MANAGEMENT

OF INTERNATIONAL FINANCIAL SERVICES

3. THE EMPLOYMENT CONTRACT

In this third section we will focus on the employment contract, and in doing so will
examine different types of contracts and suspensions, as well as collective agreements
and temporary employment companies (known in Spanish as ETT)

3.1 THE LABOUR CONTRACT

3.1.1 The employment contract

An employment contract is an agreement between the employer and the employee by

which the latter is contracted to perform certain services at the behest of the employer
in exchange for economic compensation. In layman's terms, it is an employment
relationship.

This employment relationship is indirectly defined in Article 1 of the Workers' Statute

as:

“Workers who voluntarily provide their services in the form of employment within the
sphere of an organisation and managed by another body, either physical or legal, called
an employer or entrepreneur.”

Thus, they have the capacity to contract capable businessmen who are of age, and legal
persons, in the form of mercantile companies, associations, corporations, etc. In regards
to the employees, otherwise known as workers, they are physical beings over 16 years
of age and fit to work, as deemed by their parents or guardians, until they turn 18 years
of age. Those workers between 16 and 18 years old are subject to some limitations and
cannot perform nocturnal, harmful, arduous or dangerous work, nor work overtime
hours.

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After having defined the employment contract, we can discuss its characteristics:

- The employment contract is bilateral; with the employer on one side and the
employee on the other.
- It is consensual, as there is an agreement between both parties. It is also a
voluntary relationship, as it was an agreement chosen by both parties.
- Employment signifies that both employer and employee assume a number of
obligations.
- It is a gainful relationship, that is to say, work tasks and work duties are
performed in exchange for payment.
- The employer has the power of organisation and management as he/she is who
directs the employees that they are in charge of.
- It is a personal relationship because the hiring process was completed as such,
and implies that another cannot just assume the role of employee.

The following is a description of all individuals who can establish an employment

contract:

- People over 18 years of age.

- People under 18 who are emancipated for reasons of marriage, legal ruling, etc.
- People over 16 years of age with prior authorisation from parents or legal
guardians.
- Foreign persons over 16 years of age who have prior administrative authorisation
to work under current legislation.

It is important to note that children under 16 cannot work, aside from those who are
considered artists.

As we have seen, all labour relations involve two parties, the worker and the employer.
Thus, it is important to know the legal rights and obligations of both parties.

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The rights of the employer are:

- Management power, which can be exercised directly or via delegation.

- Disciplinary authority, which implies the possibility of imposing sanctions
following breaches of orders or of the contract.

The following are the duties or obligations of the employer, as derived from worker's
rights:

- Free choice of profession or trade.

- Free unionisation.
- Collective negotiation.
- Ability to adopt measures in the case of conflict or strike.
- Right of assembly.
- Information, consultation, and participation in the company.
- Effective occupancy in the labour relationship.
- Promotion and professional training in the workplace.
- Non-discrimination for employment, or once employed, for reasons of: sex,
marital status, age (when within the limits established by law), race, social status,
religious or political beliefs, sexual orientation, union membership, language,
and physical, mental or sensory handicaps (except those resulting in ineptitude
for the employment in question).
- Physical integrity and an adequate safety and hygiene policy in the workplace.
- Respect for their privacy and due consideration for their dignity.
- Timely conception of payments.
- Individual exercise of actions arising from the employment contract.
- All other rights resulting from the contract.

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The following are considered the worker's duties:

- To meet the obligations of his/her job, in a faithful and diligent manner.

- To observe and comply with health and safety measures adopted by the
employer.
- To follow orders and instructions issued by the employer.
- To not oppose the activities of the company.
- To help improve productivity.
- All other things as laid out in the work contract.

The following are situations in which the employee can request exemptions to the
abovementioned stipulations:

- Lack of capacity on the part of the individual giving orders.

- An order that is contrary to criminal law or to the constitution.
- A violation of professional rules, or one causing professional disrepute.
- One that poses a risk to the health and/or the integrity of the worker.

3.1.2 Types of contracts

As mentioned, the employment contract is an agreement either of written or spoken

nature, as manifested by the two involved parties.

In order to understand some general differences in different contracts, we will

differentiate between indefinite and temporary contracts.

In reference to permanent contracts, we include the following:

- Ordinary indefinite contract.

- Disabled worker contracts.

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Temporary contracts can be:

- Causative:
o For work or services
o Temporary due to production circumstances
o Of an interim nature
o Of a relief nature
- Training:
o In practice
o For educational training

Before turning to the main characteristics of the most common types of contracts, let
us further examine their form and content.

Generally labour contracts are made in writing, but certain exceptions are made orally.
However, for legal certainty it is highly recommended that the contract is drafted and
written as it clarifies the terms and helps clear up any doubts further down the line.

