The Employment Law Review

Law Business Research

Fourth Edition

Editor

Erika C Collins

The Employment Law Review

Reproduced with permission from Law Business Research Ltd.

This article was first published in The Employment Law Review 4th edition(published in March 2013 – editor Erika C Collins).

For further information please emailAdam.Sargent@lbresearch.com

The Employment

LawReview

Fourth Edition

EditorErika C Collins

Law Business Research Ltd

The Law ReviewsThe Mergers and acquisiTions review

The resTrucTuring review

The PrivaTe coMPeTiTion enforceMenT review

The disPuTe resoluTion review

The eMPloyMenT law review

The Public coMPeTiTion enforceMenT review

The banking regulaTion review

The inTernaTional arbiTraTion review

The Merger conTrol review

The Technology, Media and

TelecoMMunicaTions review

The inward invesTMenT and

inTernaTional TaxaTion review

The corPoraTe governance review

The corPoraTe iMMigraTion review

The inTernaTional invesTigaTions review

The ProjecTs and consTrucTion review

The inTernaTional caPiTal MarkeTs review

The real esTaTe law review

The PrivaTe equiTy review

The energy regulaTion and MarkeTs review

The inTellecTual ProPerTy review

The asseT ManageMenT review

The PrivaTe wealTh and PrivaTe clienT review

The Mining law review

The execuTive reMuneraTion review

The anTi-bribery and anTi-corruPTion review

The carTels and leniency review

The Tax disPuTes and liTigaTion review

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The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book:

ALi BudiARdjo, nugRoho, REkSodiPuTRo

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aCknowLEdgEmEnTs

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Acknowledgements

EnS (EdwARd nAThAn SonnEnBERgS)

ESTudio gRAu ABogAdoS

gEoRgE z gEoRgiou & ASSoCiATES LLC

giAnni, oRigoni, gRiPPo, CAPPELLi & PARTnERS

giESE & PARTnER

gonzALEz CALviLLo, SC

gRAF & PiTkowiTz REChTSAnwäLTE gMBh

gRiEBE REChTSAnwäLTE

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hEEnAn BLAikiE LLP

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hERBERT SMiTh FREEhiLLS

hiCkS MoRLEy hAMiLTon STEwART SToRiE LLP

kgdi LAw FiRM

koChhAR & Co

LAw FiRM ŠAFAR & PARTnERS, LTd

MAThESon

MATToS FiLho, vEigA FiLho, MARREy jR E quiRogA AdvogAdoS

nESToR nESToR diCuLESCu kingSTon PETERSEn

PAuL hASTingS (EuRoPE) LLP

PAuL hASTingS LLP

PAuL hASTingS LLP ShAnghAi REPRESEnTATivE oFFiCE

Acknowledgements

iii

SAgARdoy ABogAdoS

SAyEnko khAREnko

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SkRinE

SnR dEnTon

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vAn oLMEn & wynAnT

wALdER wySS LTd

iv

ConTEnTs

Editor’s Preface ...................................................................................................xi Erika C Collins

Chapter 1 gLoBAL divERSiTy And inTERnATionAL EMPLoyMEnT ..................................... 1

Erika C Collins

Chapter 2 EMPLoyMEnT iSSuES in CRoSS-BoRdER M&A TRAnSACTionS .......................................................... 7

Erika C Collins and Michelle A Gyves

Chapter 3 SoCiAL MEdiA And inTERnATionAL EMPLoyMEnT ..................................................................... 14

Suzanne Horne and Eleni Konstantinou

Chapter 4 AuSTRALiA ............................................................................ 31Miles Bastick, Shivchand Jhinku and Zoë Adams-Lau

Chapter 5 AuSTRiA ................................................................................ 46Jakob Widner

Chapter 6 BELgiuM ............................................................................... 65Chris Van Olmen

Chapter 7 BRAziL ................................................................................... 81Vilma Toshie Kutomi

Chapter 8 CAnAdA ................................................................................ 99Jeffrey E Goodman and Christopher D Pigott

Chapter 9 ChiLE ................................................................................... 112Francisco della Maggiora M

Chapter 10 ChinA .................................................................................. 125Gordon Feng and Erika C Collins

Contents

v

Chapter 11 CoSTA RiCA ........................................................................ 143Carolina Soto Monge

Chapter 12 CyPRuS ................................................................................ 155George Z Georgiou, Anna Praxitelous and Natasa Aplikiotou

Chapter 13 CzECh REPuBLiC ............................................................. 170Lenka Velvarská

Chapter 14 EL SALvAdoR ..................................................................... 186Diego Martín-Menjívar and Carlos Roberto Rodríguez Salazar

Chapter 15 ESToniA .............................................................................. 201Heli Raidve

Chapter 16 FinLAnd ............................................................................. 218Petteri Uoti and Loviisa Härö

Chapter 17 FRAnCE ............................................................................... 229Deborah Sankowicz and Jérémie Gicquel

Chapter 18 gERMAny ........................................................................... 246Thomas Griebe and Jan-Ove Becker

Chapter 19 gREECE ............................................................................... 266Effie G Mitsopoulou and Ioanna C Kyriazi

Chapter 20 guATEMALA ....................................................................... 284Lionel Francisco Aguilar Salguero

Chapter 21 hong kong ..................................................................... 291Michael J Downey

Chapter 22 indiA ................................................................................... 309Manishi Pathak

Chapter 23 indonESiA ......................................................................... 327Nafis Adwani

Chapter 24 iRELAnd.............................................................................. 342John Dunne and Georgina Kabemba

Contents

Chapter 25 iTALy .................................................................................... 361Raffaella Betti Berutto

Chapter 26 jAPAn ................................................................................... 374Setsuko Ueno

Chapter 27 LATviA ................................................................................. 389Sigita Kravale

Chapter 28 LuxEMBouRg ................................................................... 405Guy Castegnaro, Ariane Claverie, Céline Defay, Christophe Domingos, Laurence Chatenier, Lorraine Chery and Evelyne Schoeser

Chapter 29 MALAySiA ............................................................................ 425Siva Kumar Kanagasabai, Selvamalar Alagaratnam and Foo Siew Li

Chapter 30 MALTA .................................................................................. 444Ron Galea Cavallazzi

Chapter 31 MExiCo ............................................................................... 454Miguel Valle, Jorge Mondragón and Rafael Vallejo

Chapter 32 nEThERLAndS ................................................................. 473Eugenie Nunes

Chapter 33 niCARAguA ....................................................................... 496Bertha Xiomara Ortega Castillo

Chapter 34 noRwAy .............................................................................. 506Gro Forsdal Helvik

