However, the project/transaction shall be deemed tacitly approved if the Government has not sent the file to the Tribunal for the Defence of Competition within one month following the notice or if, sent within such term, the Tribunal has not issued a report on the project/transaction within three months following reception of the file. The tacit approval system is only available to those companies that have filed the voluntary notice.
On the other hand, practices which are deemed to be unfair competition are systematically regulated, including court remedies (63).
9. LABOUR.
9.1 Introduction
The Spanish Labour system is complex and has changed enormously over the last 15 years. It has evolved from a Government controlled system to a responsible system based on the free negotiation of employers and employees. The reform introduced in 1994 intends to consolidate this approach by providing more flexibility to the labour framework and strengthening the negotiation capacity of employers and workers. This overview refers to the law as it stands at the date hereof.
9.2. Legal framework
The basic labour principles have constitutional rank since they have been specifically recognized in the Spanish Constitution of 1978. Individual and collective claims arising from labour relations are referred to conciliation and judicial instances.
9.3 Scope of the labour law
The law applies to all workers that render their paid services for the account and within the organization and direction of a third party, be it an individual or a company. The tendency is to enhance the scope of the labour law excluding just a handful of cases, eg, company directors and self-employed commercial agents.
9.4 Employment contracts
9.4.1 Generalities
Employment contracts are presumed to be entered into for an unlimited period of time although this presumption may be challenged.
Trial periods, to be valid, must be agreed in writing. They run from up to two months for unskilled workers to up to six months for highly qualified personnel.
Certain contracts must be drawn up in writing if required by law and in some other events. Otherwise it is presumed that it was entered for an unlimited period of time.
9.4.2 Modalities of contracts
In addition to the ordinary full time job, there are a number of modalities such as work in common and group contracts; the apprenticeship contract, the practical training contract; part-time work and replacement contracts; and work at home.
The 1994 reform has laid emphasis on the apprenticeship contract and the practical training contract. The former is intended for unqualified employees between 16 and 25 years, and may run from six months to three years. The latter is intended for qualified employees within four years following their graduation, and may run from six months to two years.
9.4.3 Temporary contracts.
These are:
a) Accomplishment of a specific work or service;
b) Season contracts (due to excess of orders) for a maximum of six months within a period of twelve.
c) Replacement of a worker entitled to hold his job.
d) For the launching of a new business. Contracts may not exceed three years. Extensions are possible under certain conditions.
e) Where the creation of jobs is promoted, namely apprenticeship, training and part-time contracts as seen above.
9.4.4 Special labour contracts
Certain employment arrangements are subject to special rules. Eg, senior management, dependent agents.
9.4.5 Promotion of employment
There is a wide variety of aids for the promotion of employment and normally entail rights to subsidies and reductions in the employer's contribution to Social Security and are intended for long term unemployed, people over 45, handicapped people, etc.
9.5 Working conditions
Following the 1994 reform employers have been given wider authority to organizework. This relates to duties within the company, the transfer of employees to other work centres and the substantial modification of working conditions (eg, working day and hours, salary systems and incentives, shifts). The law differentiates between collective and individual changes, and sets forth particular requirements and conditions.
9.6 Termination of employment contracts (i) There are several grounds for termination, the main ones being: (ii) mutual consent of the parties; (iii) resignation of the employee; (iv) expiration of the agreed term or the performance of the work or service that was the subject matter of the contract; (iv) force majeure that makes impossible to render the service. (v) unilateral dismissal of the employee.
9.7 Unilateral dismissal
Generally the unhindered dismissal on notice of employees is not available in Spain. Unilateral dismissal is possible in any of the three main following situations:
9.7.1. Collective Dismissal
The employer is required to set down in writing to the Labour Authority the financial, technological, production or organizational reasons for proposing the dismissal of some or all of its staff.
At the same time a 30 day consultation round is opened with the employees. If the parties reach an agreement, this is submitted to the Labour Authority, which will normally endorse it. If the parties do not agree, the Labour Authority must decide in fifteen days time.
The law provides for severance pay of 20 days salary for each year of service, limited to one year's salary or part thereof.
If the dismissal affects, in a period of 90 days: less than 10 employees in companies with less than 100 employees; less than 10% of the workforce in those companies having between 100 and 300 employees; and less than 30 employees in companies with 300 or more employees, no previous approval by the Authorities is required. In these cases, employees must be notified with 30 days notice and are entitled to the severance payment as described above.
In cases of insolvency the Government shall pay the indemnities recognized to the employees with a ceiling of one year's salary (the daily salary, basis for the calculation, may not be twice the interprofessional minimum salary). The Government shall also pay up to 40% of the indemnities in companies having less than 25 employees.
9.7.2. Disciplinary dismissal.
It is available whenever an employee willfully breaches the employment contract. The employee is entitled to challenge the dismissal in court and this can decide any of three things: that the dismissal was null and void (if constitutional rights were not respected), or that it was fair or that it was unfair.
If it is deemed to be null and void, the employee must be reengaged by the employer.If it is deemed to be fair the employment contract is terminated and the employee has no right to any severance pay. If it is deemed to be unfair the employer has the option to reengage the employee or not to do so in which case he must indemnify the employee. The indemnity is fixed at 45 days' salary per year of service with a limit of 42 months pays. The employee is further entitled to two additional months pays under what is known as "trial salaries" since he was unable to work during the trial.
A pre-trial hearing is required. If the parties are unable to reach a compromise the case is referred to the labour jurisdiction.
9.7.3 Dismissal on objective grounds.
This refer to: lack of professional competence of the employee; failure of the employee to adapt to technical modifications or changes in his job; the need to cut a job in the company outside of the scope of a collective dismissal; and absences within certain requirements.
The law provides for thirty days notice, and a severance pay of 20 days salary per year of service with a maximum of twelve months.
The employee may challenge the dismissal in court as if it were a disciplinary dismissal (see 9.7.2).
9.8 Dismissal of a high executive officer.
Special and more flexible rules are available for the termination of senior management contracts, as follows:
A. Termination on notice.
The employment contract may be terminated by the employer with, at least, three months' prior notice. In this event, the high executive shall be entitled to the severance pay agreed upon in the employment contract, if any. Failing this agreement, the severance pay is fixed at seven days' salary per year of service with a limit of six months' salary. If the prior notice is not given or is not respected in full the high executive shall be entitled to the salary corresponding to that portion of the prior notice period that was not effectively given by the employer.
B. Disciplinary dismissal.
Following the general rule, the employment contract can be terminated in the event of a serious and culpable breach of the contract by the high executive. Should the dismissal be ruled unfair the employer shall have to pay the indemnities agreed upon on the employment contract, or failing such agreement, the severance pay will amount to twenty days' salary per year of service up to a maximum of twelve monthly pays. The ordinary labour law provides for 45 days' per year of service with a maximum of 42 months.
C. Others.
The others set forth in the Workers' Statute, as applicable, namely dismissal on objective grounds.
(63) Law 3/1991 of january 10th on Unfair Competition, published on January 11th, which took effect on January 31st 1991.
The content of this article is intended to provide a general guide to the subject matter.
Specialist advice should be sought about your specific circumstance.
For further information contact Mr. Jorge Angell, L. C. Rodrigo Abogados, Madrid Spain: Fax: +341 576 6716 or enter text search 'L.C. Rodrigo Abogados' and 'Business Monitor'