Any employment contract with a duration longer than 4 weeks must be made in writing
and must include the following conditions:

- Identity of the parties

- Start date and duration of employment
- Registered address of the employee and the workplace
- Professional category
- Initial base salary and salary supplements
- Working day: duration and distribution
- Holiday
- Prior notice
- Trial period
- Collective agreement, if applicable
- Date
- Signature of both parties

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Now, let us examine the different types of contracts and their main features.

They can be divided into four main types:

- Indefinite contracts
- Temporary contracts
- Learning and apprenticeship contracts
- Training contracts

Prior to further examination it should be noted that we will only examine the main
features of these four general types, and more specific information can be found in the
annexes.

INDEFINITE CONTRACTS

These contracts are those that are drafted without establishing any time limits in regards
to the duration. The work day may be full-time, part-time or designated to the
completion of fixed services or tasks.

The rules governing these types of contracts are:

- Royal Legislative Decree 2/2015, approving the revised text of the Law of the
Workers' Statute.
- Royal Decree 1424/2002, on the communication of the content of employment
contracts, the inclusion of Public Employment Services and the use of electronic
means.

Indefinite, or open-ended contracts include the following types:

- Ordinary indefinite contract

- Indefinite contract of persons with disabilities
- Indefinite contract of persons with disabilities in special employment centres
- Indefinite contract of persons with disabilities in labour enclaves
- Indefinite contract that supports entrepreneurs

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- Indefinite contract of a young person supporting micro or self-employed

entrepreneurs
- Indefinite contract for new youth entrepreneurship projects
- Indefinite contract with training or educatory relations
- Indefinite contract for workers in situations of social exclusion
- Indefinite contract for workers who are accredited victims of gender violence,
domestic violence, terrorism, or human trafficking
- Indefinite contract for workers of social exclusion for integration companies
- Indefinite contract for family members of a self-employed worker
- Indefinite contract for workers over 52 years old that are beneficiaries of
unemployment subsidies
- Indefinite contract for workers from a temporary employment agency with a
contract for first-time employment, training contracts, or apprenticeship
contracts
- Indefinite contract for household services
- Indefinite contracts for prisoners in correctional institutions
- Indefinite contract for group work
- Indefinite contract for senior management

TEMPORARY CONTRACTS

As its name suggest, a temporary contract is one that establishes an employment

relationship for a fixed period and may be either full or part-time.

The rules governing this type of contract can be further reviewed in the annex and are
as follows:

- The 3rd part of Article 15 of the Law of the Workers' Statute, as approved by
Royal Legislative Decree 2/2015.
- Article 1 of the Law 14/1994, by which Temporary Employment Companies are
regulated.
- RD 170/2004, that modifies RD 1451/83 (BOE of January 31st 2004).

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- Law 43/2006 article 2.2 and the First Additional Provision.

- Law 3/2012 on urgent measures to reform the labour market.

The following are some different types of temporary contracts:

- Temporary contract for a determined work or service

- Eventual temporary contract for production circumstances
- Temporary interim contract
- Temporary interim contract to replace a worker who is on leave to care for family
members, with reduced payments to SS
- Temporary interim contract workers to replace workers in training for workers
benefitting from unemployment
- Temporary interim contract to replace workers during a period of maternity
leave, adoption, foster care, risk during pregnancy, risk during breastfeeding or
suspension for paternity
- Temporary interim contracts to replace temporarily disabled workers
- Temporary interim contract to replace workers affected by gender violence
- Temporary contract of first-time employed youth
- Temporary contract for workers in situations of social exclusion
- Temporary contract for workers who are accredited victims of gender violence,
domestic violence, terrorism, or human trafficking
- Temporary contract for workers of social exclusion for integration companies
- Temporary contract for workers over 52 years old that are beneficiaries of
unemployment subsidies
- Temporary contract that substitutes for part-time retirement
- Temporary relief contract
- Temporary contract with training or educational association
- Temporary contract for social workers or promotion of agricultural employment
- Temporary contract for household services
- Temporary contract of persons with disabilities
- Temporary contract of persons with disabilities in special employment centres
- Temporary contract for the performance of scientific or technical research
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- Temporary contract within Spanish science, technology and innovation fields

- Temporary contract for trainee research staff
- Temporary contracts for prisoners in correctional institutions
- Temporary contracts for minors and youth in juvenile detention facilities
- Temporary contract for group work
- Temporary contract for senior management

TRAINING AND APPRENTICESHIP CONTRACTS

These contracts are seen as instruments to promote employment by way of paying

young people through training as well as economic means.

