Employment and employee benefits in Spain: overview
A Q&A guide to employment and employee benefits law in Spain.
The Q&A gives a high level overview of the key practical issues including: employment status; background checks; permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; data protection; discrimination and harassment; dismissals; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; intellectual property; restraint of trade agreements and proposals for reform.
To compare answers across multiple jurisdictions, visit the Employment and Employee Benefits Country Q&A tool.
The Q&A is part of the Multi-jurisdictional Guide to Employment and Employee Benefits law. For a full list of jurisdictional Q&As visit www.practicallaw.com/employment-mjg.
Scope of employment regulation
Foreign nationals working in your jurisdiction?
Nationals of your jurisdiction working abroad?
Laws applicable to foreign nationals
Parties can choose which law regulates the employment contract, although there are certain mandatory provisions that apply regardless of the choice of law. In particular, if a European Economic Area (EEA) national, or a non-EEA national working for an EEA-based company, has been posted to work in Spain, Directive 96/71/EC concerning the posting of workers (Posted Workers Directive) (implemented by Law 45/1999) applies. This provides that employees posted to work in another member state are protected by that member state's mandatory employment legislation (Article 3, Posted Workers Directive). In Spain, this includes:
Minimum rates of pay, including overtime rates (see Question 9).
Equal treatment and non-discrimination (see Question 17).
Conditions and restrictions on work by minors.
Prevention of risks at work (see Question 25).
Freedom to join a trade union and the right to strike.
The right to privacy and dignity at the workplace.
The mandatory employment legislation that applies in the absence of a choice of law also applies to non-EEA nationals and nationals working for non-EEA-based companies (Article 6, Rome Convention on the law applicable to contractual obligations (1980/934/EEC) (Rome Convention)).
Laws applicable to nationals working abroad
Unless the parties have agreed on a choice of law, the general rules apply. This means that the employment contract is governed by the law of the country in which the employee habitually carries out his work in performance of that contract, even if the employee is temporarily employed in another country (Article 6, Rome Convention).
Categories of worker
The rendering of services to employers can be done under employment relationships (employees) or civil/mercantile relationships (self-employed people and independent contractors).
Under Spanish law, the employment contract is an agreement under which people (employees) voluntarily offer their physical or intellectual services for payment to an employer. To this effect, section 1.1 of the Workers' Statute applies to people who render their services voluntarily under the management of another person (natural or legal), where the person rendering services is the employee and the person (natural or legal) receiving the services is the employer).
For civil/mercantile relationships, the contract for the provision of services (also called a commercial contract for services) is in fact an exchange of obligations and contributions, which are rewarded with a payment for the services provided. Therefore, an employment contract will only exist where there are generic elements of employment in the relationship (that is, the employee is managed by the employer, is dependent on the employer, engages in no risk-sharing with the employer and receives a guaranteed payment for services rendered).
In addition, Spanish law separately regulates the "economically dependent autonomous employee", who is a natural person who:
Performs a professional activity for profit on a regular basis.
Carries out that activity personally, directly and principally for one natural or legal person (called a client).
Depends on this client to receive at least 75% of their income.
Economically dependent autonomous employees are a particular category of the self-employed and are regulated under a specific legal framework.
Entitlement to statutory employment rights
Only people who are employees under an employment contract are entitled to statutory employment rights.
Only fixed-term employment contracts have a maximum duration under the law.
Grants or incentives
The government issues an employment plan every year that sets out specific incentives available for employing certain categories of people. The most common incentives are:
Reducing social security contributions for employing people over the age of 45 years.
Reducing social security contributions for employers converting temporary employment contracts into permanent contracts, to promote employment stability.
Reducing social security contributions for employers converting contracts of replacement or contracts for training into permanent contracts, to promote employment stability.
Awarding bonuses to employers, such as direct payments from social security, for employing women and unemployed persons for more than one year.
In addition to the government's discretionary incentives, Law 43/2006 brought into force specific measures and incentives for employing the following people:
Unemployed persons registered at the Employment Office.
Female victims of domestic violence.
Employees suffering from social exclusion.
Unemployed persons with family responsibilities.
Further, Royal Decree 2/2009 brought into force incentives relating to unemployment for:
Employers that offer indefinite employment contracts to persons who have been receiving unemployment benefit.
Employers that reduce working hours or suspend employment contracts instead of terminating employment relationships as a consequence of redundancy agreements.
Royal Decree 1/2011 and Law 3/2012 brought into force specific measures and incentives for employing people with the following characteristics:
Persons under the age of 30 who were unemployed on 1 January 2011.
Unemployed people registered at the Employment Office for at least 12 months in the 18-month period prior to the hiring measure.
