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Freshfields Risk & Compliance

| 2 minutes read

More legislative changes impacting employers in Spain: Are you considering a termination of activities? Then you need to read this!

If we thought that in Spain there would be no further surprises for employment lawyers this legislative term, we were wrong! Last week, the government introduced a small, but significant amendment to the law governing collective redundancy procedures.

Currently, the information to be given to the authorities in case of a redundancy exercise is provided at the same time that the internal consultation process with employee representatives within the company opens. From now on, companies that intend to close down one or more workplaces must give at least 6 months' notice to (i) the competent labour authority and (ii) the most representative trade union organisations and those representing the sector to which the company belongs. I.e., the authorities and trade unions must be informed well before the negotiation and, in theory, well before informing the internal employees representatives. If complying with a 6 months' notice is not possible, notice should be given as soon as possible and a justification for failing to do so (provide notice on time) should be provided. This obligation shall apply when the closure means the final termination of the activity and the redundancy impacts 50 or more employees.

There is no doubt that this amendment is significant and, although the only obligation is to inform, it means that the relevant authorities and unions will be given time enough to react and start actions to try to prevent the closure. At the same time, employers should be left wondering about the impact that this news may have on the employees, and therefore on the on-going operations.

In addition, there are several queries arising, which are not answered by this new piece of legislation.

Grounds justifying a delay to provide the 6 months' notice: The consequences of failing to meet the relevant deadline, or what would be sufficient grounds to justify doing so are not known yet/still unclear.

  • Employees’ representatives: The new law imposes on employers the obligation refers to informing the trade unions, rather than the actual employee representatives of the workplace, if there are any. Moreover, it does not say what happens once the notice is given. Do the employers need to expect an answer from the unions?
  • What does ‘Notice’ mean: It is not clear whether this is a simple notice, or whether it must also include any specific information or documentation.
  • ‘Termination of activity’: It is unclear what does ‘termination of activity’ mean. Whether it refers to the workplace affected, to the company remains to be seen.

Time (and courts) will help us to get the answers to the questions above. In the meantime, companies considering restructuring processes in the future should be aware and take this legislative change into account, as the process has just become longer and more uncertain.