These contracts are governed by the following laws:

- Article 11.2 of the Royal Legislative Decree 2/2015, by which the revised text of
the Law of the Workers' Statute was approved.
- Royal Decree 1529/2012, approving the contract for training and apprenticeship
as the basis for dual vocational training.
- Fifth final provision of Law 11/2013, of measures to support entrepreneurs and
to stimulate growth and job creation.
- Final provision of the second and sixth Royal Decree 16/2013, on measures to
promote stable employment and improve the employability of workers.
- Order ESS/2518/2013, for the regulation of educational training and
apprenticeship contracts, in development of Royal Decree 1529/2012, approving
the contract for training and apprenticeship as the basis for dual vocational
training.
- Royal Decree/Law 6/2016, on urgent measures for boosting the National System
of Youth Guarantee.

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These types of contract include:

- Temporary contract for training and apprenticeships held by ETT.

- Temporary contract for training and apprenticeships in employment and training
programmes.
- Temporary contract for training and apprenticeships held for persons with
disabilities.

TRAINING AGREEMENTS

This type of contract aims to provide an opportunity for workers to receive adequate
employment opportunities based on their levels of education and training.

This contract is usually applicable to persons in possession of a university degree or

those who have a high level of vocational training, or those that are recognised as
equivalent. These must be in accordance with the regulatory laws of the educational
certification system, specifically in accordance with Act of Parliament 5/2009 on
qualifications for professional and vocational training.

Some regulatory highlights are:

- Article 11.1 of Royal Legislative Decree 2/2015, which approved the revised text
of the Law of the Workers' Statute.
- Royal Decree 488/1998, amending Article 11 of the Workers' Statute in the field
of preparatory contracts.
- Royal Decree 63/2006, approving the Statute of training for research staff.
- Law 35/2010, on urgent measures to reform the labour market.
- Law 3/2012 on urgent measures to reform the labour market.
- Law 11/2013, which took measures to support entrepreneurs and stimulate
growth and job creation.
- Royal Decree 16/2013, on measures to promote stable employment and to
improve the employability of workers.

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In relation to training contracts, it is good to consider the following:

- Temporary training contracts held by the ETT.

- Temporary training contracts for people with disabilities.

If you would like to learn more about contracts and their implications, refer to the annex.
In addition, we have provided information regarding international recruitment in foreign
countries such as Portugal, Brazil, the United States and Canada.

3.1.3 Modification, suspension, interruption and termination of the employment

contract

After having examined different types of labour contracts, it is now time to understand
the situations that may lead to modification, suspension, interruption and/or
termination of the employment contract.

§ Modification of the labour contract

The labour contract can be modified due to the following reasons:

- Geographic mobility

This refers to changes in the workplace environment that may result in displacement,
and thus a change of residence for the worker.

In principle, unless otherwise agreed upon, when a worker begins his activity it is
presumed that it will continue unabated in that particular workplace. However,
depending on the circumstances the company may decide to change the workplace of
the employee, which could result in a need to change his/her place of residence.

This modification of the workplace is known as ius variandi, or the right of the employer
to change or modify a workplace.

We can distinguish different types of changes as either temporary or permanent.

Transfer implies a permanent change and displacement implies a temporary one.
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Transfer

A transfer means a permanent change in the location of the workplace.

In order to move a worker from one place to another, some form of justification is
required. This can be economic, technical, production based or organisational in nature.

The following are exemptions:

- Work contracts in which the employee has been hired to provide services in
mobile centres, or those in which the nature of the work implies geographic
mobility.
- Transfer as a disciplinary sanction or a voluntary agreement between employee
and employer.

Within the realm of transfers, care must be taken to differentiate between individual
and collective:

- Individual Transfers: Those transfers that within a period of 90 days affect:

o Fewer than 10 workers in companies with a workforce of less than 100
employees.
o Less than 10% of the workers in companies with a workforce of between
100 and 300 workers.
o Fewer than 30 workers in companies whose workforce exceeds 300
workers.
- Collective Transfer: is a transfer that affects the entire workplace in a company
that has a workforce of over 5 employees, or at least more than 10% of them.

By law, the company must submit to the worker and their legal representatives notice
of any pending transfers within a period of no less than 30 days before the scheduled
date of transfer. Faced with this notice, the employee has several options:

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- Accept the transfer as well as all of the compensation that they are entitled to
for themselves and for their dependents.
- Terminate the contract and receive compensation equivalent to 20 days of salary
per year worked.
- Challenge the legal admissibility of the transfer in court for violating worker's
rights as established in Article 24 EC. This option is only possible if within the
contract the possibility of transfer was not agreed upon.

Displacement

Displacements are temporary workplace changes that result in the worker having to
move his/her place of residence.

In order to be considered temporary, displacement is limited to 12 months over a three

year period. If it exceeds this allotted time, it is considered a transfer.

