Until February 2012, when new labour reforms went into effect in Spain, , company level collective bargaining agreements were applied on a subsidiary basis with respect to broader (industry-wide) collective bargaining agreements. This meant that when a collective bargaining agreement with a broader scope applied to a company, the company could only negotiate a company level collective bargaining agreement that enhanced the working conditions of the broader (but could not worsen them), thus making the labour market less dynamic and less competitive since working conditions could not be suited to each particular company.

Recent labour reforms have attempted to reinforce company level collective bargaining agreements and make them more applicable and enforceable.

Company level collective bargaining agreements now have priority over industry-wide agreements in certain core working conditions (salary, job classification, timetable and working hour distribution, type of contract, etc.), allowing companies to adapt (and even worsen) those conditions even if they are already regulated by a collective bargaining agreement with a broader scope of applicatio

Initial court rulings on the matter have confirmed the leading role of company level collective bargaining agreements. The National Court ("Audiencia Nacional") Labour Chamber Ruling issued on May 29, 2013 concluded that:

  • There is a need to promote the competitiveness of companies  based in Spain as a key factor in overcoming the economic crisis,
  • Collective bargaining agreements must be a useful instrument, and not a barrier to companies being able to adapt to changing markets,
  •  It is legitimate, if the negotiators agree, for company level collective bargaining agreements to make the necessary and possible adjustments based on new legislation, in order to make labour relations more flexible and promote the competitiveness and adaptability of companies based in Spain to market requirements.

Additionally, a National Court ("Audiencia Nacional") Labour Chamber Ruling issued on May 31, 2013 held that industry-wide collective bargaining agreements cannot include provisions that are contrary to the new priority rule relating to company level collective bargaining agreements, and that all contrary provisions will be deemed as null and void.

In short, an important transformation of collective bargaining agreements is taking place.  There is a move towards more rational labour relations that can be adapted by companies.

We are therefore observing that many companies are requesting advice on how to implement the possibility of negotiating a company level collective bargaining agreement, now possible as a result of the new legislation, which adapts the working conditions of their employees to company needs.