Changes to Working Conditions and Termination of Employment Contracts in Spain

Posted on Oct 10, 2024 in Law & Jurisprudence

Changes to Working Conditions

Forced Relocation

Involve changes of residence or travel in excess of 12 months over a period of three years. The law requires that contracts meet the specific needs of the company’s business that have to be made in another area, involving a change of location of workers. This should never be for purely capricious employer reasons and should help the situation of the company. With some frequency, collective agreements are those that determine the distance from which we are facing a move. A distance of less than 25km will, in any case, be deemed insufficient to qualify for worker mobility and transfer.

Individual Transfer

Moving a single worker or less than 10% of the workforce. The employer shall notify the decision to both the worker and their legal representatives in the company with a minimum of 30 days in advance. Upon receipt of the notification, the worker may:

  • Accept the transfer, receiving compensation for expenses incurred by them and their family.
  • Not admit the transfer and choose to terminate their contract of employment and receive compensation of 20 days’ salary per year worked with a maximum of 12 months’ salary.
  • Move but not agree and claim before the judge to consider whether the transfer meets the actual needs of the company or not. If the worker’s claim is deemed unreasonable, they may be reinstated to their former job.

Group Transfer

Moving over 10% of the workforce within 90 days (10 workers in a workforce of fewer than 100, 10% in a workforce of 100 to 300, 30 in a workforce of over 300). The transfer must be preceded by a consultation phase with worker representatives. The consultation period must be opened and the labor authorities notified of the positions of the parties at its conclusion. Once this period is over, the employer shall communicate to employees its decision on transfers. Employees are then able to choose between the three options available for individual transfers and can also claim through the procedure of collective action.

Special Transfers

  • If one spouse is transferred and requires a change of residence, the other spouse working for the same company would be entitled to transfer to the same town if there was another vacancy.
  • Workers who are victims of gender violence and are forced to change location are entitled to a vacancy in the same group.
  • Employee representatives will have priority to stay in their jobs and not be moved or displaced.

Temporary Transport

Businesses can require workers to travel for the same reasons as transfers, requiring a change of residence for less than 12 months in a period of three years. The displaced employees are entitled to:

  • Travel and subsistence expenses (meals, accommodation) paid by the company according to collective agreements.
  • Be informed of their displacement with sufficient notice before the travel date.
  • Time off for four days working in their old home for every three months of travel.

Movements exceeding 12 months in that period shall have the same legal treatment as transfers.

If the worker disagrees with the order to move, they will have to accept it but may apply to the employment tribunal to determine its validity.

Substantial Changes to Working Conditions

The employer has the power of Ius Variandi, which allows them to align employee benefits with the needs of the company. However, there are limits to this power, such as when changes affect the substance of work performed. In such cases, the employer must apply caution.

When there are proven reasons (economic, technical), the company’s management may agree to substantial changes to working conditions that relate to:

  • Work hours
  • Shift work arrangements
  • Compensation system
  • Performance work system
  • Functions

The law prohibits the possibility that these changes are made at the whim of the employer. A modification is considered substantial when working conditions are more onerous to workers than those previously enjoyed.

Substantial Changes (Non-Collective)

Those that are made to individual workers or less than 10% of the workforce (the same threshold as for individual transfers). Workers have the right to:

  • Be notified, along with their legal representative, with a notice of 30 days.
  • If the worker is injured, they are entitled to break their contract and collect compensation of 20 days’ wages per year worked with a maximum of 9 months’ salary.
  • In the event that changes undermine their dignity or their training allowance, compensation shall be 45 days per year worked up to a maximum of 42 months.
  • If the worker decides to remain at their post but is dissatisfied, they may appeal to the trial judge, who will determine whether the changes are justified or not. In the latter case, the worker is entitled to maintain their previous conditions.

Collective Substantial Changes

These occur when they affect more than 10% of the company within a period of 90 days. The employer will hold talks with representatives of workers (for 15 days) and then take an effective decision. Workers have the same rights as in the case of group transfers.