As in the case of a transfer the company must be able to justify the causes for
displacement.

A displaced worker is entitled to the following:

- In addition to the salary, they are entitled to reimbursement for travel costs and
expenses.
- They are entitled to 4 working days in their original place of residence for every
3 months of displacement (this excludes travel days).

Depending on the duration of the displacement, the employer should notify the worker
of the final decision as follows:

- For displacement equal to or less than 3 months, 2 to 3 business days’ notice is

required.
- For displacements of over three months, the minimum notice required is 5
working days.

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- Functional mobility

Functional mobility refers to the organisational and managerial delegation of different

work to employees, perhaps delegating tasks to workers that they were not initially
hired to do. However, it is important to note that these decisions will be made according
to the academic and vocational qualifications needed to perform said tasks.

When the contract is drafted, as has been discussed, every worker is contained within a
pre-established professional category. This category implies dedication to a specific
function or set of functions for the worker's role. Thus, the need for functional mobility
is predicated on technical and organisational changes that justify this mobility.

If faced with this type of mobility, it is important to note that the worker must be granted
the following rights:

- Respect and dignity for training and career advancement.

- They should receive a salary that reflects their new activities/responsibilities
unless the new functions are of a lower paygrade than those they were
contracted for i.e., if they are taking on more responsibility, they should be paid
more.
- They must have guarantees against dismissal for objective reasons. As such,
when functional mobility occurs the company will not be able to dismiss the
worker under the guise of ineptitude or inability to adapt.
- In those cases in which the performance of higher functions is more than six
months per year, or more than eight months per two years, the worker must be
allowed to request a promotion.

- Substantial changes in working conditions

As the title suggests, this contractual modification concerns a change in working

conditions that were previously agreed upon by the employer and employee. As before,
the company will be required to present economic, technical, organisational and/or
production based justification for this modification of the workplace.

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These modifications may affect the following:

- Workdays
- Schedule and allocation of working time
- Planning of work shifts
- Pay systems and salary amount
- Systems of work and performance

In regard to these amendments, it is worth mentioning that they are regulated by Article
41 of the Worker's Statute.

It is understood that there are various causes that give rise to substantial modifications
of a contract, be they modifications to help prevent negative development or perception
of the company, or positive ones to improve the company's organisation and/or
competitiveness.

Substantial changes to working conditions can be individual or collective. Whereas the

first is specific to the individual, the latter can be established by a collective agreement
or through a company decision that yields collective effects.

Modifications considered individual in character will affect less than the following
proportion of workers in a ninety day period:

- Ten workers in a company that has a staff of under one hundred employees.
- 10% of the workers in companies with a workforce of between 100 and 300
employees.
- Thirty workers in companies that employ over 300 workers.
- When the company makes substantial changes to working conditions in
successive periods of ninety days fewer than the thresholds established for
collective modifications without new causes that justify such action in order to
avoid the manoeuvre from being defined as "modifications of a collective
nature," the modifications are considered made in circumvention of the law and
shall be declared fraudulent, null and void.

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Modifications considered collective in character will affect at least the following

proportion of workers in a ninety day period:

- Ten workers in a company that has a staff of under one hundred employees.
- 10% of the workers in companies with a workforce of between 100 and 300
employees.
- Thirty workers in companies that employ over 300 workers.

Workers affected by substantial modifications of the workplace or work contract are

able to terminate their contract and receive the equivalent of 20 days of wages per year
worked. If less than a fiscal year, it will be calculated and paid as if it were monthly, with
a maximum of 9 instalments.

Let us now discuss substantial modifications in working conditions as understood in the

conditions of collective agreements. Law 35/2010, establishes the parameters to modify
the terms of collective agreements as regulated by the Workers' Statute.

When the amendment concerns changes in working conditions it is important that an

agreement is made between both parties before any changes are made. Both sector and
company agreements that are mentioned in the Workers' Statute can be changed in the
case of an agreement being made. If they are sector-focused collective agreements, the
agreement will be undertaken in the joint committee of that sector.

If an agreement is not reached, mediation procedures will be sought through a further

collective agreement or professional agreement. In the case of a stalled mediation, the
agreement committee can submit a binding arbitration that supersedes the agreement
process. This binding arbitration will have the same efficacy as the agreements of the
consultation period.

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Modifications may only affect:

- Schedule and allocation of working time.

- Pay system.
- Planning of work shifts.
- Systems of work and performance.

§ Suspension of the employment contract

Suspension of the employment contract is a period in which work and payment stops,
or pauses, without implying termination of the contract. This form of suspension is
regulated by Article 47 of the revised text of the Law of the Workers' Statute, as
approved by Royal Legislative Decree 2/2015.