Chapter 35 PERu ..................................................................................... 519José Burgos C

Chapter 36 PoLAnd .............................................................................. 535Roch Pałubicki and Karolina Nowotna

Chapter 37 PoRTugAL .......................................................................... 549Pedro Furtado Martins, Dora Joana and Nuno Pais Gomes

Contents

viii

Chapter 38 RoMAniA ............................................................................ 564Delia Paceagiu Ratoi, Iurie Cojocaru, Alexandru Lupu and Patricia-Sabina Macelaru

Chapter 39 RuSSiA .................................................................................. 577Irina Anyukhina

Chapter 40 SAudi ARABiA .................................................................... 596Amgad T Husein, John Balouziyeh and Fadil M Bayyari

Chapter 41 SingAPoRE ........................................................................ 608Ian Lim, Nicole Wee and Gordon Lim

Chapter 42 SLovAkiA ............................................................................ 622Katarína Matulníková

Chapter 43 SLovEniA............................................................................ 634Vesna Šafar and Martin Šafar

Chapter 44 SouTh AFRiCA .................................................................. 652Susan Stelzner, Stuart Harrison, Brian Patterson and Zahida Ebrahim

Chapter 45 SPAin .................................................................................... 673Iñigo Sagardoy de Simón

Chapter 46 SwEdEn .............................................................................. 693Erik Danhard and Jennie Lööw

Chapter 47 SwiTzERLAnd .................................................................. 705Ueli Sommer

Chapter 48 TAiwAn ............................................................................... 718Seraphim Mar

Chapter 49 TuRkEy ............................................................................... 731Serbulent Baykan and Handan Bektas

Chapter 50 ukRAinE ............................................................................. 744Svitlana Kheda

Contents

ix

Chapter 51 uniTEd ARAB EMiRATES ................................................ 758Ibrahim Elsadig

Chapter 52 uniTEd kingdoM .......................................................... 768Suzanne Horne

Chapter 53 uniTEd STATES ................................................................ 780Patrick Shea and Erin LaRuffa

Chapter 54 uRuguAy ............................................................................ 795Gabriel Ejgenberg

Chapter 55 viETnAM ............................................................................ 806Michael K Lee, Huong Thi Thanh Nguyen and Doan Ngoc Tran

Appendix 1 ABouT ThE AuThoRS .................................................... 819

Appendix 2 ConTRiBuTing LAw FiRMS’ ConTACT dETAiLS .. 853

xi

Editor’s PrEfacE

It has once again been my great pleasure to edit this most recent edition of The Employment Law Review. In reviewing chapters for inclusion in this edition, I was struck repeatedly by both the breadth and variety of laws and approaches to employment regulation across jurisdictions as well as the similarities, especially with regard to certain trends, some of which are discussed below. As with the earlier editions, this book is not meant to provide a comprehensive treatise on the law of any particular country but instead is intended to assist practitioners and human resources professionals in identifying key issues so that they may, in turn, help their clients avoid potentially troublesome (and often costly) missteps.

One of the common themes during 2012 was an increase in the promulgation of laws and regulations designed to increase flexibility and lower the costs of labour for employers while maintaining sufficient protections for employees. A prime example of this trend is the passage throughout 2012 of legislation in EU Member States implementing the EU Directive on Temporary Agency Work, which came into effect in December 2011. The Directive and related implementing legislation ensure certain minimum compensation and benefits for temporary agency workers while also increasing flexibility for employers. Both Vietnam and Mexico also adopted legislation in 2012 that sanctions, but also places limitations on, labour outsourcing arrangements. In Brazil, President Dilma Rousseff’s Greater Brazil Plan also has been aimed at increasing employment and avoiding the slowdown and economic crisis faced by other jurisdictions. Among the employment-related measures implemented pursuant to the Greater Brazil Plan are relief from payroll contributions for the information technology sector and other incentives to foster employment. Finally, in the UK, a novel idea is under consideration that would allow an employer to issue an ownership interest in the company to the employee in exchange for the employee’s agreement not to be protected by the unfair dismissal laws.

While these efforts are, of course, aimed at benefiting workers by addressing unemployment, a number of them also are by-products of another trend: the implementation of austerity measures in response to debt crises in Europe and elsewhere. Fewer unemployed citizens means lower entitlement spending for governments. Other

xii

Editor’s Preface

employment-related austerity measures also have been implemented or proposed that are less beneficial to employees and jobseekers. In the Netherlands, for example, the period of time during which an individual can collect unemployment benefits was reduced from three years to two. Portugal continues to consider a reduction of remuneration and benefits for civil servants and employees public enterprises.

This fourth edition once again includes several general-interest chapters – one addressing employment issues in cross-border mergers and acquisitions, one addressing social media in the workplace, and another addressing global diversity initiatives. This edition also boasts the addition of five new countries, bringing the number of covered jurisdictions to 52.

I wish once again to thank our publisher, particularly Lydia Gerges, Adam Myers and Gideon Roberton; all of our contributors; and my associate, Michelle Gyves, for their tireless efforts to bring this edition to fruition.

Erika C CollinsPaul Hastings LLPNew YorkFebruary 2013

673

Chapter 45

Spain

Iñigo Sagardoy de Simón1

I INTRODUCTION

i Employment law framework

Employment relations are ruled by a vast group of regulations that have different origins. Essentially, these regulations can come from the Spanish state (parliament and government), the international community, collective or individual bargaining agreements and professional traditions.

The Spanish legal sources for employment law are as follows:a the Spanish Constitution;b the law: laws are passed by the Spanish parliament, and are of two different types:

• organic: they need absolute majority of the parliament in order to be approved. The Constitution reserves certain subjects to be ruled by organic laws; and

• ordinary: used for the rest of subjects, they do not need absolute majority to be passed;

c the Spanish government is entitled to pass decrees with the power of law under certain circumstances:• decree-law: when there is an extraordinary and urgent situation;• legislative decree: basically a delegation instrument from the parliament into

the government for it to create law;d ordinances: administrative regulations passed by the government, with the

objective of completing the law;e international regulation;f collective bargaining agreements: agreements reached between the employers and

the employees’ representatives. The Spanish Constitution considers collective

1 Iñigo Sagardoy de Simón is chairman at Sagardoy Abogados.

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bargaining agreements to be legally binding for the parties that subscribe to them; and

g common usage.

ii Courts and tribunals

The relevant courts and tribunals dedicated to labour issues are as follows:a Labour courts: labour courts are composed of one single judge who has

responsibility for ruling on all the labour claims and disputes in the court’s jurisdictional area. Some labour issues are restricted to higher courts. Usually labour courts’ jurisdictional competence is confined to the city limits.

b High courts of justice (‘HCJs’): HCJs are composed of several areas. The labour area will rule the labour claims and disputes that affect a wider territorial area than the labour court’s jurisdiction, but within the limits of the autonomous community. Therefore, there is one HCJ per autonomous community in Spain. HCJs also rule on the challenged decisions from the labour courts of the corresponding autonomous community. HCJs are composed of one president and several judges, depending on the autonomous community.

c The National High Court (‘the NHC’): the NHC is also composed of several areas. The labour area will rule labour claims and disputes affecting two or more autonomous communities and some issues restricted to its authority. The NHC is based in Madrid.

iii Government agencies with competence for enforcement of employment law

Even though it is not considered a government agency per se, but rather a public agency, the Labour and Social Security Inspectorate is the most important agency that is entitled to enforce employment law in Spain.

