As is the case in other European countries, Spanish labour law is very comprehensive and provides significant protection for employees. Labour law regulates individual and collective relationships between employees and employers, the scope of which extends to other related areas such as social security, health and safety at work, special employment relationships and procedural law.

Issues arising on hiring individuals

Immigration

Foreign employees from outside the European community, including self-employed individuals, must obtain an administrative authorisation or work permit from the Immigration Bureau to work in Spain.

Employment structuring and documentation

Generally, Spanish labour law is not prescriptive about the form of the employment contract. Employment contracts may be verbal or in writing. However, during the term of a verbal contract, either of the parties may require it to be put in writing.

Notwithstanding the general "freedom of form" principle, where an employment contract is for a period of more than four weeks, the employer must provide the employee with the following information in writing within two months of the commencement of employment: (1) the names of the parties to the Agreement; (2) the date of commencement and (contemporary contracts) the estimated term of employment; (3) the place of work; (4) the professional group or category; (5) the remuneration; (6) hours of work; (7) annual leave; (8) notice period; and (9) any applicable collective agreement.

In addition, certain employment contracts must be in writing, temporary employment contracts; contracts involving special labour relations (such as lawyers, top managers or commercial representatives); part-time contracts; and traineeship and training contracts.

In principle, employment contracts are presumed to be for an indefinite term. Nonetheless, there are, a limited number of fixed-term employment contracts. If the employee continues to work past the original term of the fixed-term contract, the relationship becomes indefinite and the employee will be entitled to the standard severance on termination.

If there is no special provision in an applicable collective bargaining agreement, probationary periods cannot exceed six months for qualified technicians or two months for other workers.

Issues arising during the employment relationship

Wages, annual leave and working time

Employers and employees are free to negotiate the terms and conditions of their employment relationship. However, employees have various minimum rights regardless of what is stated in their employment agreement. These rights are principally set out in the Workers Statute and applicable collective agreements.

An employee's remuneration can be monetary or in the form of benefits in kind, which can represent up to 30% of the employee's total remuneration.

The maximum working week is 40 hours, calculated as an average over a year. By agreement, flexible working schedules can be arranged, but with a limit of nine ordinary hours of effective work per day, unless provided otherwise in the relevant collective bargaining agreement. Overtime cannot exceed 80 hours per year.

After one year's continuous employment, employees are entitled to a minimum of 30 calendar days' paid annual leave. In addition, there are fourteen public holidays per year, which may differ slightly by region.

Trade unions

The Spanish Constitution grants unions the authority to promote and defend workers' economic interests. It also empowers them to represent workers in collective bargaining. Unions are also part of the preliminary mandatory conciliation step before disputes can be presented to government conciliation agencies.

Freedom of association and representation are fundamental rights under the Spanish Constitution. All employees are represented by elected representatives. There is no distinction between blue and white collar representatives.

It is for employees to start the election process and employers have no obligation to promote them.

Social insurance

In Spain, the Social Security's national insurance contributions cover: (1) common contingencies, for situations included in the Social Security's general regime; (2) professional contingencies, which covers expenses resulting from accidents at work and occupational diseases; (3) overtime; and (4) other concepts, such as unemployment, training or the Wage Guarantee Fund.

The Social Security offers public medical care to all affiliated workers.

Issues arising on termination of the employment relationship

Business transfers

The Workers Statute requires employees to be informed and consulted in the event of the transfer of an undertaking about matters including the date or proposed date of the transfer, the reasons for the transfer, the legal, economic and social implications for the employees and any "measures" envisaged in relation to the employees.

Employment contracts are automatically transferred with the business to the new employer.

Employees' rights and obligations are also transferred including special benefits and retirement compensation.

Terminating employment

Termination can be based on objective or disciplinary grounds.

Dismissals based on objective grounds can be justified for business reasons which can be economic, technical, organisational and/or productive. Other objective grounds established by law are the worker's incompetence, their inability to adapt to technical change, or lack of attendance.

The labour law provides that a party seeking to terminate an employment agreement must give the other party a minimum of 15 days' notice. This does not apply to interim contracts. The parties may agree longer notice periods.

Reasons for disciplinary dismissals include: (1) repeated and unjustified tardiness or lack of attendance to work, (2) lack of discipline or insubordination, (3) verbally or physically abusing the employer, or others; (4) contravention of contractual good faith and misuse of trust; (5) continued decline in the worker's performance; (6) intoxication due to alcohol or drugs which causes a negative effect at work; and (7) harassment based on: race, religion, birth, gender, age, disability, opinion, social condition and sexual orientation.

Dismissals will be deemed unfair if the grounds are not sufficiently serious or if the employer is unable to provide sufficient evidence that the employee has done something under those grounds.

If a dismissal is found to be unfair, the employer must reinstate the employee or make a severance payment equivalent to 45 days' salary per year of service up to 12 February 2012 with a cap of 42 months, or 33 days' salary per year of service after 12 February 2012 with a cap of 24 months.

Dismissals are null and void if the termination is discriminatory or involves protected employees (e.g. employees on maternity leave, employee representatives) in which case the employee is entitled to reinstatement. An infringement of the employee's fundamental rights will also make the dismissal null and void.

Published in collaboration with L&E Global an alliance of employers’ counsel worldwide

To view the full publication: An international guide to employment law across 28 countries, please click here.