Spain

    1.1 In what circumstances does the employee transfer law apply?

    The employee transfer rules apply to the transfer of an economic entity that retains its identity and autonomy. The economic entity must consist of an organised group of elements (tangible, intangible and personnel) and must have autonomy in conducting its own activities.

    There are two essential factors:

    • objective factor: the tangible delivery of all elements essential to enable the undertaking to operate
    • subjective factor: the substitution of the old employer for the new one. No contractual relationship is necessary, as transfer can occur via a third party. Substitution may also occur where employees transfer with no material resources.
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    Author: Sagardoy Abogados

    Date: January 2017

    1.2 Does the employee transfer law apply to (a) a sale of a business or (b) outsourcing?

    (a) Sale of a business

    The rules can to sales, leases, rentals, mergers and acquisitions and gifts.  They can also apply to the sale of assets, such as premises, equipment, customers, staff and goodwill.

    The law does not apply to the mere transfer of labour contracts. In such cases the express consent of employees is required, as consent of employee representatives is not sufficient.

    (b) Outsourcing

    Outsourcing is outside the framework of the employee transfer law in Spain, except in those cases in which the new employer acquires the basic infrastructure. In other words, if company A chooses to subcontract a service and the new employer acquires an essential part of the material resources that belonged to company A as well as the employees, this may be a case of business succession to which the employee transfer rules would apply

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    Author: Sagardoy Abogados

    Date: January 2017

    1.3 In outline, what are the implications of the employee transfer law?

    If the employee transfer law applies:

    • Employment automatically transfers from the transferor to the transferee.
    • This includes all rights and obligations as at the date of transfer, including rights relating to complementary social protection.
    • Collective agreements will transfer and remain in force until expiry or until a new agreement is entered into.
    • The transferor and transferee become jointly liable for any claims of employees arising before the transfer.
    • Dismissals by reason of the transfer itself are void.
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    Author: Sagardoy Abogados

    Date: January 2017

    2.1 Who transfers?

    The employee transfer law protects the employees of the transferred undertaking. There is no specific definition of ‘employee’, but any person, including, for example, a secondee or a woman on maternity leave, will be protected in the same way.

    The following circumstances may be considered:

    • the proportion of time spent within the entity transferring as compared to other parts of the business;
    • the value given to each part by the employee;
    • the employee’s job description; and
    • how the employer allocates the costs of the employee’s services.
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    Author: Sagardoy Abogados

    Date: January 2017

    2.2 Can employees object to transferring?

    If employees object to the transfer, the transferor has two options. The transferor can either continue to employ the objecting employees, or it can terminate their employment contracts and pay statutory compensation for dismissals. In the latter case, the employee transfer law will not apply to the relevant employees.

    Employees who object to the transfer can bring claims for unfair dismissal against the companies involved.

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    Author: Sagardoy Abogados

    Date: January 2017

    2.3 What happens to terms of employment contracts?

    The transferee takes on all the existing rights and obligations of the workers at the moment of the transfer. This includes all rights acquired by the employees before the transfer, but not future legal obligations that arise after the transfer.

    The employee transfer law preserves the continuity of service of transferring employees. The transferee takes on all the labour and social security rights and obligations of the previous employer, including all existing pension entitlements at the moment of transfer.

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    Author: Sagardoy Abogados

    Date: January 2017

    2.4 What about other employee benefits?

    The new employer must offer the same benefits as the old employer, including obligations acquired by the transferor in relation to complementary social protection. The protection is highly regulated and no changes to it are possible until a new collective agreement or company agreement is entered into with trade unions.

    If a new employer simply cannot offer the same benefit (e.g. because the benefit is hard to transfer), it should try to negotiate with the employee representatives either to cease or to alter the benefit.

    Past employment with the transferor counts as ‘continuous employment’ with the transferee.

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    Author: Sagardoy Abogados

    Date: January 2017

    2.5 What happens to pension rights?

    Pension entitlements transfer in the same way as any other benefit, as the transfer involves the maintenance of all terms existing at the transferor. No distinction is made between the different types of pensions available.

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    Author: Sagardoy Abogados

    Date: January 2017

    2.6 What liabilities transfer?

    The transferee and transferor are jointly liable for any claims or debts incurred by the transferor before the transfer. This includes any kind of debt related to employment, such as wages, dismissal compensation or additional voluntary contributions to social security. Joint liability lasts for three years for labour obligations and five years for social security.

    The transferee and transferor are also jointly responsible for labour and social security obligations incurred after the transfer if the transfer is declared unlawful. In cases of underpayments of contributions or failure to register the assigned employees, the transferee may be liable for claims relating to social security benefits. The liability does not lapse after any given period of time, but the case law on this question is inconsistent.

    The effects of transfers do not extend to non-compliance with social security obligations prior to the transfer or any criminal or administrative liability of the transferor.

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    Author: Sagardoy Abogados

    Date: January 2017

    2.7 Do collective agreements transfer?

    If there was a collective agreement at the transferor’s organisation before transfer, it will continue to apply to transferring employees. It will continue to apply until it expires or until a new collective agreement, applicable to the transferred economic entity, becomes effective. However, note that the law does not provide for a set way in which changes to collective agreements should be made.