II YEAR IN REVIEW

The Spanish labour reform approved by the government through Royal Decree-Law 3/2012, which came into force on 12 February 2012 and was subsequently confirmed by the Spanish parliament with some amendments through Law 3/2012 of 6 July 2012, clearly has been the most important event this year. It introduced significant changes to labour relations. Some of the most crucial changes are outlined below.

i Unfair dismissals

A new compensation amount has been set for unfair dismissal cases: 33 days’ salary per year worked and a maximum of 24 monthly payments, as opposed to the former 45 days’ salary and 42 monthly payments. This affects all new indefinite-term employment contracts. Unfair dismissal indemnity corresponding to contracts signed prior to 12 February 2012, however, will be calculated based on 45 days’ salary per year worked for the time of services rendered before that date, and 33 days’ salary per year worked for the time of services rendered afterwards. The amount of indemnity will not be more than 720 days’ salary unless the calculation for the period worked prior to 12 February 2012

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resulted in a larger amount; in that case that amount will be used as the upper limit, and said amount cannot be higher than 42 months, in any case.

Thus, employees with a contract entered into prior to 12 February 2012 will be entitle to the indemnity of 33 days’ salary per year worked after 12 February 2012, and the calculation of the indemnity corresponding to the period worked until 11 February 2012 will be based on the previous 45 days’ salary per year worked, respecting the maximum limits mentioned above for legal compensations.

Procedural salaries (salaries the employee did not receive from the termination date until the date of notification of the sentence that declares the unfairness of the dismissal or until the employee found employment, if the latter was prior to the date of the sentence) are eliminated if the dismissal is considered unfair and the employer decides not to readmit. In this way, there are fewer incentives to question the nature of dismissal in the courts and fair dismissal is the more common decision when brought to court.

ii Redundancy dismissals

The labour reform brought a profound revision of causes and procedures for redundancy dismissals (objective dismissals as well as collective dismissals both based on economic, technical, production or organisational grounds). The measures implemented by the labour reform represent a major reduction in redundancy costs and a streamlining of the mechanisms for its implementation. The considerable increase in legal certainty has reduced the amount of litigation over dismissals.

iii Substantial modifications to employment conditions

The system of substantial modifications to employment conditions has been modified. The joint bargaining committee is precluded from blocking the employer’s decision; the possibility of the tribunals making assessments on the measure is limited; there is a new procedure to modify substantial employment conditions; and some controversial aspects of case law are clarified. The aim is to facilitate this type of measure, increasing the clarity of the law and the role of the tribunals in such a way that legal certainty is improved and employers’ uncertainties are reduced.

Furthermore, the labour reform allows for the employer’s decision to lower an employee’s salary as a possible modification of employment conditions.

iv Opting out

The labour reform transforms the system of collective bargaining as it eliminates the possibility that, in the absence of an agreement between the social organisations, businesses cannot opt out of a higher-level agreement. If a business has justified cause to opt out of a higher-level agreement, the refusal of the social organisations at levels that are beyond the company’s scope shall not block the measure as it has done so until now. If there is no agreement the differences shall be subject to the mandatory arbitration of the collective bargaining commission. The measure is supplemented by clarification of what amounts to justified cause, limiting judicial and administrative interpretation, and with unification of the system for various causes, which were different. Thus legal certainty is increased, uncertainty is decreased and the procedure is simplified and expedited.

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This measure not only greatly facilitates opting out, but it also conditions the positions of the parties in the negotiations and favours a more reasonable stance by the unions. The possibility of opting out supposes an alternative to dismissal and reduces the incentive to keep part of the stable workforce as temporary in order to deal with adjustments at a lower cost. The measure helps, therefore, to mitigate the problem of a two-tier or excessively segmented labour market consisting of temporary and permanent employees. Furthermore, it favours the introduction of salary clauses linked to the productivity or profitability of the business instead of the rate of inflation as is customary in Spain. The measure therefore contributes to company competitiveness.

The labour reform also eliminates the priority of application enjoyed by higher-level agreements over company agreements in a such manner that a company can enter into agreements that affect the principal matters without being determined by decisions made at another level. Therefore, an agreement can be negotiated with another agreement being in place at a higher level. The aim of the labour reform is to transform the current structure of collective bargaining in Spain in which the agreements of regional scope prevail and to promote a greater degree of decentralisation. The economic theory is clear with respect to the problems of the current model and the benefits of a decentralised structure. Decentralisation of collective bargaining also helps to reduce the tendency toward an excessive linking of salaries to inflation.

v Suspensions of contracts and reduction of working hours

The system of suspensions of contracts and reduction of working hours for economic, technical, organisational or production reasons or due to force majeure has been modified, with the aim of making it easier and quicker to put these suspensions and reductions into effect. The possibility that a suspension may be blocked by one of the social institutions has been removed, as has the requirement to have prior administrative authorisation for such actions, and the tribunals, where applicable, must limit themselves to establishing that cause exists. Thus legal certainty is increased, the incentive to resort to law is reduced, and procedures that could lead to the imposition of conditions on the decision, such as prior administrative authorisation, have been removed. These changes speed up and facilitate these kinds of measures, which bring about an alternative to dismissal in extraordinary situations.

vi Irregular distribution of working time

The labour reform states that employers are unilaterally entitled to distribute irregularly throughout the year 10 per cent of the working time as opposed to the collective bargaining agreement or the agreement between the organisation and the workers’ representatives that used to be needed to implement such kind of irregularly distribution. Therefore, the irregular distribution of the working time throughout the year may be established through collective bargaining or, in its absence, through an agreement between the company and the workers’ representatives. In the absence of an agreement, the organisation is able to distribute irregularly throughout the year 10 per cent of the working time. Said distribution must, in any case, respect the minimum periods of daily and weekly rest provided for by law.