Unemployed persons registered at the Employment Office on 1 January 2011 who have had difficulty finding employment and who are aged between 16 and 30.
Unemployed female victims of domestic violence aged between 16 and 30.
Female victims of domestic violence who were unemployed on 1 January 2011 and registered at the Employment Office for at least 12 months in the 18-month period prior to the hiring measure.
Law 11/2013 and Royal Decree 4/2013 have also brought into force specific measures and incentives for employing people with the following characteristics:
People who have training or learning contracts originally signed by temporary agencies, or young people with contracts for their first work experience.
Previously unemployed people aged under 30 with indefinite or temporary contracts, or people under 35 years of age with a proven disability to a degree of 33% or more who have either no work experience, or work experience of less than three months.
People aged 45 or more who have been continuously subscribed to the Unemployment Office for at least 12 months in the 18 months prior to the hiring, or who benefit from the professional requalification programme.
The employment contracts signed must be presented to the National Employment Institute (INEM) within the next ten days of the signature.
Employers must respect candidates' right to privacy and must not ask questions about a job applicant's health before making a job offer.
However, there are certain circumstances where medical checks may be made before recruitment. These exceptions apply where employers are recruiting for jobs with a risk of occupational diseases. In such cases, the employer must arrange a medical examination of the employee before the hiring process begins. The medical examination is free to the candidate. The employer will be told whether the candidate is fit to do the job but will not have access to the details of the medical examination.
There is no clear indication in Spanish law as to what information employers are allowed to ask employees for during the hiring process. Employers usually ask about the training and professional profile of the candidate and they should avoid personal questions. All questions must comply with data protection law and must respect the candidates' right to privacy.
Permission to work
Procedure for obtaining approval. Any foreign national who is not from the EEA and wants to work in Spain must obtain, prior to commencing their work activity, a work permit and its corresponding work visa (once the work permit has been approved).
Cost. The administrative costs for a working visa are about EUR100 for US nationals, but the fee can vary for other foreign nationals, depending on the nationality of the applicant.
Time frame. The work visa takes between seven and 15 days to be issued.
Sanctions. See below, Permits: Sanctions.
Procedure for obtaining approval. EEA nationals are free to work in Spain without permits.
Non-EEA nationals must usually obtain a work permit. Different permits are required, depending on the length of employment and the employee's geographical location. If a job does not require specific qualifications, a permit is only granted if there are no Spanish people available to take up the position. As indicated above (see above, Visa), foreign nationals should obtain the work permit and its corresponding visa independently from their citizenship. The work permit is subject to the labour market test, except for the cases indicated in Article 40 of the Immigration Law and for Peruvian and Chilean citizens, who are exempted.
A company wishing to hire a non-EEA national must obtain a permit from the labour authorities. The work permit application can be filed in one of the following organs, depending on the characteristics of the Spanish sponsoring company and the professional skills of the assignee:
The General Immigration Directorate: the process takes around 30 days to resolve the application.
The local immigration office: the process takes a minimum of three months.
Once the work permit is approved and notified, the assignee has to apply for the corresponding work visa within one month from the Spanish consulate that has jurisdiction over the applicant's place of residence.
Cost. The charges for a work permit can vary from approximately EUR192 to EUR380 depending on the salary the applicant will receive.
Time frame. The process can take from 30 days to three months, depending on which organ the work permit application is filed with.
Sanctions. Employing a foreign national who does not have the necessary permission to work is considered a very serious legal breach and can be penalised with a fine from EUR10,000 to EUR100,000 (plus any social security charges due).
Restrictions on managers and directors
The usual retirement age for all employees is 65, but it is not compulsory to terminate an employment contract when this age is reached. There are no specific age restrictions on managers or company directors. However, major Spanish companies are increasingly imposing age limits on company directors in accordance with good corporate governance rules (for example, the OECD (Organisation for Economic Co-operation and Development), Principles of Corporate Governance 2004, the Olivencia Code and the Aldama Code). This practice has not been affected by Spain's implementation of European provisions on age discrimination.
There are no specific nationality restrictions on managers or company directors.
Regulation of the employment relationship
Written employment contract
There is no general requirement for an employment contract to be in writing, except for temporary contracts lasting for more than four weeks.
If the contract is not in writing, employees must be provided with certain written particulars of employment, including details identifying the following matters (Royal Decree 1659/1998 of the 24 July and section 8.5, Workers' Statute):
Name of the company.
Date on which employment begins.
Place of work.
Hours of work.
Holiday and holiday pay entitlement.
Collective agreements applicable to the employment relationship.
Professional group to which the employee belongs.
