Transferring employees on an outsourcing in Spain: overview

A Q&A guide to outsourcing in Spain.

This Q&A guide gives a high level overview of the rules relating to transferring employees on an outsourcing, including structuring employee arrangements (including any notice, information and consultation obligations) and calculating redundancy pay.

To compare answers across multiple jurisdictions, visit the Transferring employees Country Q&A tool.

This Q&A is part of the global guide to outsourcing. For a full list of jurisdictional Q&As, visit www.practicallaw.com/outsourcing-guide.

For the general rules relating to outsourcing, visit Outsourcing: Spain overview.

Blanca Escribano and Sofía Fontanals, Olswang, Spain LLP
Contents

Transfer by operation of law

1. In what circumstances (if any) are employees transferred by operation of law?

Initial outsourcing

Employees are transferred provided that both the (Article 44, Statute of Workers and Spanish case law):

  • Outsourcing transaction qualifies as a transfer of an undertaking (that is, there is a transfer of all the essential assets of an undertaking, business or parts of the undertaking or business, which may qualify as an independent and organised production unit).

  • Transferee continues the operation of the business or undertaking.

If these requirements are met, the customer's employees who work on the service being outsourced automatically transfer to the supplier. The employees can opt out of the transfer and resign from their employment without any compensation (except in the case of senior executives, who are entitled to the compensation agreed in their employment contract or, by default, seven days of salary in cash per year of service, capped at six months' worth of pay).

Parties cannot contract out of Article 44 of the Statute of Workers, but they do have certain flexibility to apportion the financial consequences of its effects.

Some collective bargaining agreements establish transferring obligations even in cases where Article 44 of the Statute of Workers does not apply.

Change of supplier

The employees working on the outsourced service transfer if the change of supplier transaction qualifies as a transfer of an undertaking (see above, Initial outsourcing).

Termination

Article 44 of the Statute of Workers can also apply where the outsourcing terminates and the customer brings the services back in-house. In this case, the supplier's employees transfer to the customer. The customer may end up taking on more employees than it originally transferred.

 
2. If employees transfer by operation of law, what are the terms on which they do so?

General terms

Transferred employees retain all rights acquired during their employment, including length of service, remuneration and holidays.

Employee benefits

All contractual benefits transfer when a transfer of an undertaking takes place (for example, car allowance, medical insurance, lunch and nursery vouchers).

Other matters

Collective bargaining agreements also transfer either up until that agreement expires or until a new collective bargaining agreement is approved for the new employing entity. The transferee can terminate this agreement and apply its own, provided that this is agreed with the employee representatives once the transfer of undertaking has taken place.

When an outsourcing transaction qualifies as a transfer of an undertaking, the transferor and the transferee are jointly and severally liable for:

  • All labour obligations arising before the transfer date that have not been fulfilled. This liability continues for three years from the date of the transfer.

  • All outstanding contributions to the social security system accrued before the transfer date. This liability has a statutory limitation of four years from the date on which the contributions were due.

  • All labour and social security obligations arising after the transfer date.

If a transferor, by deceiving the employees or abusing their circumstances, employs its employees under lesser conditions than those required by law and the transferee does not improve their conditions, both parties could be liable for administrative fines and, in very exceptional circumstances, for a criminal offence.

If the services transferred continue to be independent after the transfer, employee representatives maintain their mandate until it expires.

 

Redundancy pay

3. How is redundancy pay calculated?

Employees made redundant are entitled to a statutory redundancy payment equal to 20 days of salary per year of service, capped at 12 months of salary.

 

Harmonisation

4. To what extent can a transferee harmonise terms and conditions of transferring employees with those of its existing workforce?

Any change to the employee's contractual terms and conditions for a reason connected to the transfer is void, unless either (Article 44, Statute of Workers):

  • It is individually agreed with the employees.

  • There is an economic, organisational, production or technical reason entailing changes in the workforce. In this case, negotiations must be conducted in good time before the changes are implemented.

 

Dismissals

5. To what extent can dismissals be implemented before or after the outsourcing?

Dismissals can be implemented before or after the outsourcing takes place, but any dismissal is automatically unfair unless it is for a proved economic, organisational, production or technical reason. Outsourcing transactions per se do not justify dismissals.

Dismissals for an economic, organisational, production or technical reason both:

  • Must be communicated with 15 days' notice.

  • Give rise to compensation equivalent to 20 days of salary per year of service, capped at 12 months of pay.

The dismissing entity assumes this liability.

 

National restrictions

6. To what extent can particular services only be performed by a local national trained in your jurisdiction?

There are generally no restrictions. However, to provide services in certain specific sectors the supplier must be supported by qualified professionals or workers (for example, outsourcing security services).

 

Secondment

7. In what circumstances (if any) can the parties structure the employee arrangements of an outsourcing as a secondment?

It is possible to structure the employee arrangements as a secondment, especially on a short-term basis. Special consideration must be given to health and safety regulations and the risks of illegal assignment of employees.

 

Information, notice and consultation obligations

8. What information must the transferor or the transferee provide to the other party in relation to any employees?

Information is usually provided during the due diligence procedure or negotiation process. However, there is no obligation to do so unless the applicable collective bargaining agreement includes the obligation to provide certain information to the transferee before the transfer. If this information is not provided in due time, the transferring obligations may not apply.

 
9. What are the notice, information and consultation obligations that arise for the transferor and the transferee in relation to employees or employees' representatives?