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vii Employment law statistics

According to the Labour Relations Institute of Sagardoy Foundation (‘the IRLE’), the unemployment rate in Spain for people under 25 years old increased in 2012 to 43 per cent.

Another group of people in which the rate of unemployment has increased exponentially is the ‘long-term unemployed’. According to a study of the Labour Relations Institute, long-term unemployed people made up only 23.5 per cent of the total number of unemployed people in 2008. In 2012, however, this figure has risen to 47.9 per cent of the total number of unemployed people in Spain.

Regarding the percentage of labour disputes, even throughout the economic crisis that Spain has been suffering (during which a larger number of dismissals should have been declared as fair) the number of court rulings completely in favour of the employers has remained practically the same. According to the IRLE, labour courts rule in favour (or partly in favour) of the employee in around 35 to 40 per cent of the disputes. Bearing in mind that another 25 to 30 per cent of the disputes end with an agreement, only 30 per cent of the court decisions rule in favour of the employers.2

viii Hot topics

Hot topics this year include the labour reform, the rising unemployment rate and the general strike, which took place on 14 November 2012.

III SIGNIFICANT CASES

The recent ruling of the NHC of 28 September 2012 is very important as it is the first court ruling regarding a collective dismissal carried out by a company after the passing of the labour reform of 2012. It must be noted that before this court ruling, the collective dismissals carried out after the labour reform of 12 February 2012 had been declared as unlawful, mostly due to formal mistakes.

A ruling of the NHC of 10 September 2012 declared null some dispositions of a sectorial collective bargaining agreement, which stated that the salaries and working hours included in that collective bargaining agreement would take precedence over any company agreement. This ruling therefore declares that after the labour reform in 2012, an agreement reached by the company and its own workers’ representatives takes priority over a sector agreement.

IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP

i Employment relationship

The employee must give his or her consent to enter into an employment contract. The parties may nominate the form of the contract, whether oral or written. This is called

2 For further information regarding these or any other labour statistics, please visit the IRLE website: www.fundacionsagardoy.com.

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the ‘freedom of form principle’. There is a presumption that the contract exists if there is a provision of services under the direction of the employer in return for remuneration.

Strictly speaking, there is no legal obligation for the employer to provide a written contract to the employee. However, either party may request a written form of the contract during the employment relationship. Work contracts must be reflected in writing whenever a legal provision so demands and, in any event, in the case of apprenticeship and training contracts, part-time contracts, fixed-term contracts and for specific work or services, and contracts of workers hired in Spain at the service of Spanish companies abroad. Contracts for a specific term in excess of four weeks shall likewise be reflected in writing with the signature of the employee.

The work contract may be entered into for an indefinite period of time or for a specific duration. Contracts for a specific duration may be formalised, for example: (1) when the worker is contracted to perform a specific independent work or service with its own substance within the activity of the company, the execution of which – limited in time – is of uncertain duration; (2) where market circumstances, the accumulation of tasks or the excess of orders thus require, even where this concerns the normal activity of the company; or (3) when dealing with the substitution of workers with a right to the reservation of their work posts, provided that, inter alia, the name of the worker substituted and the reason for substitution are specified in the work contract.

The following items must be included in the statement:a the identities of the employer and employee;b the start date of the employment relationship;c whether the relationship is permanent or temporary and its anticipated duration;d the registered office of the company and the address of the employer or the

workplace where the employee usually provides services. If the employee provides services on a regular basis in different work centres, the contract must contain this information;

e the employee’s category or professional group and a summary job description;f the amount of the basic and wage supplements and frequency of payment;g the duration and distribution of a normal working day;h collective agreement applicable;i holiday allowance; andj the notice period for termination of the contract by either party.

iii Establishing a presence

The activity of hiring employees through an agency must be made exclusively by the duly authorised temporary work companies in accordance with Article 16.3 of the Workers’ Statute Law (Royal Legislative Decree 1/1995) (‘the Worker’s Statute’). This activity must be for a limited time.

A foreign company not officially registered in Spain and incorporated abroad may engage an independent contractor for business purposes in Spain but subject to the laws of their country with regard to their capacity to contract and pursuant to the provisions of the Commercial Code.

A well-established business outside Spain that does not have a physical office in Spain must register with the Labour and Social Security Inspectorate in order to engage employees.

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The contracting of workers for their temporary transfer to another company may only be undertaken through duly authorised temporary work companies under the legally established terms.

An independent contractor can create a permanent establishment in another company, but there is a risk of illegal transfer of workers under Article 43 of the Workers’ Statute. The transferring company must have a stable activity and means to carry on the business.

The illegal transfer of workers is understood to take place where any of the following circumstances is present:a the purpose of the service contracts between the companies is limited to a

mere deployment of the workers of the transferring company to the benefiting company; or

b the transferring company has no stable activity or organisation of its own, it does not have the means necessary to undertake its activity, or it does not exercise the functions inherent to its status as an employer.

ii Probationary periods

Employment can be subject to a probationary period. Employers use this to assess the employee’s suitability and performance. A probationary period should be specified in the contract of employment. It will generally last:a six months for certified technicians;b two months for unqualified employees or three months in companies with fewer

than 25 employees; orc one year at the start of a permanent contract to support entrepreneurs.

The employer can terminate the contract during a probationary period without reason, without notice and without compensation. If, however, an employee performed the same functions under a different contract with the same company he or she cannot be dismissed without reason, notice or compensation, as the current probationary period will be considered void. If the contract is terminated for a discriminatory reason, the termination is not valid.

V RESTRICTIVE COVENANTS

Spanish law permits non-compete clauses in employment contracts. The employer and employee can agree an exclusivity clause in the employment contract. This restricts employees from carrying out any work-related activities or jobs for any other employer or on their own account. The employees must be specifically compensated during the term of employment for agreeing to the exclusivity clause.

On the other hand, employers can agree a non-compete clause with employees for a maximum of two years after their employment is terminated. This clause shall only be valid if the employer has an actual industrial or commercial interest in such, and the employee is paid an adequate economic compensation.

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VI WAGES

i Working time

The duration of the working day shall be that agreed upon in the collective bargaining agreement or work contract. The maximum duration of the ordinary working day shall be 40 hours a week of effective work on average over a year.

The irregular distribution of the working day throughout the year may be established through collective bargaining or, in its absence, through agreement between the company and the workers’ representatives. In the absence of an agreement, the company will be able to distribute unevenly 10 per cent of the working day throughout the year. Said distribution must, in any case, respect the minimum periods of daily and weekly rest provided for in the Workers’ Statute. The worker must be informed of his or her work schedule with a minimum notice period of five days.

