merger.

Consultation

There is no obligation to consult in relation to the transfer itself, unless it is envisaged that additional measures will be taken in connection with the transfer (e.g. modification of working conditions). In those cases, there is an obligation to consult with the employee representatives (or, if there are no employee representatives, with the most representative unions or the employees themselves) about the proposed measures.

The format of the consultation depends on the type of measure. For example, modification of working conditions must be subject to a consultation period that can last up to 15 days.

Veto rights

Neither the employees nor the employee representatives have any veto rights, and neither can stop a transfer from proceeding.

Penalties

Those employees who are assigned to the transferred business can file a termination claim if they are not effectively transferred. This can be done within 20 days of the transfer. If successful, this will result in compensation equal to 45 days of salary for each year of service before February 12, 2012 and 33 days of salary for each year of service after February 12, 2012 (capped at 24 months’ salary).

Failure to comply with the information obligations could also result in an administrative fine of a maximum of €6.250.

Other

The Transferor and/or Transferee must comply with any additional process prescribed in any applicable CBA.

Information can be provided to the employees in the local language or in any other foreign language, provided this is the language used on a regular basis to communicate with the employees.

Impact of Share Sale

In general, the above requirements do not apply on a Share Sale. On a Share Sale, employees will remain employed by the same entity under the same terms and conditions on completion. Unless significant changes affecting employees are proposed as part of the Share Sale, a share sale will not itself trigger consultation obligations. However, it is advisable to inform the employee representatives in good time in order to maintain good employee relations.

Intra-Group Transfers

The same requirements apply in the event of an Intra-Group Transfer.

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Collective Redundancies

Threshold

A collective consultation process is triggered where an employer proposes to make redundant within a period of 90 days:

(i) 10 employees in a business employing less than 100 employees;

(ii) 10 percent of employees in a business with more than 100 and less than 300 employees; or

(iii) 30 employees in a business with more than 300 employees.

Obligations

There is an obligation to inform and consult with employee representatives in good faith. This will include the employer taking into consideration the proposals made by, and making all feasible information available to, the employee representatives.

Timing

The employer should commence the information and consultation process in sufficient time to allow for meaningful consultation to take place. In practice, the consultation process should last 30 calendar days in a company employing more than 50 employees and 15 calendar days in a company employing less than 50 employees.

In any event, employees must be given at least 15 calendar days’ notice of dismissal and there must be at least 30 calendar days between the initial notification to the Administrative Labor Authority that the consultation process has commenced (as described below) and the proposed dismissal date.

Representatives

Where there is an existing Works Council or other existing employee representatives, they will need to be informed and consulted with. Where there are no existing employee representatives, employees are entitled to elect an "ad hoc" committee among themselves or the most representative Trade Unions to ensure they are represented during the consultation process (the "Committee").

Information/Notification

There are two main notifications:

(i) Information to representatives: The employer must provide the employee representatives with the following information in writing:

(a) grounds for the redundancies;

(b) number and description of employees to be affected;

(c) number and description of the employees employed during the previous year;

(d) proposed timeframe in which the terminations will be conducted;

(e) criteria to be used to select affected employees;

(f) a copy of the initial communication to the employees or their representatives in which the employer announced the intention to proceed with the redundancy; and

(g) identity of the employee representatives that will constitute the Committee.

(ii) Labor authority: The employer must notify the Administrative Labor Authority that it has commenced consultation with the employee representatives. The notification must be submitted at the same time as the above communication to the employee representatives.

At the end of the consultation period, the employer must notify the Administrative Labor Authority of the outcome of the consultation within 15 days after the last negotiation meeting of the consultation period taking place.

Consultation

The employer must consult with employee representatives with a view to reaching an agreement, in particular as to the number of affected employees and the termination packages to be offered. However, there is no requirement to reach agreement in order for the collective redundancies to be implemented.

Where it is proposed that more than 50 employees will be made redundant, it will be necessary to prepare a social plan, which will detail additional measures that may assist affected employees to find a new job (e.g., by offering them outplacement services, different courses, or relocation).

The final decision of the employer is subject to judicial review.

Penalties

Failure to comply with the above process could result in an employee claiming for unfair dismissal, which, if successful, may result in reinstatement and/or an award of compensation of 45 days’ salary for each year of service before February 12, 2012 (up to a maximum of 42 months’ salary) and 33 days’ salary for each year of service after February 12, 2012 (up to a maximum of 24 months’ salary). Furthermore, any measures taken by the employer could be deemed void if they are based on discriminatory grounds or if formalities have not been observed.

Other

The employer must comply with any additional process prescribed in any applicable CBA.

Any documentation related to the redundancy can be provided to employees in local language or in any other foreign language, provided this is the language used on a regular basis to communicate with the employees.

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Individual Redundancies

Threshold

Where the threshold for a collective redundancy is not met.

Obligations

There is an obligation to inform employees in writing of the grounds for the proposed redundancy.

Timing

There is no prescribed timeframe for the process. In practice, the employer must inform the employee in writing of the reasons for the proposed redundancy at least 15 days before the dismissal, and should allow sufficient time for meaningful consultation with the employee.

Representatives

Although the employees may choose to be accompanied to any meetings by one of their representatives, there is no requirement for employee representatives. 

Information/Notification

The employer should provide the employee with a termination letter and, simultaneously, provide the employee with their statutory severance pay plus any final sums due, e.g. payment for accrued but unused holidays. The termination letter should be as detailed as possible in explaining the reasons for the redundancy, which will need to be of an economic, technical, organizational or productive nature.

Consultation

There is no obligation to consult with employees.

Penalties

Failure to comply with the above process could result in an employee claiming for unfair dismissal, which, if successful, may result in reinstatement and/or an award of compensation of 45 days’ salary for each year of service before February 11, 2012 and 33 days’ salary for each year of service after February 12, 2012 (up to a maximum of 24 months’ salary). If the termination is based on a discriminatory ground, it may be deemed void and the employee may be entitled to reinstatement and compensation.

Other

The employer must comply with any additional process prescribed in any applicable CBA.

Any documentation related to the redundancy can be provided to employees in local language or any other foreign language, provided this is the language used on a regular basis to communicate with the employee.

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See also:

Global Employee Consultations at a glance ›

Employment, Compensation & Benefits practice group ›

 

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