Employment Contracts and Labor Relations
Track 1: The Employment Contract
Art. 1.1: Definition of an Employment Contract
An employment contract exists when an individual voluntarily provides services under the direction of another person (employer) in exchange for payment.
Provision of Services
The provision of services includes both manual and intellectual work. It emphasizes activity, not results. The worker must fulfill their hours, not necessarily achieve a specific outcome. The service must be voluntary; if the employee’s consent is compromised, the contract is void. The worker follows instructions from the employer or their representative in return for remuneration (monetary or in-kind).
Business risks are assumed by the employer.
Features of the Employment Contract
- Bilateral Contract: Reciprocal benefits for both parties.
- Onerous Contract: Obligations for both parties.
- Commutative Contract: Terms are known at the time of hiring (e.g., location, schedule).
- Synallagmatic Contract: The worker’s effort should be commensurate with the remuneration.
Contracts Related to the Employment Contract
Contract for Services
Services are provided in exchange for payment. There’s a business obligation, and payment is typically monthly. The employee receives basic instructions but works independently, assuming the risks of the outcome.
Contract for Jobbing
An individual creates a specific work in exchange for payment. There’s no fixed schedule, and the worker receives basic instructions and assumes the risks. The obligation is fulfilled upon completion of the work, with no ongoing activity or subordination.
Partnership Agreement with an Industrial Partner
Two or more individuals pool resources (assets, money) for a profit-making industry. The industrial partner contributes work but not capital, with their obligation being the result, not the activity. They don’t share in losses but may share in profits. They are not involved in management and have more autonomy than a typical employee.
Characteristics of the Industrial Partner
- Shares in profits (if any) but not losses.
- Not involved in management and has autonomy.
- Typically receives a fixed monthly payment.
Relationships Outside Traditional Employment
According to Article 1, certain relationships exist outside traditional employment status. Reasons for exclusion include:
Constitutive Causes
Situations specifically excluded by law.
Declared Causes
Situations lacking the requirements of Article 1.1.
Civil Servants
Subject to different jurisdictions. Excluded for constitutive reasons. Disputes fall under the administrative litigation system.
Mandatory Personal Benefits
Excluded for declared reasons, as they are mandatory, not voluntary.
Works of Friendship, Kindness, and Good Neighborliness
Occasional jobs provided by friends. Excluded for declared reasons, as they are not permanent and lack an employer-employee relationship.
Positions in Administrative Bodies of Commercial Companies
Involved in company management. Excluded for declared and constitutive reasons, as they don’t fulfill the characteristics of an employment relationship. They have their own legislation.
Family Work
Excluded for declared reasons, unless it meets the criteria for employment status.
Commercial Agents Assuming Risk and Peril
Excluded for constitutive and declared reasons. They are highly independent and assume all risks.
Self-Employed Individuals in Penal Institutions
Considered their own employer, with full autonomy and assuming all risks.
Special Labor Relations
Article 2 of the Statute of Workers (Est) addresses relationships with a higher degree of trust and responsibility, resembling employment relationships and subject to labor law.
High-Level Positions (Royal Decree 1985)
- Contract: Oral or written (indefinite if oral).
- Severance Clause: Common in senior management contracts.
- Confidentiality Clause: Protects sensitive information.
- Non-Compete Clause: Restricts working for competitors.
- Termination: Notice periods and compensation.
- Corporate Withdrawal: Employer-initiated termination due to loss of confidence.
- Disciplinary Dismissal: No notice or compensation.
- Allowances: Not subject to income tax or contributions.
- Promotion to High-Level Position: May lack certain contractual clauses.
- Dual Roles (Director and Senior Manager): Employment relationship typically prevails.
Domestic Service (Royal Decree 08/01/1985)
- Exclusions: Legal persons, family/friends, services provided by companies.
- Contract: Verbal or written (one year renewable if unspecified).
- Working Hours: Often exceed 40 hours/week (compensation required).
- Wages: In-kind payment limited to 45% of total.
- Termination: Notice periods and compensation.
- Employer Discontinuance: Notice period and paid leave.
Sales Representatives
- Provide services to one or more employers without assuming the risks of commercial agents.
- Remuneration: Fixed, variable, or both.
- Social Security: Subject to the general scheme.
- Compensation: Entitled to compensation for damages, unamortized expenses, and client acquisition.
Professional Athletes and Artists
- No element of trust as in other special relationships.
- Working time includes training or rehearsals.
- Contract: Negotiated time and wages (including fees and bonuses).
- Transfers: Permitted.
- Penalties: Subject to the same labor regime of sanctions.
- Jurisdiction: Labor courts.
Sources and Principles of Labor Law
Regular Sources (Routine Implementation)
- Legislation: Constitution and specific laws.
- General Principles: Generic standards.
- Case Law: Judgments of Supreme and High Courts.
- Doctrine: Interpretations by legal scholars.
Regular Sources (Specific Application)
Collective agreements create specific obligations and conditions.
Reporting Principles of Labor Law
- Pro Operario Principle: Interpretation favors the worker.
- Most Favorable Rule Principle:
- Minimum Standard Principle: Rights and obligations are regulated by laws and collective agreements.
- Principle of the Most Favorable Rule: In case of conflict, the rule most beneficial to the worker applies.
- Most Advantageous Terms Principle (Acquired Rights): Favorable working conditions cannot be unilaterally revoked by the employer.
- Unavailability or Inalienability of Rights Principle: Worker’s rights derived from laws or collective agreements cannot be waived.