Between the end of one working day and the beginning of the next, there shall be at least a 12-hour rest period.

The actual number of ordinary working hours may not exceed nine daily, unless another distribution of daily working time is established by collective bargaining or, in its absence, an agreement between the company and the workers’ representatives, respecting, in any case, the rest period between working days.

Workers under 18 years old may not work more than eight actual hours a day, including, as applicable, the time devoted to training and, if they work for several employers, the hours worked for each of them.

Work done between 10pm and 6am shall be considered night-time work. Employers regularly performing night-time work shall inform the labour authorities thereof.

The working day for night-time workers may not exceed eight hours daily on average in a reference period of 15 days. Night-time workers may not perform overtime work.

ii Overtime

Those hours of work done over the maximum duration of the ordinary working day outlined above shall be considered overtime. Through a collective bargaining agreement or, in its absence, an individual contract, a choice shall be made between payment for overtime in a set amount, which in no case may be inferior to the value of the ordinary working hour, and payment in terms of equivalent periods of paid rest. In the absence of an agreement in this respect, it shall be understood that overtime done shall be compensated through rest within the four months following its execution.

Overtime work shall be voluntary, unless its execution has been agreed on in collective bargaining agreements or in individual work contracts.

The number of overtime hours may not exceed 80 in one year, with an exception for excess overtime worked to prevent or repair accidents and other extraordinary or urgent damages.

For the purposes of overtime calculation, the working day for each worker shall be recorded from day to day and summed up in the period set for the payment of compensation, with a copy of the summary provided to the worker in his or her payslip.

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The government may suppress or reduce the maximum number of overtime hours for a specific period of time, either generally or for certain sectors of activity or territories, in order to increase the opportunities of placement for workers in a status of compulsory unemployment.

VII FOREIGN WORKERS

Employers must keep a register of their foreign workers and must keep soft or hard copies of the work permit authorisation, social security enrolment, social security coverage communication and all other relevant labour documents.

There is no limit on the number of foreign workers a workplace or company may have. There are also no restrictions on the length of a foreign worker’s assignment as long as the work permit is renewed accordingly. The initial permit is valid for one year, the second for two years and the third for another two years.

The length for a transnational worker assignment (hired by a company located outside the EU and transferred to the Spanish subsidiary or client) is usually one year, renewable for another year. Exceptionally it can be renewed on an annual basis for up to five years where the bilateral social security agreement between the sending country and Spain states so and it is formally approved by both the sending state’s and the Spanish social security departments.

After five years of continuous residency, the worker can apply for a long-term residence permit valid for five years, allowing him or her to work in the same conditions as Spanish nationals.

EU/EAA nationals can start work from the outset with their passport only. No preliminary work permit approval is needed, athough the applicant is required to be registered at the local police station if the intended stay is longer than 90 days in a period of 180 days.

Non-EU/EAA nationals must obtain work permit approval, a consular work visa and social security enrolment in order to start work. Therefore, up-front work authorisation is mandatory.

The company must pay taxes and social security costs for a foreign worker.Every worker who performs labour activities in Spain, whether locally hired, transnational or completing an internship or training, is protected under local employment laws.

Locally hired workers are also protected by the collective agreements applicable to the specific activity business area in the same terms as Spanish workers.

Transnational workers assigned by a foreign company to a Spanish branch, client or project are specifically protected by Law 45/1999, even if the contract was originally signed under the home country specific labour regulation. Law 45/1999 guarantees the minimum labour conditions such as basic salary, intimacy and dignity protection, right to join a union, to strike, no discrimination, etc.

VIII GLOBAL POLICIES

There is no obligation in Spanish law to implement internal discipline rules. Article 58 of the Workers’ Statute states that employees can only be sanctioned according

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to the disciplinary procedures established in the Workers’ Statute and the applicable collective bargaining agreement. Any global policy regarding disciplinary procedure will not be applicable in Spain if it states something different than the applicable collective bargaining agreement or the Workers’ Statute.

Employers can negotiate with the workers’ representatives the disciplinary procedure and sanctions; however, this negotiation must be within a collective bargaining agreement negotiation. According to the Spanish legislation, employers and workers’ representatives are entitled to negotiate the disciplinary procedures included in the applicable collective bargaining agreement; therefore, the agreement reached in this issue is not submitted to any government control.

In order to avoid any discrimination between male and female employees, the Spanish legislation states that companies employing more than 250 employees must create an anti-discrimination policy regarding men and women. For other companies this policy is voluntary unless it is foreseen in the applicable collective bargaining agreement.

The rules must be always written in the local language since it will be the speaking language of the employees.

Notwithstanding the above, some international companies introduce global codes of conduct. In order to be applicable, and considering that their content must not oppose what is stated in the law and the applicable collective bargaining agreement, the employer must prove that the code of conduct has been made known to the employee. Therefore, even though there is no such legal obligation, this kind of code should be signed by the employees. Another usual way to prove that the employees are aware of the code is to introduce a statement clause in the employment contract.

It is widespread practice to post this code of conduct on the company’s intranet; however, the main point is to prove that the employees know that the code has been posted on the intranet. This could be stated in the employment contract or in another computer use policy.

As mentioned above, disciplinary rules cannot be incorporated in the employment contract and must be included only in the applicable collective bargaining agreement and the law.

IX TRANSLATION

There are no rules about the language of employment contracts between the parties themselves. However, employment contracts and employment documents must be registered with the Public Administration drafted in an official language, that is, Spanish or the official language of an autonomous community (Spain is divided in autonomous communities or regions and some of them have a different language from Spanish that it is considered official).

The contract can be signed in two different languages. In such case, it is recommended to include a clause in the employment contract stating which version will prevail for interpretative purposes.

The employee must understand the terms and conditions of the labour relationship he or she has entered into so the documents should be drafted in an understandable

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language. However, in order to enforce such documents before the public administration or courts, they must be translated in Spanish.

If the court does not understand the document then the agreement will not be taken into account in the judicial proceeding, but there are no criminal penalties established for not having the employment document translated.

X EMPLOYEE REPRESENTATION

Employee representation in Spain is structured in two different ways – union representatives and employee representatives – both with similar rights.

