Employment International: Who benefits from Spanish employment law rights?

As a general rule, Spanish mandatory employment laws apply to workers who carry out their duties in Spain, even if they have agreed a different choice of law with their employer.

However, Spanish law will also apply (either completely or partially) when the parties have not made a choice of a law in the contract, or when they have opted for their employment relationship to be subject to a foreign law, but the circumstances of the relationship demonstrate a relevant connection between the employee’s employment and Spanish territory.

Employers must bear in mind that, if the employment relationship is subject to Spanish legislation, this means that both the legal provisions and any collective agreements that regulate the company’s activities in Spain will apply.

When do employees have Spanish employment rights?

Whether or not Spanish employment rights apply is always a point of contention when the employment relationship breaks down. Therefore, to avoid any surprises, it is essential that employers understand, and make provision for, the circumstances when Spanish employment laws will come into play.

Although it is not possible to define a specific group of employees who benefit from Spanish employment laws, employers should be aware of the following situations when rights may apply:

• Employees who render their services in Spain, and have agreed with their employer that Spanish law will apply to their employment, will benefit from the full application of Spanish employment rights.
• Employees who carry out their duties in Spain, but have not agreed the application of Spanish law to their employment contract, may still benefit from Spanish employment rights. For example, employees temporarily relocated to Spain from outside the EEA (i.e. USA, Canada, and Switzerland) will benefit from Spanish “imperative rights” if, on analysis of the employment relationship, there is a sufficient connection with Spain.
• Employees temporarily relocated to Spain by a Company established in the EEA will benefit from certain minimum employment rights relating to working time, holidays, minimum salary, health and safety, and equality of treatment.
• Employees who render their services outside Spain, but have agreed that their employment relationship is subject to Spanish law, may benefit from rights in the country where they are working as well as Spanish rights.
• Employees who are otherwise “connected” to Spain may also attract Spanish employment rights. Examples of relevant connections are a Spanish home address, a contract entered into in Spain and the hirer being located in Spain.

When will Spanish social security laws apply?

If Spanish social security laws apply to the employment relationship, the employer will be required to register as an employer in Spain and make the necessary contributions for its employee(s).

As a general rule, Spanish social security legislation will apply to all employees who render services in Spanish territory. These rules apply regardless of the employment law applicable to the employment contract.

Notwithstanding this, employees temporarily relocated to Spain, (for an anticipated period of less than 24 months), from a country in the EU, the EEA or from Switzerland, may maintain their social security contributions in their country of origin and not contribute to the Spanish social security system. In the same way, employees who are temporarily relocated from Spain, (for an anticipated period of less than 24 months), to a country in the EU, the EEA or Switzerland, may maintain their social security contributions in Spain and not contribute to the social security system of the country of destination.

Maintaining contributions in the country of origin (whether it is Spain, or another country) will also be possible if Spain has signed a bilateral agreement on social security matters with the country in question. At the date of this newsletter, Spain has bilateral agreements for these purposes with, the United States, Andorra, Colombia, Mexico, Uruguay, Argentina, Korea, Paraguay, Venezuela, Australia, Ecuador, Peru, Dominican Republic, Cabo Verde, the Philippines, Russia, Canada, Japan, Tunisia, Chile, Morocco, and the Ukraine.

What is the key consideration for employers?

Employers with employees in any way “connected” to Spain should regularly review the employment relationship to assess what employment rights will apply. Employers temporary posting employees to or from Spain should decide whether it is possible, and desirable, to maintain social security contributions in the employee’s home country.