The employment contract may be suspended for the following reasons:

- Mutual agreement of the involved parties

- The causes recorded and validated in the contract
- For maternity or paternity reasons, risk during pregnancy, adoption and/or
foster care, of children under six years of age
- Military service or social service benefits
- Public office service or representation
- Pending the results of a judicial decision
- Suspension without pay because of disciplinary reasons
- Temporary powers beyond control, otherwise known as force majeure
- Economic, technical, organisational or production oriented reasons
- Active status
- Exercising the right to strike
- Legal closure of the company
- Decision by workers forced to leave their jobs as a result of being victims of
gender violence

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As already mentioned, the suspension of the employment contract exonerates the

reciprocal employee/employer relationship. It is also important to note that in the case
of temporary contracts, suspension does not necessarily result in its expansion.

The suspension of an employment contract may be undertaken in a variety of manners:

- Leave of absence: leaves of absence are regulated by Article 46 of the Workers'

Statute, which states that the leave may be voluntary or forced. Compulsory
leaves of absence are those that occur as a product of appointment or election
to public office, which prevents the person in question from being in their
workplace. In this case the worker is entitled to retain his job and his/her
seniority status continues computing. Voluntary leaves of absence, in contrast,
are a result of a voluntary decision made by the employee to temporary suspend
his/her work activities. The aforementioned law retains priority for the employee
in the case that he decides to return, but his readmission is not guaranteed. In
addition, if the employee is readmitted to the company, it may be in another
workplace with a new schedule, and new contractual conditions.
- Suspension of work for economic, technical, organisational, production
oriented or reasons of force majeure: Faced with causes such as this, and the
means to justify them, the employer may suspend the employment contract of
the employee. Let us further examine some of these motives for contractual
suspension:
o Economic causes: refer to cases stemming out of negative economic
consequences. This may be due to current and/or anticipated losses, or
a persistent decline in income.
o Technical causes: occur alongside changes in production technology.
o Organisational causes: refer to organisational changes in the company's
systems, staffing, or production means.
o Production causes: refer to fluctuations of availability and demand for
products or services that the company offers.

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This type of suspension is regulated in Article 47 of the Workers' Statute.

- Suspension with guaranteed job safety: refers to an employment suspension

wherein the job is reserved for the employee upon their return. With that being
said, after the suspension period the worker will be able to return to his/her prior
employment with the same conditions as were in his/her contract before. The
conditions of this type of suspension are established in Article 48 of the Workers'
Statute.
- Suspension of the employment contract due to paternity or maternity refers to
the worker's right to suspend his/her contract due to childbirth, adoption or
foster care, as regulated in Article 48 of the Workers' Statute.
§ Interruption of the labour contract

Interruptions are a type of suspension, but usually for a shorter duration. Furthermore,
they do not produce a termination of the contract and do not affect the payment of
wages. Therefore, if an interruption is properly notified to superiors, the employee
continues to be paid throughout the duration.

Interruptions can be as follows:

- By the will of the worker:

o Personal circumstances: 15 calendar days for marriage, and two or four
days for childbirth
o Fulfilment of public duties: the time necessary
o Fulfilment of trade union representation or functions: the time necessary
o Exercise of educational rights
o Circumstances related to labour conditions
o Changing or moving residence: One day permit
o Other causes
- Reasons attributable to the employer.
- Interruptions due to force majeure.

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§ Termination of the employment contract

This entails the termination of the employment relationship between the company and
the worker.

This termination can be due to a number of causes or motivations such as:

- Mutual agreement between the parties

- Causes recorded and validated in the contract
- Expiration of the agreed upon time or completion of the work of a service
contract
- Resignation of the worker
- Withdrawal of the contract due to workplace transfer
- Withdrawal of the contract for modifications of the workday, schedule, shifts, or
wages that may impair the worker
- By the voluntary will of the worker in response to substantial modifications of
the workplace conditions, especially those carried out in opposition to Article 41
of the Workers' Statute, which affects the dignity of the worker
- By the voluntary will of the worker in response to serious failures on the part of
the employer
- Death of the worker
- Retirement of the employee
- Death, retirement, or disability of the employer
- Termination of the legal entity of the employer
- Dismissals due to objective causes
- Collective dismissal due to economic, technical, organisational or production
pressures
- Uncontrollable forces (force majeure) confirmed by the labour authority
- Disciplinary dismissal deemed inadmissible
- Objective dismissal deemed inadmissible

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At the time of notifying the termination of the contract the company must attach a
settlement notice with all of the proposed pay-outs.

When signing the final severance settlement the employee is entitled to request the
presence of legal representatives.

If the company prevents the presence of the legal representative, the employee may
include it in the receipt itself for the appropriate purposes.