Functional Mobility

It is a manifestation of Ius Variandi, consisting of changing jobs. There are two types:

  • Within the same group: Functional mobility is free within each professional group, provided that the collective agreement does not provide more restrictive criteria for workers. Such mobility has to be without prejudice to the dignity of the worker and without prejudice to their training. However, the employee may choose to terminate their employment contract and receive an award of 45 days per year worked up to a maximum of 42 months.
  • Functions belonging to another professional group: There are two cases:
    • If a person performs functions of a lower professional group: This must be justified by unforeseeable needs of the productive activity. Such a decision shall be communicated to the representatives of workers. The worker who occupies the lower position will continue to receive the remuneration they were previously receiving.
    • If the employee performs functions of a higher professional group for longer than 6 months in a year or for 2 years, they may: claim the promotion (unless a collective agreement states otherwise), or at least request to fill the vacancy they are occupying and claim the salary for the function performed. If the company ignores these requests, the worker may complain to the competent jurisdiction.

Suspension and Termination of the Employment Contract

Suspension

It is a special state of the employment contract in which the employee and the employer are exempt from the obligations of work and remuneration. When the underlying causes of the suspension disappear, the contract’s reciprocal obligations are reinstated.

Causes of Suspension

  • Causes under the agreement of the parties: The employee and the employer mutually agree to suspend the contract.
  • Temporary Disability (TD): Occurs when the worker is unable to work due to illness. Its duration is the duration of the disability.
  • Maternity risk during pregnancy, risk during breastfeeding: Applies to a child under nine months and adoption or foster care of children under 6 years or older than 6 with disabilities or difficulties in social integration. The suspension will last 16 weeks for maternity leave and breastfeeding.
  • Paternity leave: For adoption or foster care of a child, the employee is entitled to a suspension of the contract of 13 consecutive calendar days.
  • Deprivation of the freedom of workers: Only while there is no conviction. It will last the time it takes to reach sentencing.
  • Exercise of public office: Whenever the performance of this position is not compatible with their work. It will last the duration of the election for the position in question.
  • Exercise of the right to strike: If the strike is legal, the employer may deduct from the employee’s salary for each day of strike: base salary and bonuses, share of extra payments, and share of the remuneration of days off in a week when the strike occurs.
  • Suspension without pay for disciplinary reasons: It is a possible sanction that the employer may impose on the worker. It will last as long as the penalty is in effect.
  • Legal closure of the company: Where the employer decides to close the center of collective work. It will last the duration of the closure.
  • Economic reasons: Losses, technical reasons (organizational restructuring), productive team restructuring (restructuring departments), or production reasons (accumulation of stocks).
  • Force majeure: When the employer is forced to close due to catastrophic events. It will last as long as it is expected that the closure will be temporary.

Cessation and Re-entry to Work

Once the suspension is lifted, the contract regains its validity. The re-entry period will be after the disappearance of the cause of suspension.

Leave of Absence

It is a situation similar to suspension, with the difference that here the employee does not always have the right to re-enter the workplace. There are three types:

  • Unpaid leave: A worker with more than one year of service in the company is entitled to request unpaid leave for no less than four months and not more than five years. They can only ask for it again after 4 years have passed since the end of the previous one. There is no right to retain the position of work; the worker only retains a preferential right to re-entry into vacancies of the same or similar category in the enterprise, and only if there are vacancies.
  • Leave of absence for family care: Workers are entitled to a leave period of not more than three years for the care of each child. This period is counted from the date of birth. They are also entitled to a period of leave not exceeding two years for the care of a relative up to the second degree. During the first year, they retain the right to keep their job. After that, they are guaranteed a job in the same occupational group.
  • Active status: By appointment or election to public office, which will last the duration of the representative’s term of office. There is a right to keep the job.

Note: Although not a cause for suspension or leave, you can request a reduction in your workday of between 1/8 and a half to care for children under 8 years old and family members up to the 2nd degree.

Termination of the Employment Contract and its Causes

The termination of the employment contract ends the legal relationship that binds the employer and employee. It requires that the contract ceases to exist, definitively stopping the obligations of the parties.

The causes for which the contract can be terminated are varied and may depend on the goodwill of the parties or on circumstances beyond their control that lead to its extinction:

  • Derived from the common will of the employer and employee: Mutual agreement or mutual consent, a resolutory condition set forth in the contract, termination of the agreed-upon term.
  • Derived from the unilateral will of the worker: Resignation, abandonment, justified resolution.
  • Derived from the unilateral will of the employer: Dismissal for misconduct, dismissal for objective reasons, dismissal for objective causes, and redundancy for greater cause.
  • Other external causes imposed on the parties: Death, retirement, or disability of the worker. Death, retirement, or incapacity of the employer as an individual. Termination of the legal personality of the company.