Statute and case law imply certain terms into employment contracts. Common implied terms are the:
Mutual duty of trust and confidence.
Employee's duty to obey the employer's instructions.
Employee's duty to comply with the company's internal rules.
Collective agreements between unions and employers are quite common in public services, and at private industry and company level. Almost every company in Spain is subject to a collective agreement. The provisions in collective agreements apply regardless of the terms in the employment contract.
Employers can unilaterally modify the terms and conditions of employment acknowledged to employees under their employment contracts, collective agreements (which is different from a collective bargaining agreement) or enjoyed by virtue of a unilateral decision of the employer. To this effect, employers must fulfil the requirements established by section 41 of the Workers' Statute. Under section 41, where demonstrated economic, technical, organisational or production justifications exist, the company management can resolve to make a substantial modification to the following terms and conditions of employment:
Hours of work.
Working timetable and distribution of working time.
Working patterns for shift work.
Salary system and salary amount.
Procedures for measuring employees' work and performance.
Employees' functions, where these exceed the limits set by section 39 of the Workers' Statute for functional mobility.
The justifications contained in section 41 will be presumed to exist where the adoption of the proposed change will be linked with:
Technical or labour organisation.
An individual substantial modification to working conditions will take place when in a 90-day period a modification based on the above justifications takes place and the thresholds stated for collective substantial modification to working conditions are not met.
A collective substantial modification to working conditions will take place when in a 90-day period the modification affects at least:
Ten employees in those companies employing less than 100 employees.
10% of the employees in those companies employing between 100 and 300 employees.
30 employees in those companies employing more than 300 employees.
Different procedures for modification must be followed depending on whether the modification is of an individual or collective nature.
Restrictions on working time
The Spanish working time regulations state that employees must (Workers' Statute):
Not work (on an annual average) more than 40 hours a week.
Not work more than nine hours a day.
Be given at least 12 hours' rest before starting the next day's work.
There are exceptions for certain industries (for example, agricultural work), management executives and other specified employment relationships.
Whenever the duration of the continuous working day exceeds six hours, a rest period of not less than 15 minutes must be given during that period. This rest period is considered as working time where this is established by either a collective bargaining agreement or the employment contract. For workers under the age of 18 years, the rest period must be a minimum of 30 minutes long and must be given whenever the duration of the continuous working day exceeds four and a half hours.
Workers have the right to an uninterrupted minimum weekly break of one and a half days, which can be accumulated to up to 14 days. This break period, as a general rule, should include either Saturday afternoon or Monday morning, together with the whole of Sunday. Persons under the age of 18 years must have a weekly break of two days without interruption (it is irrelevant which days of the week this weekly break takes place).
The following provisions are set out in both the Workers' Statute and in Royal Decree 1561/1995 of 21 September, which regulate that the following special working hours for shift workers must be observed:
Employees will be entitled to minimum weekly time off, which can be accumulated for a period of up to 14 days, equal to one and a half interrupted days which, as a general rule, should include Saturday afternoon, or Monday morning and all day Sunday. However, in cases where shift workers are required to work by the organisation, the weekly half day of rest can be accumulated by periods of up to four weeks, or else be separated from that into full days to enjoy on another day of the week.
When the shift worker is unable to enjoy the minimum time off between working days (the legal minimum is 12 hours) this may be reduced, on the day in question, to a minimum of seven hours, compensating the difference up to the 12 hours generally established over the immediately following days.
Reductions in time off between working days and working weeks set out in the above two bullets must be compensated by alternative rest periods which must be no shorter than the reduction in question, to be enjoyed within the periods of reference in each case, in the manner set out by agreement or covenant.
The enjoyment of the time off in lieu referred to in the two first bullets above cannot be replaced with financial compensation, except in the case of termination of employment for causes other than those arising under the terms of the contract. In any event, in the case of employees with fixed-term or temporary contracts or employed on a part-time basis for permanent seasonal services, any outstanding time off must be enjoyed within the established reference periods in each case, before the end of the contract.
Minimum holiday entitlement
Once employees have been continuously employed for one year, they are entitled to 30 calendar days' paid holiday every year. Holiday entitlement cannot be replaced by payment in lieu.
There are 14 public holidays which are not included in the minimum holiday entitlement.
Illness and injury of employees
Entitlement to time off
Employees are entitled to a maximum of 18 months' sick leave in cases of illness or injury. Once the 18-month period has expired, employees can be designated as permanently ill and claim a social security pension.
Entitlement to paid time off
Employees receive social security payments during the sick leave period (up to a maximum of 18 months). The amount of social security payment varies depending on the employees' salary and their position in the employer's organisation. Some employers, on their own initiative or under the provisions of a collective agreement, supplement the social security payment to match the employee's current salary.