Let us now examine some of the reasons that lead to the termination of employment
contracts

The following are considered just causes for an employee to request the termination of
his/her contract:

- Substantial modification of workplace conditions that negatively affect

professional training or affect the worker's dignity.
- Non-payment or delays in payment.
- Any other situation that constitutes a serious breach of the company's
obligations, except in cases of force majeure. In addition is the refusal to
reinstate the worker in his/her previous working condition as provided in Articles
40 and 41 of current law, when a court ruling declares them unjustified.

In abovementioned cases, the employee is entitled to compensation for unfair dismissal.

Termination for objective reasons

There must be certain conditions that require the termination of the employment
contract on behalf of the employer.

The employee contract may be terminated by the employer for the following reasons:

- Unsuitability or ineptitude perceived after the employee has begun working.

Ineptitude recognised prior to the completion of the probationary work period
cannot be used as a justification after the probationary period has ended.

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- For workers unable to adapt to technical changes in the workplace within a two
month period, if such changes are recognised as reasonable. The employer is
asked to provide training courses that assist the worker in order to improve their
competency with the new technology.
- The time designated to these training programmes is considered an effective use
of working time.
- During these courses the worker will be paid their normal working wage.
- When there is an objectively accredited need to amortise jobs for any of the
reasons set forth in article 51.1 of this law and in a lower number than that
established therein. To this end, the employer will attribute the decision for
termination to economic, technical, organisational, or production oriented
causes. The workers' representatives will have permanent priority within the
company during this supposed separation.
- For cases of intermittent, albeit justified, workplace absences that affect at least
20% of work days in 2 consecutive months, or 25% of work days over four months
within a 12 month period.
- Absences due to a legal strike, trade union activities, a work injury, and a number
of other causes will not be counted.

Termination for disciplinary reasons

This refers to a worker's termination by a company’s decision due to the worker's

serious breach of obligations.

The legal grounds for dismissal are:

- Repeated or unexcused absences, and/or punctuality problems.

- Disobedience or lack of discipline.
- Verbal or physical abuse towards the employer, co-workers or their family
members.
- Abuse of trust or breach of good faith, as contractually obligated.
- Continuous decrease in workplace performance as compared to the standards
established in either the contract or the collective agreement.

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- Drunkenness or drug addiction.

- Harassment of co-workers or employees on the basis of race, ethnicity, religion,
disability, age or sexual orientation.

Termination by Collective Dismissal

Collective dismissal is understood as being a problem rooted in economic, technical,

organisational, or production oriented causes that necessitates a mass layoff of workers
to improve the company's situation.

In order to be considered a collective dismissal, the following proportion of workers

need to be affected in a period of 90 days:

- Ten workers in a company that has a staff of under one hundred employees.
- 10% of the workers in companies with a workforce of between 100 and 300
workers.
- 30 workers in companies whose workforce exceeds 300 workers.

If the company purposefully undertakes the layoffs in a period longer than 90 days so as
to avoid legal recognition as collective dismissal, it is considered legal fraud and is
punishable by law.

It is also considered a collective dismissal if the termination affects the entire workforce
(when the number of workers is over 5) produced as a result of the total cessation of
business activity.

3.1.4 Collective agreements

Continuing the theme of contracts, this following section will be dedicated to

understanding collective agreements.

By way of definition, a collective agreement is an agreement pertaining to a specific

labour sector that is signed by employers and worker's representatives and aims to
establish a standard for productivity, workplace conditions and work obligations. Thus,

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it requires all employees and employers in a certain sector to comply with prior agreed
upon rules and stipulations regarding labour.

This agreement regulates a variety of aspects that affect the employment relationship,
such as wages, work hours, breaks, vacations, work conditions, union representation,
etc. The main labour topics affected and/or regulated by collective agreements are:

- Economic: wages, indirect wages, overtime pay, etc.

- Labour: working days, weekly and yearly working hours as well as vacations,
professional categories, contract duration, and performance standards.
- Union: work councils, personnel representatives, negotiation rules, etc.
- Conditions of employment.
- Criteria for determining the methods, personnel, and material of private
prevention services.
- Relations between worker's representative organisations and employer's
business associations.
- Assistance: voluntary improvements to SS.
- Career advancement measures.
- Work conditions and productivity.
- Measures to promote equal treatment and equal opportunity for men and
women in the workplace.

It is important to note that the conditions set out in the collective agreement are the
minimum conditions under which labour relations are regulated. That is to say, they can
be improved but never worsened. In cases where there is no collective agreement
working conditions are governed by statutory and regulatory minimum requirements
established in the Workers' Statute.

In regards to the classification of collective agreements, two types can be distinguished;

company agreements and sectoral agreements.

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§ Company agreements
This type of agreement is company specific.

The agreement regulates labour and services rendered, economic compensation, labour
relations, etc., for all of the employees of the company, regardless of professional
category.