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    Author: Sagardoy Abogados

    Date: January 2017

    2.8 How does the transferee obtain information on transferring employees?

    There is no legal obligation on the transferor to provide information to the transferee, but this will normally be done by agreement between the two parties.

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    Author: Sagardoy Abogados

    Date: January 2017

    3.1 Can employers make changes to employment contracts?

    The aim of the employee transfer law is to guarantee all the rights of employees affected by the transfer and to ensure that the same working conditions continue to apply as with the transferor.

    However, by article 44 of the Workers´ Statute a transferor that foresees the need to take measures with regard to the employees must initiate a consultation with the employee representatives. This must be done in sufficient time before the measures are carried out.

    If the changes involve relocation or substantial modification to working conditions, the employer must notify affected employees in writing 30 days beforehand for relocation and 15 days beforehand for other significant changes. If the measure is considered collective, the company must also hold a consultation with employee representatives. Generally speaking the employer will need to be able to show economic, technical, organizational, technical or production-related cause to make the changes.

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    Author: Sagardoy Abogados

    Date: January 2017

    3.2 When can employers safely dismiss employees before or after a transfer?

    Spain follows European case law in relation to the protection of employees against dismissal during the transfer of an undertaking. An employee cannot be dismissed by reason of the transfer itself. The employee transfer law makes it very difficult for employers to make dismissals after a transfer. If employees are dismissed just prior to the transfer (or after), they can claim the dismissal was unlawful.

    However, this does not mean that an employee cannot be dismissed if there is a legal cause, regardless of the time the cause arose. There is a small possibility of the dismissal being declared void because of the transfer, but there is no set legal timeframe which prevents dismissal within a certain period. It may be prudent for employers to wait six months. If a dismissal is declared void, the employee will have the right to reinstatement, unpaid salary and, possibly also damages.

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    Author: Sagardoy Abogados

    Date: January 2017

    4.1 Who must employers consult?

    The employers must consult with employee legal representatives regarding any planned measures. It is essential to inform employee representatives of the grounds on which the measures are based and all their future consequences. This information should be given in good time before the measures are adopted, and all the parties must negotiate in good faith.

    If there are no employee legal representatives the employers must consult directly with the employees affected by the transfer. There is no need for employee representatives to be appointed.

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    Author: Sagardoy Abogados

    Date: January 2017

    4.2	What information must they provide?

    The transferor and the transferee are obliged to inform the employee representatives of the following:

    • the date or proposed date of the transfer
    • the reason for it
    • the economic, social, and legal consequences for the employees
    • measures envisaged which will affect the employees.
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    Author: Sagardoy Abogados

    Date: January 2017

    4.3	What does consultation involve?

    Consultation involves consulting with employee representatives about the measures to be implemented. The consultation requirement will only be fulfilled if the information provided is relevant and sufficient to inform the parties about the circumstances of the affected employees.

    If the consultation period ends without agreement the employer will generally be able to apply the planned measures. However, it must notify affected employees in writing 30 days beforehand for relocation and 15 days beforehand for other significant changes. If the measure is considered collective, the organisation must also consult with employee representatives for up to 15 days.

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    Author: Sagardoy Abogados

    Date: January 2017

    4.4	How long does consultation last?

    The law does not provide a timeframe for consultation, but generally the consultation will last about 15 days.

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    Author: Sagardoy Abogados

    Date: January 2017

    4.5	What happens if an employer fails properly to inform or consult?

    If the transferor does not fulfil its information and consultation obligations with regard to the employee representatives or the transferee, it could be ordered by the court to fulfill its information duties, and if the consultation period is ignored, the measures taken could be declared ineffective. The transfer would thus not be effective under Spanish labour law.

    An administrative penalty of between EUR 626 and 6,250 could be imposed on both the transferor and transferee for failure to comply with the information and consultation duties.

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    Author: Sagardoy Abogados

    Date: January 2017

    5.1	Identify up to three issues in this country of which employers should be aware?

    The two most important issues are:

    • The contractual position of the transferor’s employees. In Spain all temporary contracts must be genuinely temporary, otherwise they will be deemed to be fraudulent and the employee will be entitled to claim a permanent contract. It is therefore important for the transferee to check that all temporary contracts are genuine.
    • The social security obligations of the transferor, given that the transferor and the transferee will have joint liability for them.
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    Author: Sagardoy Abogados

    Date: January 2017

    5.2	Would the employee transfer law apply on a cross-border transfer into or out of this country?

    Whether Spanish employee transfer law applies in a cross-border transaction will depend on whether the affected employees are subject to Spanish law. The governing law will be agreed by the parties, or, in the absence of agreement, the law corresponding the workplace will apply. If the governing law cannot be determined in this way, it will be taken to be the law of the country where the company that hired the employee is based.

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    Author: Sagardoy Abogados

    Date: January 2017

    6.1	What are the main national laws protecting employees upon transfers of businesses?

    The Spanish ‘Workers Statute’ (Article 44) and Law 12/2001 for the improvement of the quality of work contain the main provisions relating to transfers of undertakings in Spain. These are the two main national laws that implement European Directive 2001/23 on the rights of workers upon transfers of undertakings.

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    Author: Sagardoy Abogados

    Date: January 2017

     

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