This country-specific Q&A provides an overview to employment and labour law in Spain.
It will cover termination of employment, procedures, protection for workers, compensation as well as insight and opinion on the most common difficulties employers face and any upcoming legal changes planned..
This Q&A is part of the global guide to Employment & Labour. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/employment-labour-law/
Does an employer need a reason in order to lawfully terminate an employment relationship? If so, what reasons are lawful in the jurisdiction?
In Spain there is no termination without cause, so that the employer must always justify the reasons for employment termination (unless the termination takes place during the trial/probationary period, in which case the employer may dismiss the employee without grounds, notice and termination severance). Dismissals cans be supported on the following grounds:
- Owing to the worker’s known or observed ineptitude subsequent to his/her actual placement in the company.
- Owing to the worker’s lack of adaption to technical modifications made on his/her work post, where said changes are reasonable.
- Where there is a demonstrated objective need to decrease the number of jobs for economic, technical, organisational or production reasons (redundancy dismissals which could be of individual -objective/individual redundancy- or collective -collective layoff/redundancy- nature).
- Owing to absences from work, even when these are justified but intermittent, when they amount to 20% of the working days of two consecutive months, provided that the total absences in the previous 12 months exceed 5% of the working days, or 25% for in 4 non-consecutive months within a 12 month period (there are some absences that are expressly excluded from the above calculations in accordance with legal provisions).
- Repeated and unjustified absence from work or lack of punctuality at work;
- Lack of discipline or disobedience at work;
- Verbal or physical offences to the employer or those working for the company or family members living with them;
- Violation of contractual good faith, as well as abuse of confidence;
- Continuous and voluntary decrease in the work performance;
- Habitual drunkenness or drug addiction if it negatively affects work; and
- Harassment based on race, ethnic origin, religion or convictions, disability, age or sexual orientation, and sexual harassment directed against the employer or persons working for the company.
The very serious misconducts for disciplinary dismissals may be also established in the applicable collective bargaining agreement.
What, if any, additional considerations apply if large numbers of dismissals (redundancies) are planned?
As mentioned before, redundancy dismissal could be of individual (objective/individual redundancy) or collective nature (collective layoff/redundancy).
Collective layoffs shall be understood as the extinction of employment contracts based on economic, technical, organizational or production reasons where, in a period of 90 days, the extinction affects at least (i) 10 workers in companies that employ less than 100 workers; (ii) 10 percent of the number of workers in the company in those employing between 100 and 300 workers; or (iii) 30 workers in companies that employ more than 300 workers (some legal provisions must be taken into consideration while computing the number of employment terminations). If the legal thresholds above mentioned are not met, the employer will have to comply with the individual redundancy dismissal procedure.
To this effect, please note that different procedures must be complied with whether the redundancy is of individual or collective nature (in this latter case, a consultation period with the workers’ legal representatives must be complied with).
What, if any, additional considerations apply if a worker’s employment is terminated in the context of a business sale?
The termination of an employment contract based on the sale of its business does not match nor correspond with any of the reasons stated by law for dismissals. Therefore, if the Company decides to make redundant some employees due to the sale of its business, the legal consequence would be the unfair dismissal declaration by Court , and hence the employees shall be entitled to the statutory unfair dismissal severance.
What, if any, is the minimum notice period to terminate employment?
In case of redundancy dismissals, a 15 day prior notice must be complied with , although the employer may choose to replace it with payment in lieu of notice. On the other hand, no prior notice shall apply to disciplinary dismissals.
In any case, it will be advisable to check if the applicable collective bargaining agreement establishes any specific provision in this regard.
Is it possible to pay monies out to a worker to end the employment relationship instead of giving notice?
Yes, it is possible. As mentioned before, the employer may choose to fully or partially replace prior notice with payment in lieu of notice.
Can an employer require a worker to be on garden leave, that is, continue to employ and pay a worker during his notice period but require him to stay at home and not participate in any work?
No. Garden leave clauses are not valid under Spanish legislation.
Does an employer have to follow a prescribed procedure to achieve an effective termination of the employment relationship? If yes, what are the requirements of that procedure or procedures?
Yes, it does.
A written dismissal letter must be given to the employee detailing the facts supporting the disciplinary dismissal and the termination date.
Likewise, a specific different legal procedure must be complied with in case employees to be dismissed are workers’ legal representative or trade union affiliates.
a) Collective layoff
- A consultation period with the workers’ legal representatives shall be followed before the collective layoff takes place. Such consultation period shall not exceed 30 calendar days, or 15 in case of companies employing less than 50 employees.
- The consultation period shall minimum deal with the possibilities of preventing or reducing the redundancy dismissals as well as mitigating their consequences through the application of social support measures such as outplacement measures or training or professional and recycling activities that could be used to improve employability.
- Notice of the opening of the consultation period shall be notified in writing by the employer to the workers’ legal representatives, a copy of which shall be sent to the Administrative Labour Authority. Spanish law also stipulates the information that such letter shall include.
- During the consultation period, parties must negotiate in good faith with a view of achieving agreement. However, there is no obligation to reach an agreement.