Whenever a company has a collective agreement it is binding for all parties and is
unaffected by sector-specific agreements, unless otherwise agreed upon.

§ Sectoral Agreements
Within this type of agreement the working conditions for entire business sectors, such
as the automotive or hospitality sectors, are negotiated.

Their application is mandatory for all companies in each respective sector, except in the
case of company specific agreements as mentioned above.

Sectoral agreements can establish labour regulations on a national level, within

autonomous communities (CCAA), or on a provincial level.

All of the content contained within the collective agreements is public and is legally
required to be published on the Official Spanish Gazette (BOE). As such, national
agreements are available on the website of the BOE and CCAA agreements are found on
the respective autonomous community's website.

In order to further understand specific regulations of collective agreements refer to the

annex.

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3.1.5 Temporary Employment Agencies (ETT)

To conclude our discussion of contracts, we will discuss Temporary Employment

Agencies (ETT).

This type of company contracts out employment opportunities to temporary workers.

That is to say, the ETT seeks employees to work temporarily for other companies.

This process involves three parties, resulting in a triangular relationship between the
company seeking employees, the ETT, and the worker. This triangle results in two types
of contracts:

- Between the ETT and the company seeking temporary workers.

- Between the ETT and the temporary worker.

The legislation that should be consulted regarding this type of contract is law 14/1994,
by which Temporary Employment Companies are regulated.

In addition, the following will be of interest:

- Law 3/2015

The temporary employment agencies may also act as placement agencies when they
meet the requirements of Employment law 3/2015. Furthermore, they may develop and
implement professional qualification training programmes in accordance with these
regulations.

Regulation:

- Royal Decree 216/1999, on the minimum health and safety standards in the field
of temporary employment.
- Royal Decree 2720/1998 amending Article 15 of the Workers' Statute on fixed-
term contracts.
- Law 29/1999, amending Law 14/1999, by which the ETTs are regulated.
- Royal Decree 417/2015, approving the regulation of ETTs.

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- Royal Decree 2/2015, approving the revised text of the Workers' Statute.
- Law 45/1999, concerning the displacement of workers within the framework of
transnational services.
- Law 12/2001, on urgent measures to reform the labour market to increase
employment and improve its quality.
- Royal Decree 10/2010, on urgent measures to reform the labour market.
- Law 35/2010, on urgent measures to reform the labour market.

The contract that arises from this temporary relationship is called a service contract,
which is established between the ETT and the company, by which the worker will be
hired to provide services. As such, it is an agreement that does not explicitly involve the
worker, but rather of a temporary economic nature between the two companies.

Also, a contract between the ETT and the temporary worker will be established.

It is important to note that these two contracts do not necessarily have the same
duration. However, in cases where the contract with the ETT has ended and the worker
continues providing services to the company, it shall then be considered an indefinite
employment relationship between the two.

Some examples wherein a company is not allowed to request temporary workers from
an ETT are:

- To replace striking workers.

- To carry out work that is especially hazardous and that might have a negative
impact on the health and safety of the worker.
- When in the 12 months immediately before the contract the company has
depreciated the jobs that they have intended to cover in an unfair dismissal or
through causes anticipated in Articles 50, 51, and 52, or paragraph c) of the
Workers' Statute, except in cases of force majeure.
- To lend workers to other temporary employment.

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It is very important that the company requesting workers informs the worker's
representatives about each job made available, such as its reason for deployment,
within 10 days after the job's commencement. During the same time period each
available worker should be given a basic copy of the employment or service contract,
which should also have been provided by the ETT.

Such contracts must be finalised in writing.

The ETT should notify the public office of employment of its content in the terms
established and required by regulation, within the 10 days following commencement of
employment.

Between the ETT and temporary workers there are two types of employment
relationships:

- Employment relationship between the ETT and ETT workers: if the work
activities performed by the workers will be exclusive to the ETT, the standard
rule regarding work contracts will be applied. As these workers will be providing
their services within the structure of the ETT, they will be managed solely by the
ETT. These cases will be regulated by articles 13 and 14 of the ETT law, and if not
then social security legislation will apply.
- Employment relationship between the ETT and the temporary workers that will
be subcontracted: the workers that provide their temporary services to
companies may be subcontracted on either a permanent or a temporary basis.
These contracts must comply with certain formal requirements.
It is important to note that permanent contracts are infrequent, as ETTs tend to
focus on temporary contracts. Thus, permanent contracts are usually established
following legal claims by workers against the ETT for fraudulent contracts.
In addition, the ETTS may offer work contracts in training and apprenticeship for
the contracted workers so as to prepare them for work that they will be
subcontracted for in other companies.
The ETT can also offer the temporary workers an employment contract that hires
out their services to various companies, provided that the signed contract allows

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this. These contracts must correspond with paragraph 1 of Article 15 of the

Workers' Statute.