The transferor and the transferee must provide the legal representatives of their respective employees affected by the transfer with a written notice indicating all of the following:

  • The expected date of the transfer.

  • The grounds for the transfer (that is, the legal transaction giving rise to the transfer and reasons for this operation).

  • The legal, financial and social consequences of the transfer for the employees.

  • Any expected changes with respect to the employees.

If the employees do not have legal representatives, this notice must be provided directly to the relevant employees. The employer usually directly informs all affected employees of the transfer, even if there are employee representatives. Information must be provided in good time before the transfer is carried out (this is understood to be at least 15 days before the transfer takes effect).

It is recommended that this communication is signed by both the transferor and the transferee (although this is not legally necessary).

Failure to comply with the information duties does not render the transfer invalid. However, failure is considered a serious breach which may be sanctioned by the labour authorities with a fine ranging from EUR626 to EUR6,250.

 

Online resources

Spanish Official Gazette

W www.boe.es

Description. This is the website of the Spanish Official Gazette. It is published daily, so it is always up-to-date. The Official Gazette publishes the laws issued by parliament, dispositions from the Autonomous Communities and judgments of the Spanish courts.

EUR-Lex

W www.eur-lex.europa.eu

Description. This website provides access to the legal texts of the European Union and to other public documents. It is possible to consult the Official Journal of the European Union, International Treaties, and legislation, case-law and legislative proposals. It is published by the Publications Office of the European Union. It is updated every day and the information displayed is official.

Bank of Spain

W www.bde.es

Description. This is the official site of the National Bank of Spain. The Bank of Spain is the national supervisor of the Spanish banking system. It is an official website maintained the Bank of Spain. It is up-to-date and the information displayed is official.

Tax Agency

W www.agenciatributaria.es

Description. This is the official website of the Spanish Tax Agency, which is a public body forming part of the central government that manages the tax and customs system. It is up-to-date and the information displayed is official.

Ministry of Justice

W www.mjusticia.gob.es/cs/Satellite/es/1288774502225/TextoPublicaciones.html

Description. Website of the Spanish Ministry of Justice. It is official and updated, but translations are only for information or guidance, and cannot be considered as binding in the English language version.



Contributor profiles

Blanca Escribano Cañas, Partner

Olswang Spain

T +34 91 187 1924
F +34 91 187 1999
E blanca.escribano@olswang.com
W www.olswang.com

Professional qualifications. Lawyer, admitted ICAM, 1995

Areas of practice. Telecommunications; media; technology; outsourcing; competition law.

Non-professional qualifications. Doctorate in Law, Carlos III University, 1997; LLM in European Union Law, Carlos III University, 1995; degree in Law and European Law, Complutense University and K.U. Leuven, 1994; piano player (Conservatorio de Madrid)

Recent transactions

  • Partner and the head of the Media, Communications and Technology Group at Olswang Spain.
  • Practiced law for more than 18 years in international firms, advising clients operating in the communications, technology and media sectors.
  • Advises different agents in the full value chain of the communications industry, from the content producers to the network providers, including applications, software, web pages, service providers, distributors and manufacturers.
  • Broad experience in negotiating and drafting sophisticated agreements within the telecoms and technology industries, including outsourcing of telecom networks and IT platforms and cloud computing agreements.
  • Recently represented a European telecom operator in the litigation against a main Spanish player regarding the migration process to a new IT platform.

Languages. Spanish, English

Professional associations/memberships

  • Member of the Madrid Bar Association (ICAM), IBA, ABA, ENATIC, DENAE and European Outsourcing Association (EOA) España.
  • Officer at the Communications Committee of the International Bar Association.
  • In addition, Blanca has been named to, Chambers Europe Edition, Legal 500, Best Lawyers and the International Who's Who of Telecoms and Media Lawyers as one of the leaders practitioners in Spain.

Publications

  • Authored the EU chapter for "International Telecommunications law" (CILS) (in progress).
  • Co-authored the "EU regulatory framework" chapter of the International Comparative Legal Guide to Telecommunication Laws and Regulations 2014 (ICLG).
  • "Telecommunications and media industry developments in Spain" published in the "Spain: Telecom & Media" Section of the Global Competition Review 2009. September 2008.
  • "2006 eCommunications Market Review in the European Union", published in "The Partyline", Communications Industry Committee Newsletter of the American Bar Association. Section of Antitrust Law. Summer 2006.
  • Spanish Section of the "Communications Law Newsletter" of the International Bar Association (September 2005).
  • Co-authoring "Prospective Model in the Telecommunications Sector, Risks of a Dual Analysis" (Control de Concentraciones Empresariales, Reforma de las normativas Comunitaria y Española). Instituto de Estudios Europeo. 2004.
  • Co-authoring "Frustrated Merger Between the US Satellite pay TVs. Competition v Regulation and Public Interest Licence". 2002 Competition review. Fundación ICO.

Sofía Fontanals, Senior Associate

Olswang Spain

T +34 91 187 1932
F +34 91 187 1999
E sofia.fontanals@olswang.com
W www.olswang.com

Professional qualifications. Lawyer, admitted ICAM, 2006

Areas of practice. Telecommunications; media; technology; outsourcing; privacy and data protection; advertising; consumer law.

Non-professional qualifications. Masters degree in Telecommunications and IT Law, Carlos III University; degree in Law, Complutense University of Madrid

Languages. Spanish and English

Professional associations/memberships. Member of the Madrid Bar Association (ICAM), ENATIC, DENAE and European Outsourcing Association (EOA) España.


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