Extinction by Shared Wish of the Parties

Mutual Agreement

Both the worker and the employer can terminate the contract at any time during its validity. The law does not require or demand a particular method or grounds for this, although it is normal for the joint will to be expressed in a document called a settlement. The settlement includes what the employer must pay the worker, the proportion of paid vacations, and any extra payments. The employee may be required, at the time of signing, to have a legal representative of the workers present if one exists within the company. In this case, there is no entitlement to compensation.

Conditions Precedent

The contract can be terminated because one of the causes included in it has been fulfilled. This allows the working life of the contract to be conditioned, for example, so that the employee receives a certain entitlement. A condition that is abusive will not be valid, as the maintenance of the contract would then depend on a circumstance that will be met by the employer. There is also no compensation in this case.

End of Term

This is very common in fixed-term contracts. The arrival of the contract’s end date does not automatically extinguish it: it must be expressly terminated (and if it is for more than one year, the termination must be communicated with a minimum advance of 15 days). If there is no termination notice, the contract is considered extended until the maximum allowed by law. Upon termination of the contract, the worker is entitled to payment of an amount determined in the collective bargaining agreement or, in its absence, 8 days’ salary per year of service.

Extinction by the Will of the Worker

A: Resignation

The law allows the worker to unilaterally terminate the contract without having to express or have a reason to do so correctly. To protect the status of workers, however, the worker is required to give some advance notice. The notice period will be the one set in the collective agreements. If the worker does not give notice, even if they resign, they are not entitled to compensation.

B: Abandonment of Work

The worker leaves their job without notifying the employer and without giving notice. They are not entitled to compensation and must compensate the company for any damages caused by their abandonment.

C: Resolution of the Contract

The worker may have justified reasons to terminate the employment contract. The termination is caused by the employer’s behavior. The causes for which the worker may request termination of the contract are set out in Article 50 of the Workers’ Statute. They are as follows:

  • That the employer substantially modifies the working conditions that had been agreed upon, and that this amendment is detrimental to the worker’s professional development or damages their dignity.
  • That the employer does not pay the wages due or delays payment continuously.
  • A serious breach of any other contractual obligations.

Extinction by the Will of the Employer

1. Disciplinary Dismissal

According to Article 54 of the Workers’ Statute, the employment contract can be terminated by the employer’s decision based on a serious and culpable breach by the worker. The causes for dismissal are:

  • Misconduct or disobedience
  • Verbal or physical abuse of the employer, work colleagues, or their family members
  • Transgression of contractual good faith or abuse of trust
  • Voluntary and continuous decline in performance
  • Habitual drunkenness and drug addiction in the workplace
  • Harassment based on ethnicity, religion, race, or belief, etc.

In this case, the worker is not entitled to any compensation.

2. Dismissal for Objective Reasons

This type of dismissal occurs when there are objective circumstances that affect both the worker and the employer. These are legally valid reasons for dismissal. The worker is entitled to compensation of 20 days’ salary per year worked, with a maximum of 12 months’ salary. The causes include:

  • Inability of the worker that was previously unknown or that occurs upon their incorporation into the company.
  • Lack of adaptation of the worker to technical modifications that occur in their job, provided that these changes are reasonable and the employee has at least two months to adjust.
  • Repeated and intermittent absences from work, even if justified, but in such number and frequency that they make the worker unproductive for the company.
  • Need to reduce the number of work positions, provided that the number of redundancies is below the threshold for collective dismissal.
  • Insufficiency of budget allocations for indefinite contracts agreed upon for the performance of plans and public programs without stable financing and funded through annual budget allocations. These contracts can be terminated due to insufficient budgetary provision for the maintenance of the work since the worker concerned was hired.

Absences due to legal strikes, workplace accidents, maternity leave, physical violence, and illness or non-occupational accidents are not considered objective causes for dismissal. If intermittent absences, even if justified, reach 20% of the working day in two consecutive months or 25% in four non-consecutive months within a period of 12 months, they can be invoked as objective causes for dismissal.

3. Dismissal for Economic, Technical, Organizational, or Production Reasons

The law allows the employer, for reasons that have nothing to do with the worker, to decide to terminate the contract that links them to the company. This requires that there are reasons arising from the economic situation and organizational, technical, or production needs of the company. This dismissal may be individual, plural, or collective.

Individual or plural dismissal: When the company needs to reduce or eliminate one or more work positions but without reaching a certain threshold or limit fixed by the statute.