As previously discussed, the worker signs the contract with the ETT, and as such, the ETT
needs to meet the following labour obligations:

- It is the responsibility of the ETT to ensure that the temporary worker meets all
of the salary and SS obligations
- All ETT should allocate, on an annual basis, 1% of the total payroll to the training
of temporary workers subcontracted by companies, notwithstanding the legal
obligation to pay for professional training.
- It is the responsibility of the ETT to ensure that the worker, prior to starting work,
has the theoretical and practical training necessary to prevent occupational
hazards. In doing this, they should take into account their qualifications and
professional experience, as well as the risks they will be exposed to. In those
cases where workers do not have the proper training, the ETT should provide it.
- No ETT may request payment from workers for recruitment, training, or
employment.
- Disciplinary power always rests with the ETT.

The responsibilities and obligations of the companies hiring workers through the ETT
include:

- When the worker starts employment with the company, the management and
control of work activities will be passed onto that company. However, in the case
that the worker fails to come through on some aspect of his/her contract, the
company will notify the ETT of this, which will be responsible for determining the
appropriate actions and sanctions.
- Informing workers about the risks arising from work activities as well as the
preventative measures needed to avoid them.
- Responsibility for the health and safety of the workers in the workplace.
- Responsibility for the worker's wages and SS obligations for the duration of the
temporary contract.

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- Obligation to inform the workers lent by the ETT of vacancies so that they can
seek permanent employment within that company when opportunities arise.

The workers have the following rights:

- The worker, whenever he/she perceives any irregularity, may submit complaints
in regards to working conditions.
- The right to utilise public or communal transport, or other opportunities offered
by the company for the duration of their work activities with said company.
- The workers are entitled to regular health monitoring by the ETT, taking into
account the characteristics of the job to be performed.

3.2 THE INTERNATIONAL LABOUR ORGANISATION (ILO)

To conclude our discussion on the topic of recruitment, we will devote this section to
the International Labour Organisation.

The ILO is a special agency of the United Nations (UN) which is responsible for governing
many aspects of employment and labour relations, since its establishment on April 11th,
1919. The ILO has a tripartite government composed of administrative representatives,
employers and workers, with a grand total of 187 member states. Their main objectives
are:

- To set labour standards and develop policies and programmes that promote
decent work for all; women and men.
- To promote social justice and recognise core labour standards.
- To create employment opportunities.
- To improve working conditions worldwide.

Thus, the main mechanisms of the ILO are the establishment and supervision of
international labour standards, providing technical assistance, and the research and
dissemination of information. Their field of activities include:

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- Promotion of respect for basic labour principles.

- Eradication of child labour.
- Supervision of labour regulations and compliance with agreements.
- Development of technical cooperation programmes.
- Labour migrations.
- Analysis of social dimensions of globalisation.

In regards to the functioning of the ILO, it operates through three main bodies:

- International Labour Conference: This body meets once a year to establish

international labour standards and define the general policies of the ILO. In
addition, it is also a forum for discussion of key social and labour issues.
- Board of Directors: This is the executive body of the ILO and meets in Geneva
three times a year. Their tasks are making decisions in regards to ILO policy, the
establishment of its programme and budget, which is then submitted to the
Conference for adoption.
- International Labour Office: This is the permanent secretary of the ILO, and is
responsible for all ILO activities carried out under the supervision of the
Governing Body and the management of the General Director.

The work carried out by the bodies of the ILO gives rise to what is called the International
Labour Standards. These are legal instruments that act to reinforce the principles and
fundamental rights of work, and regulate other aspects of the working world. It is
important to note that these rules take the form of agreements and recommendations.
The agreements are recognised as legally binding on an international level. They can be
ratified by member states of the ILO, and in most cases they establish the basic principles
that all member states should implement. Recommendations, on the other hand, serve
only as non-binding guidelines. Nonetheless, the ILO also adopts other legal
instruments, such as declarations and resolutions that contain official declarations that
act to reaffirm the importance of principles and values submitted by the tripartite.

This text will not go into great detail about the International Labour Standards, but a
case study that can be found in the annex will explore this in further detail.

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As mentioned, the ILO strives to achieve optimal labour conditions on a worldwide level.
Some of the important programmes and issues that it focuses on are:

- Child labour.
- Decent work.
- Disability and work.
- Ethical recruitment.
- Promotion of employment.
- Economic and social development.
- Equality and discrimination.
- Freedom to belong to a union.
- Future of employment.
- Sustainable jobs.

These are just a few examples of many themes and programmes that the ILO focuses
on. In the annex you will find links to learn more about these programmes.

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