Employees affiliated with a trade union may set up union divisions within a company to represent their interests. In companies or work centres with 250 employees or more, employees may elect their trade union delegates by and among employees affiliated with a labour union. The number of such union representatives for each union division is related to the number of employees in the company or work centre, as follows: a up to 250 employees in the company: one union delegate for each union division

when they obtain between 5 and 10 per cent of votes in the election to the works council;

b 250 to 750 employees in the company: one union delegate for each union division with 10 per cent of votes in the election to the works council;

c 751 to 2,000 employees in the company: two union delegates for each union division with 10 per cent of votes in the election to the works council;

d 2001 to 5,000 employees in the company: three union delegates for each union division with 10 per cent of votes in the election to the works council; and

e more than 5,000 employees in the company: four union delegates for each union division with 10 per cent of votes in the election to the works council.

The number of union delegates may be increased by collective bargaining agreements.In companies with 50 employees or more, the company must establish a works

council to act on behalf of employees and to negotiate with the employer. The number of the members of the works council depends upon the number of employees in the company, as follows:a 50 to 100 employees: five representatives;b 101 to 250 employees: nine representatives;c 251 to 500 employees: 13 representatives;d 501 to 750 employees: 17 representatives;e 751 to 1,000 employees: 21 representatives; andf more than 1,000 employees: 21 representatives plus an additional two for every

extra 1,000 employees up to a maximum of 75.

Companies employing between 11 and 49 employees do not need to establish a works council, but they can elect employee delegates to represent the employees’ interests. Companies employing between six and 10 employees may also elect employee delegates if the employees so decide by majority agreement.

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The most representative labour organisations, those having at least 10 per cent among the representatives in the company, or the workers of the work centre by majority agreement, may advocate elections for employees’ delegates and the works council.

Unions with the capacity to advocate elections shall have the right of access to the registers of the public administration containing data on the registration of companies and the enlistment of workers, to the extent necessary to carry out such a purpose in their respective areas.

The proponents shall notify the company and the public office subordinate to the labour authorities of their proposal to hold elections with a minimum advance notice of at least one month prior to the start of the electoral process. In the said notification, the proponents must exactly identify the company and the work centre in which the electoral process is intended to be held, as well as the date it is to start, which shall be that of the organisation of the polling station, and which, in any case, cannot begin before one month or after three months counted from the registration of the notice in the public office subordinate to the labour authorities. Within the following working day, this public office shall display the prior notifications presented on its bulletin board, providing a copy thereof to the unions that may request it.

Only subject to majority agreement between the most representative unions or the unions considered representative in accordance with Organic Law 11/1985 dated 2 August, on the Freedom of Association, may the holding of general elections in one or several functional areas or territories be advocated. Said agreements must be communicated to the public office subordinate to the labour authorities for their deposit and publication.

Where elections are advocated to renew representation owing to the end of a mandate, such advocacy may only be initiated three months prior to the expiry of such mandate.

Partial elections may be advocated due to resignations, revocations or adjustments in representation due to an increased workforce. Collective bargaining agreements may make provisions for the need to accommodate workers’ representation to any significant decreases in workforce that may take place in the company. By default, the said accommodation may be carried out by virtue of an agreement between the company and the workers’ representatives.

The duration of the mandate for workers’ delegates and works council members shall be four years, with the understanding that they shall remain in office exercising their competences and guarantees until such time as new elections may be advocated and held.

Under Article 64 of the Workers’ Statute the works council shall have the following competences:a To receive information, which shall be provided to it at least every quarter, on

the general evolution of the economic sector to which the company belongs, the situation of production and sales in the entity, its production programme, the probable evolution of employment in the company, and the employer’s provisions regarding the signing of new contracts, indicating the number of these and the modalities and types of contract to be used, including part-time contracts, on the performance of additional hours by the part-time workers contracted, and the premises of subcontracting.

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It shall also have the right to receive information at least once a year regarding the application of the right to equal treatment and opportunities between men and women in the company, which shall include data on the proportion of men and women on the different occupational levels, along with information, as the case warrants, on measures that may have been adopted to promote equality between men and women in the company, and, if an equality plan has been projected, on the application thereof.

b To receive the basic copy of the written contracts and the notification of extensions and dissolutions thereof within a term of 10 days following the date on which these take place.

c To know the balance, profit and loss accounts, management report and – should the company take the form of a stock or share company – the other documents made available to the stockholders, under the same conditions as these.

d To issue a report prior to enforcement by the employer of the decisions that it adopts on the following matters:• workforce restructuring and total or partial, permanent or temporary cessations

in this;• reductions in the working day as well as total or partial transfer of installations;• professional training plans of the company;• the implementation or revision of organisational and work control systems;

and• time studies, the establishment of bonus or incentive systems and work post

evaluations.e To issue reports when the merger, absorption or modification of the company’s

legal status implies some effect on the volume of employment.f To know the written forms of work contract used in the company as well as the

documents regarding the termination of labour relations.g To be informed of all sanctions imposed on very serious offences.h To know, at least on a quarterly basis, the statistics regarding absenteeism and

its motives, work accidents and professional illnesses and their consequences, accident indices, periodic or special studies on the work environment, and prevention mechanisms employed.

i To exercise the tasks of:• vigilance in the fulfilment of the labour, social security and employment

regulations in force, as well as all other standing pacts, conditions and practices of the company, formulating, as the case warrants, the appropriate legal action with respect to the employer and the competent agencies or courts;

• vigilance and control over the safety and hygiene conditions in the company’s work procedures; and

• vigilance for the respect and application of the principle of equal treatment and opportunities between men and women.

j To participate in the management of the social work established in the company for the benefit of the workers or their family members, as set forth in the collective bargaining agreement.

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k To collaborate with company management towards the establishment of whatever measures may procure the maintenance and increase of productivity, as agreed on in collective bargaining agreements.

l To collaborate with company management in establishing and initiating conciliation.

m To give general information to the employees.

Except for what is provided for in the collective bargaining agreements, works council members and employees’ delegates, as the legal representatives of the workers, shall have the following guarantees:a Opening of an inter partes case in the event of sanctions for serious or very serious

offences, where, apart from the interested parties, the works committee or other workers’ delegates shall be heard.

b Priority of permanence in the company or work centre with respect to the other workers in cases of suspension or extinction for technological or economic reasons.

c Not being dismissed or sanctioned during the exercise of his or her functions or during the year following the expiry of his or her mandate, unless this is caused by revocation or resignation, provided that the dismissal or sanction is based on the acts of the worker in the exercise of his or her mandate of representation. Likewise, he or she may not be discriminated against in his or her economic or professional promotion precisely by reason of the exercise of such representation.

d Freely expressing – jointly, if the committee is concerned – his or her opinions on matters concerning the sphere of his or her representation, being able to publish and distribute publications of labour or social interest without disrupting the normal progress of work, communicating this to the company.

e Each committee member or workers’ delegate shall receive a credit of paid monthly hours for the exercise of their representative functions, in accordance with the following scale: workers’ delegates or works committee members:• up to 100 workers, 15 hours;• from 101 to 250 workers, 20 hours;• from 251 to 500 workers, 30 hours;• from 501 to 750, 35 hours; and• 751 workers and over, 40 hours.