- Once the consultation period finishes, its result must be communicated by the employer to the Administrative Labour Authority. If an agreement is reached, the employer shall deliver a copy of it to the Administrative Labour Authority. However, if parties have not reached an agreement during the consultation period, the employer shall communicate to the workers’ legal representatives and the Administrative Labour Authority its adopted final decision related to the redundancy dismissal as well as its conditions and terms.
- Where the extinction affects more than 50% of the employees, notice shall be given to the workers’ legal representatives and as well to the corresponding authorities of the sale of the company property by the employer, except for those goods making up its normal traffic.
- Once the final decision is notified to the workers’ legal representatives, the employer should notify the individual dismissals to the affected employees according to the following procedure:
- Written notice to the employee, stating the reasons for the dismissal.
- Simultaneously with the delivery of the letter, the statutory redundancy severance payment (20 days of salary per worked year of service with a maximum of 12 monthly payments) shall be made available in such moment to the employee. However, a severance payment higher than the statutory one could be stated by the Company unilaterally or according to the conditions negotiated by the Company and the workers’ legal representatives during the consultation period.
-15 days prior notice following the delivery of the letter must be granted before the dismissal takes effect, although the employer may choose to replace this period with the payment in lieu of notice. In any case, at least 30 days should exist between the notification date to the Administrative Labour Authority about the opening of the consultation period and the dismissal date.
- Workers’ legal representatives shall have the priority of permanence in the company. By collective bargaining agreement or agreement reached during the consultation period parties can state permanence priorities for other employees groups such as employees with family care, disabled employees or workers above a certain age.
- If collective layoffs affect employees aged 50 years or older, companies shall have to pay an economic contribution to the Spanish Public Treasury under the terms and conditions stated in law. Please note that certain legal requirements must be met by employers to pay the economic contribution mentioned above.
- Employers shall be obliged to offer outplacement plans when collective layoffs affect more than 50 employees.
b) Individual redundancy
- Simultaneously with the delivery of the written dismissal letter detailing the corresponding legal reason, the statutory redundancy severance payment (20 days of salary per worked year with a cap of 12 monthly payments) shall be made available in such moment to the employee.
- Furthermore and as mentioned before, 15 day prior notice following the delivery of the letter must be granted before the dismissal takes effect, although the Company may choose to replace this period with payment of salary in lieu of notice. If the Company chooses the first option, notice that during such period of time the employee shall have to continue providing his/her services, although he will be entitled to spend 6 hours per week looking for new employment.
- A copy of the redundancy dismissal letter must be given to the workers’ legal representatives.
In any case, it is highly advisable to check the applicable collective bargaining agreement in order to determine if additional provisions shall be complied with.
If the employer does not follow any prescribed procedure as described in response to question 7, what are the consequences for the employer?
In case of disciplinary dismissal or individual redundancy, the dismissal will be considered as unfair, which consequence is the payment for the employee of the statutory unfair dismissal severance, except for the cases of employees protected from dismissals, which consequence would be the null and void declaration. In this latter case (null and void dismissal scenario), the employee will be entitled to the reinstatement in his/her job position plus payment of the salaries accrued from the termination date until the notification of the Court’s resolution, with the possibility to pay an additional indemnity if damages are proven before Court (some examples of employees protected from dismissals are pregnant employees, workers’ legal representatives, employees who have requested a reduction on working hours, employees who previously filed claims against the Company, etc.).
In relation to collective layoff, please take into consideration that if the consultation period has not been complied with or if the employer has not provided the corresponding mandatory documentation to the workers’ legal representatives, such collective layoff would be considered as null and void, which consequences before mentioned.
How, if at all, are collective agreements relevant to the termination of employment?
In case of disciplinary dismissals, collective bargaining agreements usually establish labour misconducts and sanctions the employer may impose on the employee (including specific procedures), this being the reason why it is highly advisable to check it before proceeding with the employment termination.
On the other hand, and in spite of the fact that is not quite common, the applicable collective bargaining agreement may establish some provisions to consider when making employees redundant.
Does the employer have to obtain the permission of or inform a third party (e.g local labour authorities or court) before being able to validly terminate the employment relationship? If yes, what are the sanctions for breach of this requirement?
Only in case of collective layoff an information obligation with the Administrative Labour Authority exists (in this regard, please see answer to question 7).
What protection from discrimination or harassment are workers entitled to in respect of the termination of employment?
When challenging a dismissal before Court, an employee may allege that no grounds exist to validly support his/her dismissal and that such dismissal decision was taken on the basis of discriminatory grounds. If the claim if accepted by Courts, the dismissal will be declared as null and void, which consequence would be the the reinstatement of the employee in his/her job position plus payment of the salaries accrued from the termination date until the notification of the Court’s resolution, with the possibility to pay an additional indemnity if damages are proven before Court (some examples of employees protected from dismissals are pregnant employees, workers’ legal representatives, employees who have requested a reduction on working hours, employees who previously filed claims against the Company, etc.).
On the other hand, and employee may allege harassment in order to terminate the employment relation and being entitled to the statutory unfair dismissal severance.