Recovery of sick pay from the state
Employers are compensated for payment made in favour of employees from the day after the accident (or after the 16th day in the case of a common contingency) by discounting the amount of the delegated payments made from their periodic settlements of social security contributions.
The delegated payments by employers end after 365 days. If there is an extension after this date, that payment is made directly by the National Social Security Institute.
Statutory rights of parents and carers
Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?
Carers (including those of disabled children and adult dependants)?
Pregnant employees can take a maximum of 16 weeks' maternity leave. They must take the leave immediately after the birth. Maternity leave is increased where there are:
Multiple births (by two weeks for each additional child, to be counted from the second child).
Maternity leave can also be increased where the child is disabled. If the mother dies whilst taking maternity leave, the remaining leave is transferred to the father (see below, Paternity rights).
Pregnant employees and those who have recently given birth are entitled to time off for, among other things, attending antenatal clinics and breastfeeding, in addition to the 16 weeks' maternity leave.
Social security benefits are paid 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 applies.
Employees aged between 21 and 26 years old: a qualifying period of 90 days' paid employment 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 aged over 26 years old: a qualifying period of 180 days' paid employment within the last previous 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.
The father of a newly born child can take up to two working days' paid absence immediately after the birth.
Fathers are also entitled to 13 additional days' paternity leave. Paternity leave can be increased for multiple births (by two days for each additional child, to be counted from the second child). Social security benefits are paid to employees on paternity leave, provided that 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.
A male employee can also share his partner's maternity or adoptive leave if either:
There is a mutual agreement between the parents.
The mother dies whilst on maternity leave (see above, Maternity rights).
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). The mother must take a minimum of six weeks' leave immediately following the birth.
There are no applicable rights in the case of surrogacy.
Employees have the right to leave of up to three years to attend to the care of each child, whether natural, adopted or being fostered permanently or as a pre-adoptive measure. The leave is to be counted from the date of birth or, where applicable, from any relevant legal or administrative resolution.
The leave envisioned in the present legislation, the duration of which can be apportioned, is an individual employee's right, applicable to both males and females. Nonetheless, if two or more employees from the same company exercise this right on account of the same person, the employer can limit its simultaneous exercise for justified reasons concerning the company's operation.
The period for which the employee remains on leave is calculated by seniority, and the employee retains the right to attend professional training courses that the employer wishes him to participate in, particularly on the occasion of their reinstatement. During the first year, the employee has the right to reserve their work post. After that period, the reservation applies to a work post of the same professional group or equivalent category.
Female workers have the right to one hour of absence from work each day to breastfeed an infant of less than nine months. This can be divided into two half-hour periods. The duration of this leave will be increased proportionately in cases of multiple births.
Women can choose to substitute this right for a reduction of their working day by half an hour for the same purpose. Alternatively, they can let this accumulate into complete days under the terms provided for by the collective bargaining agreement or by the agreement arrived at with the employer.
In the case of the birth of premature infants or children who, for any reason, have to remain hospitalised after childbirth, the mother or the father have the right to be absent from work for one hour. Likewise, they have the right to reduce their working day by up to a maximum of two hours, with a proportional reduction in salary.
This leave can be enjoyed by either the mother or the father, in the event that both work.
A person legally charged with the direct care of a child of less than eight years of age, or a person with a physical, psychic or sensory handicap who does not perform any paid activity, will have the right to a reduction in the working day. There will be a proportional decrease in salary of between one eighth and one half of the salary.
If two or more employees from the same company exercise this right on account of the same person, the employer can limit its simultaneous exercise for justified reasons concerning the company's operation.
The Law on the Promotion of Personal Autonomy and Care for Dependant Adults was enacted in 2006. It focuses on encouraging the independence of, and care for, dependent people. Under its provisions, dependent people can receive financial assistance for the hiring of a personal assistant. Carers do not have any applicable rights in Spain.
Continuous periods of employment
None of the statutory employment protection rights are dependent on a minimum period of continuous employment. However, some social services benefits, for example, unemployment benefits, do depend on the length of employment.
Consequences of a transfer of employee
When individuals are transferred to a new entity, they retain their continuous period of employment if the new entity is an associated employer. Employers are associated if either:
One controls the other (directly or indirectly).
A third party controls both of them (directly or indirectly).
Employees also retain their continuous period of employment if they are transferred to a new entity and the business transfer falls within the definition of a "change of ownership" (section 44, Workers' Statute). 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:
A specific workplace (or several specific workplaces).
An autonomous productive unit.