The accumulation of hours on the part of the different work council members and, as applicable, of the employees’ delegates, in one or several members, may be negotiated in collective bargaining, by which these may be relieved from work, without prejudice to their compensation.

The committees shall meet every two months, or whenever one-third of its members or one-third of the workers it represents petitions it.

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XI DATA PROTECTION

i Requirements for registration

A company is responsible for all files containing personal data of its employees and must comply with all the obligations that the data protection legislation foresees. Inter alia, there is an obligation to notify the files to the Spanish Data Protection Agency (AEPD) to have them registered.

The employer must identify which information is being processed in order to apply the corresponding level of safety according to law.

The employee’s consent will not be necessary as long as the data filed is necessary for the fulfilment of an employment contract. However, the employee may oppose the treatment of certain personal data in the event of a reason based on a particular personal issue.

The employee has the right to know about all his or her personal data that the company collects. Therefore, the Personal Data Protection Law foresees that the employee can require the company to provide all the personal data filed regarding him or herself. This access right cannot be limited in any way by the company.

The company must adopt all the adequate and necessary measures in order to guarantee the safety of the personal data.

According to the Spanish legislation there are three different safety levels depending on the data filed, with different safety procedures: basic level, medium level and high level, the three levels linked to the level of protection needed for the personal data filed.

ii Cross-border data transfers

According to the Spanish legislation, the general rule is that cross-border transfers of data must require the authorisation of the Director of the AEPD. There are, however, some exceptions to this rule, which are: (1) the data is transferred to a country with an adequate level of protection; and (2) legally excluded situations.

The countries considered by the Spanish legislation that offer an adequate level of protection are: EU Member States, Switzerland, Canada, Argentina, the Isle of Man, US entities ascribed to the safe harbour regulations, Guernsey, Andorra, Israel, Uruguay, Iceland, Liechtenstein and Norway.

All employees whose personal data will be transferred must be informed of it prior to such transfer. The law also establishes that the way to perform this obligation must be in a way that allows checking of its fulfilment (e.g., in writing or via e-mail). In some cases employees’ consent must be obtained.

According to the Spanish legislation, safe harbour principles are sufficient and will be considered by the AEPD as adequate.

Onward international data transfers are foreseen and allowed in Spain, under certain circumstances. Should the original transfer be carried out to a country offering an adequate level of safety according to the Spanish legislation, onward transfers must be foreseen, this possibility being included in the contract signed between companies. Another possibility for carrying out onward transfers is that the Spanish company

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requests a special authorisation from the Director of the AEPD to carry out an onward transfer.

iii Sensitive data

Spanish legislation differs between personal data and specially protected data. Specially protected data needs to be treated in a different way, involving higher protection standards, not only during its collection, but also during its treatment.

Article 7.1 of Organic Law 15/1999 of Personal Data Protection distinguishes three different categories of special protected personal data:a data regarding politics, religion, beliefs and union affiliation;b data regarding race, origin, health and sexual orientation; andc data regarding criminal records and administrative sanctions.

Data regarding politics, religion, beliefs and union affiliationArticle 16.2 of the Spanish Constitution states that no one can be forced to reveal this data. Therefore, regarding an employment relationship, these kinds of data can only be collected if there is a company interest that justifies it.

If the collecting of these data is allowed, the processing can only be done with express and written agreement of the employees.

Data regarding race origin, health and sexual orientationAccording to the Spanish legislation, the general rule for collecting and processing these personal data is that it must be done with the agreement of the employee.

However, there are two main situations where the employees’ agreement is not mandatory: (1) when a law provides in that way; and (2) when it is considered as essential information for any occupational risk prevention plan.

Data regarding criminal records and administrative sanctionsThese kinds of personal data can only be included in files that are property of the public administration; therefore an employer must refrain from collecting or processing them.

iv Background checks

It is perfectly legal to check the references included in an employee’s CV with its former employers.

Regarding credit checks, it is possible to check at the public registers if there is any note regarding a candidate. However it is not possible to ask for a credit check on a candidate, unless it is allowed by a law or collective bargaining agreement.

An employer asking for a criminal record check in a general way is against the law; an employer cannot ask for a criminal record from all of its employees and without any specific reason to do so. It may be different, and it would be needed to be studied on a case-by-case basis, if the criminal record requirement is limited to certain job posts with a specific condition.

Women cannot be asked if they wish to have children in the near future or if they are pregnant or any other personal aspect has no relevance to the job post. Women also

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have the right not to inform the employer about their pregnancy. In addition, employees are not obligated to answer whether they would be willing to strike or not.

XII DISCONTINUING EMPLOYMENT

i Dismissal

An employee may not be dismissed without cause since the employer must support the disciplinary dismissal on a specific cause reflecting in the written dismissal letter the facts that justify it and the date on which it will take effect.

Even though notifying a works council or trade union is not a requirement for the validity and fairness of the dismissal, its non-fulfilment will be considered as an administrative infraction to be punishable accordingly. Further, collective bargaining agreements could state specific requirements for it.

Certain categories of employee, other than employee representatives, are protected from dismissal. Dismissals shall be null and void in the following cases:a workers during a period of work contract suspension owing to maternity, risk

derived from pregnancy, problems derived from natural breast-feeding, illnesses caused by pregnancy, childbirth or natural breast-feeding, adoption or fostering or paternity, or of workers notified on such a date that the timeline for prior notice ends within the said period;

b pregnant workers, starting from the date of the start of the pregnancy up to the beginning of the period of suspension mentioned before;

c workers who have requested leave to breast-feed children, leave to take care of children who have to remain hospitalised after childbirth or leave to take care of a child less than eight years of age or a person with a physical, mental or sensory handicap who does not perform any paid activity; or are currently on any of the above kinds of leave, or have requested or are currently using the leave for childcare;

d workers who are victims of domestic violence exercising the rights to reduction or reorganisation of their working time, geographical mobility, or change of work centre or suspension of labour relations, in the terms and conditions acknowledged by law; and

e workers after reinstatement at work at the end of the period of contract suspension for maternity, adoption, fostering or paternity, provided that not more than nine months have elapsed from the date of birth, adoption or fostering of the child.

What is set forth above shall be applicable unless the dismissal is declared fair in such cases for reasons not related to the pregnancy or the exercise of the right to the leave and permissions outlined.