What are the possible consequences for the employer if a worker has suffered discrimination or harassment in the context of termination of employment?
In addition to the information detailed in answer 11 above, and from an employment legal perspective, the Work Inspectorate may impose an economic fine to the employer up to 187.515,00 Euros.
Are any categories of worker (for example, fixed-term workers or workers on family leave) entitled to specific protection, other than protection from discrimination or harassment, on the termination of employment?
Yes, there are. Employees protected from dismissals are:
- Workers’ legal representatives.
- Workers who have requested or are currently benefiting from specific legal rights (such as child-care leave; or have requested legal reduction of working hours).
- Workers who are victims of domestic violence exercising the rights to reduction or reorganization of their working time, geographical mobility, or change of work center or suspension of labor relations.
- Workers after reinstatement at work at the end of the periods of contract suspension for adoption, fostering or paternity, provided that more than nine months have not elapsed from the date of birth, adoption or fostering of the child.
- The dismissal of employees who have already initiated proceedings against the Company, protected by the so-called indemnity guarantee. This guarantees that the exercise of an action at law, or of preparatory acts prior to such an action, does not carry damaging consequences for the claimant in his public or private relations. In the field of labor relations, the indemnity guarantee protects employees from reprisals relating in any way to the exercise of their legal rights.
Are workers who have made disclosures in the public interest (whistleblowers) entitled to any special protection from termination of employment?
Yes, although a case by case analysis shall be made (in this regard, and depending on the circumstances, such employees may argue that the dismissal decision was taken in retaliation of a previous complaints/disclosures made against the Company).
What financial compensation is required under law or custom to terminate the employment relationship? How do employers usually decide how much compensation is to be paid?
In case of disciplinary dismissals, employees will not be entitled to any termination severance unless the dismissal is declared as unfair. In this latter case, and for employment contracts entered into after 12th February, 2012, the employee will be entitled to the statutory unfair dismissal severance equivalent to 33 days of salary per worked year with a cap of 24 monthly installments.
In case of employment contracts entered into before 12th February, 2012, the unfair dismissal severance shall amount to 45 days of salary per worked year for the time of services rendered before 12th February 2012, and 33 days of salary per worked year for the time of services rendered afterwards. The severance amount shall not exceed 720 days of salary, unless the calculation for the period worked prior to 12th February 2012 resulted in a higher number, in that case that number shall be used as upper limit, and said number shall not be higher than 42 months, in any case.
The employee affected by this type of dismissal will be entitled to the redundancy termination severance equivalent to 20 days of salary per worked year, with a cap of 12 monthly salaries. However, if the Company cannot prove the said grounds, the affected employees will be entitled to the unfair dismissal severance above mentioned.
In relation to collective layoff, please take into consideration that a termination severance exceeding the statutory redundancy one could be unilaterally offered by the Company or negotiated with the workers’ legal representatives during the consultation period. In fact, it is under the obligation of negotiating in good faith with a view of achieving an agreement, but submitted to the economic, productive, technical or organizational situation of the companies as well to the conditions of the corporate sector, to pay additional indemnities to the ones stated by law to the affected employees.
Can an employer reach agreement with a worker on the termination of employment in which the employee validly waives his rights in return for a payment? If yes, describe any limitations that apply.
Yes, an individual agreement could be reached in this regard.
In any case, please take into consideration that if the unfairness of the dismissal will be acknowledged by the employer, the agreement must be reached before the Conciliation Administrative Service/Body (SMAC), in order to validly apply the tax exemption over the statutory unfair dismissal severance. The SMAC will issue the corresponding conciliation act/record, and such record/act will expressly state that once the payment is made by the employer, the parties will be fully settled and therefore the employee will not be entitled to file any kind of claim against the Company in relation to the labour relation.
Is it possible to restrict a worker from working for competitors after the termination of employment? If yes, describe any relevant requirements or limitations.
Yes, it is possible. To this effect, please take into consideration that non-competition agreements to be in force after the employment termination -which may not be higher than 2 years for technical personnel and 6 months for other employees- shall only be valid if the following requirements are met: (i) that the employer has a current industrial or commercial interest in such; and (ii) that the employee is paid an adequate economic compensation. According to the Spanish Courts rulings, an adequate economic compensation should be equivalent to 40% - 60% of the fixed gross annual salary per each year the non-competition obligation is in force.
Can an employer require a worker to keep information relating to the employer confidential after the termination of employment?
Yes, they can.
Are employers obliged to provide references to new employers if these are requested?
No, they are not obliged to do it.
What, in your opinion, are the most common difficulties faced by employers in your jurisdiction when terminating employment and how do you consider employers can mitigate these?
If employees challenge the dismissals before Courts, most common difficulties refer to prove the grounds supporting such dismissals. Hence, it is highly advisable to analyse all circumstances involving a potential dismissal and to determine the risks and consequences the employer may face when terminating the employment relation.
Are any legal changes planned that are likely to impact on the way employers in your jurisdiction approach termination of employment? If so, please describe what impact you foresee from such changes and how employers can prepare for them?
Not to date.