However, under case law, a transaction must be carried out as an asset acquisition to qualify under section 44 as a transfer of undertaking. Transfers of shares do not alter the employer's legal identity and, therefore, do not qualify as a change of ownership.
Temporary and agency workers
Temporary and agency workers are entitled to the same rights and benefits as permanent employees (section 15.6, Workers' Statute).
Fixed-term contracts can only take place in certain cases expressly stated by law, which are outlined in section 15 of the Workers' Statute:
When the employee is hired for a determined work/service project, which is autonomous within the activity of the company and which, even though is of a limited period, in principle has an uncertain duration.
When the circumstances of the market, accumulation of tasks, or excess of orders requires it when considering the normal activity of the company.
When replacing employees entitled to maintain their work position. In this instance, the contract must specify the name of the employee replaced and the reason for their replacement.
The Workers' Statute states specific maximum terms for fixed-term contracts.
At the termination date, the employee will be entitled to a severance payment under the following schedule:
Ten days salary per year of work for contracts signed after 1 January 2013.
11 days of salary per year of work for contracts signed after 1 January 2014.
12 days of salary per year of work for contracts signed after 1 January 2015.
Agency workers are entitled to the following rights and benefits:
During the periods where employees are rendering their services, they are entitled to the same essential conditions as if they were directly hired by the employer. Essential conditions include the following:
night time work;
They are entitled to be applied the same dispositions regarding health and safety measures.
They are entitled to the same dispositions regarding pregnancy, breastfeeding and non-discrimination.
Should the agency employment contract be a fixed term, the employee will be entitled to a severance payment of 12 days salary per year of service.
The work contract must be understood as part-time when the services are agreed on for a number of hours a day, week, month or year where that work is less than the working day of a comparable full-time worker. To this effect, a "comparable full-time worker" must be understood as a full-time worker from the same company and work centre with the same type of work contract, performing an identical or similar job. If there is no comparable full-time worker in the company, the full-time working day defined in the applicable collective bargaining agreement must be considered or, in its absence, the legal maximum working day.
Part-time workers will have the same rights as full-time workers. These rights must be acknowledged proportionally in the legal and regulatory provisions and in the Collective Bargaining Agreements, depending on the time worked.
Employees' data protection rights
Employees are entitled to receive information from their employer concerning the processing of ordinary and sensitive personal data about them. 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 (Data Protection Act 1999 (Ley Orgánica de Protección de Datos de Carácter Personal)).
Employers' data protection obligations
Under the Spanish Data Protection Act, any information concerning an identified or identifiable natural person is protected. The law sets out a list of rules or principles aimed at providing the necessary protection for personal data, as follows:
Personal data can be processed only where relevant and must not be used excessively in relation to the purposes for which the information was collected.
Personal data cannot be used for purposes incompatible with those for which the information was collected.
Personal data must be accurate and kept updated.
Personal data, if proved to be inaccurate, must be deleted and replaced, where relevant.
Personal data must be deleted when no longer necessary or relevant.
Personal data must be stored in a way that allows the right of access to be exercised.
The data controller or processor is required to take all measures necessary to prevent alteration, loss and unauthorised processing of, or access to, personal data.
Likewise, an organisation is responsible for files containing personal data about its employees. Accordingly, the organisation must comply with all the obligations imposed by the Data Protection Act. For example, there is an obligation to notify the Spanish Data Protection Agency so that files can be registered with that Agency. The organisation must adopt all adequate and necessary measures to guarantee the security of personal data. There are three different security levels depending on the type of data, with different security procedures. The levels are basic, medium and high and are based on the level of protection required.
Discrimination and harassment
Protection from discrimination
Under the Spanish Constitution, Spanish people are equal before the law and cannot be discriminated against on account of:
Opinion or any other personal or social condition or circumstance.
Under employment law, employees have the right to not be directly or indirectly discriminated against in employment by reason of:
Racial or ethnic origin.
Religion or convictions.
Membership or non-membership in a union.
Language within Spain.
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 EUR6,251 and EUR187,515.
Employees can terminate their employment contract and receive the severance payment stipulated by law for unfair dismissal together with moral damages compensation.
Employees who have been treated less favourably by employers because they have made an allegation of discrimination or harassment can file a claim to stop the employer's less favourable treatment and receive compensation.
Protection from harassment
See above, Protection from discrimination.
Termination of employment
Where employees are dismissed on disciplinary grounds, there is no duty to give them notice of dismissal.
If a dismissal is made on disciplinary grounds and a judge subsequently rules that the dismissal is unfair, the employer will have the following options:
Reinstatement of the employee in their job position and payment of the accrued salaries up to the date of notification of the court's decision.