Collective redundancy: When the number of workers concerned exceeds the threshold for collective dismissal, which is:

  • 10 workers in companies with fewer than 100 workers
  • 10% of workers in companies with 100 to 300 workers
  • 30 workers in companies with 300 or more workers

All this must be done within a period of 30 days. Layoffs due to force majeure are also included in this category.

4. The Form of Redundancy

Each type of dismissal requires a certain formality for the employer to put it into practice.

Disciplinary dismissal: The worker must be notified (letter of dismissal), which should include the facts that motivate the dismissal and the date it takes effect.

Layoffs for objective causes (both individual and plural): The worker must also be notified in writing with 30 days’ notice so that they can find a new job. The employer must provide compensation to the worker, which is 20 days’ salary per year of service, with a maximum of 12 months’ salary. This is the same as for dismissal for technical, organizational, or production reasons.

Collective redundancies: The employer is obliged to follow a lengthy procedure that includes consultation with workers and their representatives. In the absence of an agreement, the employer may resort to the authorized labor authority, who will decide on the dismissals. The compensation is 20 days’ salary per year worked, with a maximum of 12 months’ salary.

Force majeure: The employer is obliged to follow a lengthy procedure that includes consultation with workers and their representatives. In the absence of an agreement, the employer may resort to the authorized labor authority, who will decide on the dismissals. The compensation is 20 days’ salary per year worked, with a maximum of 12 months’ salary.

5. Challenging Dismissal, its Qualifications, and its Effects

The act of reconciliation is a prerequisite for handling any dismissal proceedings before the labor court. The dismissed employee has 20 working days (excluding Sundays and holidays) from the moment of dismissal to file a complaint before the national reconciliation service of each autonomous community. This term is interrupted until the end of the reconciliation act. The claim is filed with the SMAC (Servicio de Mediación, Arbitraje y Conciliación) without a lawyer. Conciliation is an attempt for the parties to reach an agreement to avoid going to court. To achieve this agreement, potential litigants must meet before the cited administrative authority, which will try to obtain the agreement of the parties.

The parties involved in labor court proceedings (worker, unions if applicable, and employer) can attend personally or be represented by an attorney, a labor relations graduate, or any other individual in full use of their civil rights. The plaintiff may appear without counsel and conduct their own defense (in other cases, counsel is required).

The judge, before the claim, must rate the dismissal as appropriate, inappropriate, or null and void.

Appropriate dismissal: The alleged cause is sufficient, and the employment relationship is extinguished.

Inappropriate dismissal: When no cause for dismissal has been established, or the cause was not deemed sufficient, or the dismissal was carried out without the required formalities. In such cases, the employer is given the option to reinstate the worker or to refuse, extinguishing the employment relationship. If the employer chooses extinction, they must compensate the employee with an amount that is 45 days’ salary per year of service, with a limit of 42 months’ salary. Normally, the employer must also pay the unpaid wages that the worker would have received from the date of dismissal until the date of the sentence, which is called the processing salary. There is a case in which the processing salary is not paid, and that is when the main compensation is awarded.

Null and void dismissal: This occurs when the dismissal is discriminatory or violates fundamental rights (e.g., dismissal based on sex or nationality), when it concerns workers during suspension of the contract due to maternity, risk during pregnancy, adoption, or foster care, when it affects pregnant workers or workers enjoying maternity or breastfeeding leave, or when it affects workers on leave for childcare or family care, unless the court deems that the dismissal is justified. When it concerns workers who are victims of gender violence, there is no obligation to reinstate the dismissed worker in their job under the same conditions.

6. Other Causes of Extinction

  • Death of the employer: This determines the termination of employment contracts if the employer’s heirs do not wish to continue with the company. Otherwise, there will be a substitution. The same applies when the employer retires or suffers a disability that prevents them from continuing to work as an employer (due to receiving a pension) and chooses to close the company for such reasons. The worker is entitled to compensation of one month’s salary.
  • Death of the worker: The contract is automatically terminated.
  • Disability of the worker: This occurs when the worker’s disability makes it impossible for them to perform their work (although they may be able to perform another job). Retirement is also accompanied by the extinction of the contract.
  • Extinction of the legal personality of the company: (When it is a legal entity) This also determines the extinction of the contracts of the workers who work there, provided that the productive activity is not continued by another company. In that case, there would be a substitution. The law also requires that such dismissals follow the procedure provided for collective redundancies.