Severance and other dismissal indemnities are not required. However, if the dismissal is declared unfair, the employer must choose between the employee’s reinstatement, with the right to procedural salary, or the payment of an indemnity equivalent to 33 days’ salary per year worked and a maximum of 24 monthly payments. This compensation will affect all new indefinite employment contracts signed since 12 February 2012.

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However, unfair dismissal indemnity corresponding to contracts signed prior to 12 February 2012 will be calculated based on 45 days’ salary per year worked for the time of services rendered afterwards. The amount of indemnity will not be more than 720 days’ salary unless the calculation for the period worked prior to 12 February 2012 resulted in a larger amount, in which case that amount will be used as the upper limit, and said amount will not be higher than 42 months, in any case.

On the other hand, null and void dismissals shall produce the immediate reinstatement of the worker, along with the payment of those wages that he or she stopped receiving.

Parties can enter into a settlement agreement; however, such agreement must be settled before extrajudicial conciliation authorities or judicial authorities.

ii Redundancies

To make an employee redundant the comany must be able to support the dismissal on economic, technical, organisational or productive reasons. In the case of multiple redundancies, such as mass lay-offs, collective dismissals or reduction in the workforce, a different procedure must be followed by the employer.

The company is only required to notify the government of redundancies where, in a period of 90 days, the lay-off affects at least:a 10 workers in companies that employ fewer than 100 workers;b 10 per cent of the number of workers in the company in those employing between

100 and 300 workers; andc 30 workers in companies that employ more than 300 workers.

Among other formalities, a copy of the notice of the opening of the consultation period shall be sent by the employer to the Labour Inspectorate. Further, at the end of the consultation period, the employer shall inform the Inspectorate of the results thereof.

For individual redundancies, the employer must deliver to the workers’ legal representatives a copy of the dismissal letter. For collective redundancies, at the end of the consultation period with no agreement with the workers’ legal representatives, the employer must notify them of his or her decision regarding the collective dismissal and its conditions.

A social plan is only required for collective redundancies affecting more than 50 employees. The employee does not legally have rehire rights; however, a social plan could recognise such rights to the affected employees. Offers of suitable alternative employment are similarly not legally required; however, a social plan could recognise such rights to the affected employees.

The company must provide 15 days’ prior notice to the employee. Pay in lieu of notice is permissible.

In terms of categories of employee that are protected from dismissal, see Section XII.i, supra. Note, however, that workers’ legal representatives shall have the priority of permanence in the company for these cases and collective bargaining agreements or agreements reached during the consultation period could state priority of permanence for other groups of employees such as employees with disabilities and workers above a certain age.

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Simultaneously with the delivery of the dismissal letter, the employer must deliver to the employee a severance payment equivalent to 20 days’ salary per year of work, with the period of time of less than one year prorated by months to a maximum of 12 months.

Parties can enter into a settlement agreement. For individual redundancies, such agreement must be settled before extrajudicial conciliation authorities or judicial authorities. For collective redundancies, employers can enter into an agreement with the workers’ legal representatives during the consultation period, in spite of the fact that in case of a dismissal claim parties can settle an agreement before the authorities mentioned.

XIII TRANSFER OF BUSINESS

The Transfer of Undertaking Directive 2001/23/EC, which protects the employment contracts of people working in businesses that are affected by mergers, acquisitions or outsourcing transactions, was transposed into Spanish law approving the amended text of Article 44 of the Workers’ Statute in the version following Law 12/2001 of 9 July 2001.

Article 44 of the Workers’ Statute imposes that in the event of a transfer of business (either a share sale or asset transfer) the new employer must respect every single right and obligation regarding employees’ working conditions. Therefore, employees are automatically transferred with the same working conditions as they previously enjoyed to the new employer. In addition, the same collective bargaining agreement is applicable for the transferred company in the moment of purchase. However, this obligation can be avoided if an agreement is reached between the buyer and the representatives of the employees transferred. This agreement, in order to be valid, must be reached once the purchase of the company is complete. The obligation of the maintenance of the collective bargaining agreement by the new employer will last until the expiration date of the collective bargaining agreement, or its substitution for a new one applicable to the business transferred.

Article 44 of the Workers’ Statute establishes that, both the transferor and transferee companies must inform the representatives of the employees affected by the transfer, at least with regard to the following matters:a date of transfer;b reasons for the transfer;c economic, legal and social consequences for the affected employees; andd any measures designed for the affected employees.

This obligation must be carried out before the transfer date. The law does not provide a precise notice period for this obligation; it only states that it must be done an appropriate time in advance. The only precise requirements in the law relate to merger and spin-off procedures.

In case of a merger or a spin-off, both the transferor and the transferee must provide the aforementioned information before or at least at the time when the general assembly of shareholders convenes.

A consultation period will arise between the transferor, the transferee and the workers’ representatives in the event that due to the undertaking any labour measures are

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planned. The law only establishes that this consultation period must be done sufficiently in advance and that both parties must negotiate according to the principle of good faith in order to reach an agreement.

The main aim of the undertaking process is to protect the affected employees from dismissal. Therefore, the undertaking will never be a dismissal cause by itself. This protection applies to the dismissals made by the one cause of undertaking, but it will be perfectly legal to dismiss employees by any cause stated in the Workers’ Statute.

XIV OUTLOOK

For 2013, employers should consider the upcoming rulings of the courts interpreting the new regulations introduced by the recent labour reform approved by the government through Royal Decree-Law 3/2012, which came into force on 12 February 2012 and was subsequently confirmed by the Spanish parliament with some amendments through Law 3/2012 of 6 July 2012.

Since the Spanish labour reform introduced several modifications to the labour legislation, upcoming trends or hot topics will likely be related to the application and judicial interpretation of such new regulations.

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about the authors

IñIgo SAgArdoy de SImónSagardoy AbogadosIñigo Sagardoy de Simón was born in Madrid, Spain, on 19 October 1968.He has been a member of the College of Lawyers of Madrid since 1992. His academic background includes studying at the faculty of law of ICADE and he has a doctorate in employment law and social security (ESINE). He has also completed a programme of instruction for lawyers at Harvard Law School (1998) and a course on leading professional service firms at Harvard Business School (2002).

He is a senior lecturer of employment law at the University Francisco de Vitoria and is a professor of employment law on the master’s degree programme in labour advocacy (CEU – Madrid), and is also a member of the National Jurisprudence Academy.

Iñigo is the author of publications on employment and social security issues.

SAgArdoy AbogAdoSC/ Tutor 2728008 MadridSpainTel: +34 914 540 053Fax: +34 915 420 502is@sagardoy.comwww.sagardoy.com