Payment of a severance payment equivalent to:
45 days of salary per year for services for the period of time worked up to 12 February 2012; and
33 days of salary per year worked for services for the period after 12 February 2012.
In any event, the amount of severance payment must not exceed 720 days' salary (unless the period of employment calculated that occurred prior to 12 February 2012 exceeds this amount, in which case that higher calculation will apply, though this is also limited to no more than 42 months' salary in any event). The severance payment for employment contracts entered into after 12 February 2012 will be equivalent to 33 days of salary for each year worked, with a cap of 24 months' salary.
Procedural requirements for dismissal
If the dismissal is based on disciplinary grounds, a specific procedure must be followed (section 55, Workers' Statute). Under this procedure, the employer must communicate their decision to the dismissed employee in writing, 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 (this requirement must be met by the employer where the affected employee is a trade union member and the employers have knowledge of that affiliation). Spanish law does not, however, provide for any notice periods for disciplinary dismissals.
Protection against dismissal
Disciplinary dismissals constitute unfair dismissals if employers cannot prove, before the court, the disciplinary grounds stipulated in the written notice to the employee, or if the employer did not observe the requirements contained in section 55.1 of the Workers' Statute.
All employees are protected from unfair dismissal. For unfair dismissal, the employer can choose between either:
Paying severance pay (see Question 19, Severance payments).
Reinstating the employee.
Protected employees include the following:
A union representative.
A staff delegate (that is an employee representative).
A member of the works council.
A protected employee (rather than the employer) can choose between severance payment or reinstatement if he is unfairly dismissed.
Definition of redundancy/layoff
If the dismissals affect a smaller number of employees than those required for collective redundancies (see below, Definition of collective redundancy/layoff), the employer must follow the objective dismissal procedure for redundancies (and not the collective redundancy/layoff procedure).
Grounds for redundancies/layoffs
Dismissals must be grounded on economic, organisational, technical or productive reasons.
The following procedural requirements must be met by the employer (section 53, Workers' Statute):
Simultaneously with the delivery of the written dismissal letter detailing the corresponding legal reason for the dismissal, the minimum legal severance payment (20 days' of salary per year worked with a cap of 12 months' salary) must be made available to the employee.
A 15-day notice period following the delivery of the letter must be granted before the dismissal takes effect (although the employer can choose to replace this period with payment of salary in lieu of notice). If the employer chooses the first option, during that notice period the employee will have to continue providing their services, although they will be entitled to spend six hours per week looking for new employment.
Employees affected by this type of dismissal will be entitled to receive a legal severance payment equivalent to 20 days' salary for each year of service in the company (up to a maximum of 12 months' salary).
Definition of collective redundancy/layoff
Collective redundancies involve the termination of work contracts based on economic, technical, organisational or production reasons where, in a period of 90 days, the terminations affect at least:
Ten workers in companies that employ less than 100 workers.
10% of the workers in companies employing between 100 and 300 workers.
30 workers in companies employing more than 300 workers.
Likewise, the termination of the employment contracts of a whole company payroll is a collective layoff, provided that more than five employees are affected, and that it is the result of the total cessation of the company's business activities based on any of the reasons that support this type of dismissal.
Grounds for collective redundancies/layoffs
Collective layoffs must be grounded on economic, organisational, technical or productive reasons.
A consultation period with the workers' legal representatives must be conducted before the collective layoff takes place (section 51, Workers' Statute). The consultation period with such representation must last for not more than 30 calendar days (or 15 calendar days in the case of companies employing less than 50 employees). During the consultation period, parties must negotiate in good faith with a view to 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 will deliver a copy of that agreement to the Administrative Labour Authority. However, if parties have not reached an agreement during the consultation period, the employer will communicate to the workers' legal representatives and the Administrative Labour Authority its adopted final decision concerning the redundancy dismissals, as well as its conditions and terms. Once the agreement is reached or once the final decision is notified to the workers' legal representatives, the employer must notify in writing the individual dismissals to the affected employees following a specific procedure similar to the redundancy/layoff procedure, but with the specific obligation that 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.
Collective redundancy/layoff pay
Employees affected by this type of dismissal will be entitled to receive a legal severance payment equivalent to 20 days' salary per year of service in the company (with a maximum payment of 12 months' salary). Furthermore, a 15-day notice period following the delivery of the letter must be granted before the dismissal takes effect (employees are entitled to take six hours a week off work during the notice period to look for another job), although the company may choose to replace this period with the payment of salary 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. However, if the company cannot prove the necessary grounds, the employees will be entitled to receive an unfair severance payment equal to 45 days' salary for each year worked before the 12 February 2012, and 33 days of salary for each year worked after 12 February 2012.
Employee representation and consultation
Employees are not entitled to management representation.
Employers must consult workers' legal representatives when they propose any of the following:
Collective redundancy (see Question 21).
Business transfers when labour measures will be adopted by the old or new employer.
Substantial modifications to working conditions.
When the employer takes a decision that could cause any relevant modification in the employment organisation or to employment contracts.
Employers must also consult employees on health and safety matters.
Employee consent is not required for most major transactions. If a business transfer constitutes a change of ownership (see Question 14), both the old and new employers must inform the workers' legal representatives about it (specific information listed by law must be informed) and the consultation obligation must be observed if the new or old employer plan to adopt labour measures with regards to the affected employees.
In addition, workers' legal representatives must issues a report prior to enforcement by the employer of the decisions planned to be adopted on the following matters:
Workforce restructuring as well as total or partial, permanent or temporary cessations of the workforce.
Reductions in the working day.
Total or partial relocation of the workplace.
When the merger, absorption or modification of the company's legal status implies some effect on the volume of employment.
Professional training plans of the company.
The creation or revision of organisational and work control systems.
Time studies, the establishment of bonus or incentive systems and job post evaluations.
If employers do not comply with their consultation duties, they can be subject to administrative fines and the measures already taken can be declared invalid.
If employers fail to consult workers' legal representatives when appropriate, employees can file a claim in an employment court to prevent the action going ahead.
Consequences of a business transfer
Automatic transfer of employees
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.
Protection against dismissal
A dismissal is automatically unfair if it is solely or principally 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.
Harmonisation of employment terms
It is only possible to harmonise the employment conditions of all employees through negotiations with the workers' legal representatives or, if these do not exist, by an agreement with employees individually or collectively. Negotiations can take place before or after the transfer.
Employer and parent company liability
An employer can be liable for the acts of its employees?
A parent company can be liable for the acts of a subsidiary company's employees?
An employer is vicariously liable, under common law and statute, for the acts of its employees carried out in the course of their employment. For example, an employer is liable for sexual harassment by an employee (unless the employer took reasonable steps to prevent the employee from carrying out the harassment).
Parent company liability
A parent company cannot be held liable for the acts of a subsidiary company's employees if the two companies are separate legal entities.
Employer and parent company liability
Employee rights on insolvency
Under section 32 of the Workers' Statute:
Salary credits for the last 30 days of work in an amount not exceeding twice the minimum wage will enjoy preference over any other credit, although this may be backed by pledge or mortgage.
Salary credits will enjoy preference over any other credit with respect to the objects prepared by the workers while these are owned or are in the possession of the employer.
Credit for unprotected salaries in the above bullets will be singularly privileged, in the amount resulting from multiplying three times the minimum wage by the number of days of salary pending payment, and will enjoy preference over any other credit, except those credits with rights in rem, in the cases in which these are preferential under the law. Legal severance payments for terminations in the amount corresponding to the legal minimum calculated over a base that does not exceed three times the minimum wage will have the same consideration.
The timeline for the exercise of the rights of preference on salary credit is one year, to be counted from the moment on which the salary should have been received. Such rights are extinguished once this term elapses.
The preferences acknowledged in the preceding bullets will be applicable to all cases in which the employer has not declared themselves in receivership and the pertinent loans concur with another or others on their property. In the event of bankruptcy, the provisions of the Bankruptcy Law regarding the classification of credit, enforcement and distraint will apply.
State guarantee fund
The Salary Guarantee Fund, a regional agency depending on the Employment Ministry, will pay the workers the amount of the salaries and legal severances due as a result of the employer's insolvency or bankruptcy. Such payments will be made by the Salary Guarantee Fund under specific terms and conditions.
Health and safety obligations
Employees have a legal right to work in a safe environment. As a result, employers must comply with the following general duties (section 14.1 of Law 31/1995 dated 8 November, on the Prevention of Occupational Risk):
Protecting employees from safety hazards in the workplace and avoiding these hazards as far as possible.
Evaluating any inevitable safety risks.
Prioritising group safety measures over individual safety measures.
Keeping employees informed about health and safety matters at all times.
There is also a specific duty on employers to draw up a risk prevention plan, which must set out the organisational structure, procedures and resources necessary to prevent safety risks in the workplace (section 14.1, Occupational Risk Prevention Law).
Taxation of employment income
Foreign nationals working in your jurisdiction?
Nationals of your jurisdiction working abroad?
Whether individuals are subject to Spanish tax on their employment income depends on their ordinary residence. Individuals are resident for tax purposes if they are present in Spain for at least 183 days in any tax year.
Individuals who are resident in Spain are subject to Spanish income tax on all their employment earnings, regardless of whether or not these earnings are for work carried out in Spain. In addition, EU citizens who are employed in Spain are subject to Spanish tax legislation.
EU citizens who are employed in Spain and one or more other EU member states are subject to taxation in the member state where they reside, provided that either:
They work in that member state.
Their employer has a registered office or place of business in that member state.
If employees do not reside in the member state where they work, they are subject to tax in the member state where their employer's registered office or place of business is situated.
Non-EU citizens may be exempt from Spanish tax if an agreement has been made between the employee's home jurisdiction and Spain.
Nationals working abroad
Spanish nationals working in, or seconded to, the EU are taxed under the same principles as EU citizens working in Spain (see above, Foreign nationals).
Spanish nationals who are working in non-EU countries are taxed in both jurisdictions, unless there is a double taxation treaty with the foreign jurisdiction. These double taxation treaties typically specify that any income earned by Spanish employees as a result of their employment in another jurisdiction is only taxed in Spain. However, an exception applies if one of the following conditions is satisfied (in which case, the employees' income is taxed in the jurisdiction where they are working):
The employees remain in the jurisdiction where they are working for more than 183 days during the tax year.
The remuneration is paid to the employees on behalf of an employer resident in the jurisdiction where they are working.
The remuneration is paid by a fixed base that the employer has in the jurisdiction where the employees are working.
Income tax is regulated by Act 35/2006 and Royal Decree 439/2007. There is a dual system: the state (or general) tax and the regional tax.
State tax. The rates are progressive and depend on the employee's salary. If the employee's gross taxable income is:
From EUR0 to EUR17,707.20, withholding tax is charged at 24.75%.
From EUR17,707.20 to EUR33,007.20, withholding tax is charged at 30%.
From EUR33,007.20 to EUR53,407.20, a fixed sum of EUR2,124.86 is payable on the first EUR17,707.20, withholding tax is charged at 40%.
From EUR53,407.20 to EUR120,000.20, withholding tax is charged at 47%
From EUR120,000.20 to EUR175,000.20, withholding tax is charged at 49%.
From EUR175,000.20 to EUR300,000.20, withholding tax is charged at 51%.
For EUR300,000.20 or more, withholding tax is charged at 52%.
Regional tax. Regional tax is applied in a similar way as the state tax. The rates vary, depending on the autonomous region in which the employee works (Spain is divided into 17 autonomous regions). Under Law 39/2010, each autonomous region must approve its own scales in order to determine the employee's gross taxable income, the applied rate and the regional tax amount.
Social security contributions
Social security contributions are paid at various rates, depending on the different contingencies (for example, overtime, unemployment and occupational training) that are covered under the system. For common contingencies, the employer pays 29.9% of the employee's net taxable income and the employee pays 6.35% (this is deducted from the employee's salary). There is a minimum and a maximum contribution for all employees depending on its category within a range from EUR753.00 to EUR3,425.70.
Intellectual property (IP)
IP rights created by employees in the course of their employment usually belong to the employer. In the course of employment refers to the scope of the employees' duties and the terms of employment.
IP rights created by an independent contractor belong to the contractor rather than the employer. Therefore, an employer should include an appropriate assignment of rights in an independent contractor's contract.
Restraint of trade
Restriction of activities
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 and adequately compensated during the term of employment for agreeing to the exclusivity clause.
Post-employment restrictive covenants
Employers can agree a non-compete clause with employees for a maximum of two years after their employment is terminated. The employee must be specifically and adequately compensated for agreeing to the non-compete clause. An adequate compensation can range from 30% to 60% of the employee's salary.
Proposals for reform
Social Security website
Description. This is the official website of the Spanish Social Security. This website is updated daily and contains official information regarding employment conditions as well as many other labour related issues.
Employment Ministry website
Description. This is the official website of the Employment Ministry. The website is updated daily and contains information regarding social security, employment, immigration, health and safety and employment inspection. The language of the website can be changed to English.
Public Employment System
Description. This is the official website of the public employment system containing information on pensions, benefits and employment statistics.
Íñigo Sagardoy de Simón
Sagardoy Abogados (member of Ius Laboris)
Professional qualifications. Lawyer, Spain, 1992
Areas of practice. Employment and labour law.
- Legal assistance advising a multinational bank on mergers of the savings banks.
- Legal assistance advising one of the first Spanish companies from the food industry on litigation concerning the ex-General Manager.
- Legal assistance advising a multinational company from the food industry on litigation concerning stock options plans.