Antonio Flores’ Blog

I very much enjoyed reading an article written by Eleanor Mill in the Sunday Times in respect of how overprotective EU employment legislation is interfering severely with women’s careers because of provisions on maternity leave. Eleanor says that “legislation designed to protect women is now killing them with kindness” because it almost forces them to stay at home “pureeing carrot” for up to, depending on the country, 3 years when they have made some choices, working being one of them!

I don’t intend to make an analysis or comparison between the different jurisdictions in place across the EU but because Eleanor’s article coincided in time with a labour dispute we had in our office I would like to expand a bit on the opposite, that is, how can a pregnant worker who wishes to never work again (judging by her acts it cannot be otherwise) take advantage of Spanish laws and endlessly link a series of leave periods of different nature to avoid coming back to work and all the while getting paid.

In our case, the worker, who was pregnant, had verbally agreed that she would take maternity leave for a number of months and on her return she would resign, taking with her a reasonable package. She had her baby and it all went well and good until she was due back in the office to implement the agreement we had, when she decided that the agreement was no longer good enough for her because she could get far more from us (inasmuch as even though she is not working the employer still has to pay) and from the social security system…

Chronologically, the events can be summarised as follows:

1. Sick leave (high risk pregnancy/painful back): 23 weeks
2. Maternity leave: 16 weeks
3. Breastfeeding leave: 2 weeks
4. Holidays: 4 weeks
5. Sick leave again (anxiety this time): 9 weeks… and counting.

When I spoke to a colleague with vast expertise in labour to ask him for some advice, he broke into a laughter and reproached me that “it served me well for hiring women of a certain age because they were explosive devices which detonate by pregnancy”. I don’t have to say how much I disapproved his comment, but it had me thinking for some moments after which he said that the only way to tackle this problem was to reach an agreement with the employee because, in his experience, Courts in Spain would always rule in their favour and until reaching a ruling I would still have to pay wages and social security cover (a horrific 30% of the salary!)

Two months later received another registered letter with acknowledgement of content (burofax) indicating that she was pregnant again…

Aside from this, it appears that, due to the crisis, some employees are taking their employers to Court in spite of pre-agreed work conditions that don’t suit them any longer. As an example I can cite two typical examples:

1. Employer hires under the condition that the employee will not claim the extortionate 45 days of salary per year worked (the famous “finiquito”, which is considered to be one of the causes of our near to 20% unemployment and 25% in Andalucía). The employee agrees gleefully and shakes hands but when he loses his job he reneges on the deal due to the fact that these rights cannot be waived and takes his employer to the cleaners.
2. Employer enters a contract with a self employed worker (autonomo), which is a contract typically used in the real estate industry and with some lawyers. Since plenty of case-law deems that this type of contract is used by employers to avoid social security and redundancy payments it can successfully be morphed to a full labour contract, through the Employment Tribunal, which will hit the employer, retrospectively, with a request for unpaid social security, fines, interest, redundancy etc. Enough to put anyone off employing in Spain forever!

I will finally add that in my experience, real estate workers, in particular sales representatives, have an extremely high ratio of honouring verbal agreements when fired under an “autonomo” contract, far more than lawyers hired under those same circumstances (sorry colleagues!).

So what it the solution to the above? According to the trend of our unemployment rate and our average salaries in comparison to the rest of Europe, there is only one solution (unions will blacklist me for saying this): don’t hire in Spain, or if you do, make sure salaries are very low, and if you can avoid it, don’t sign indefinite contracts!

Antonio Flores Corporate Law finiquito, spanish redundancy, unemployment in spain

It will certainly sound perplexing for many, especially when thinking on Spain’s internationally infamous bureaucracy, but as from the beginning of 2010 someone willing to open a business in Spain will not be required to obtain a license but only to apply for it. Although the procedure sounds “too good to be true” it is indeed the case, but not thanks to Zapatero but to a EU Directive known as the Bolkenstein Directive which has now been implemented.

Anyone who has been involved with opening a business will know that this legislation change is providing a legal framework to something which was de facto being done, that is, start running a business without having the permit which, in some Town Halls, was taking up to 12 months to grant. The problem us lawyers had with this was telling a client that yes, it was not a problem to open it whilst “mañana” Town Hall officials reviewed the papers and decided, after innumerable trips to the businesses department with fully stamped certificates from until-then-unknown technicians, to grant the bloody thing. Because although the above system was in practice, any unfriendly neighbour could call the local police to complain that a place was running without a license, and that automatically merited a visit and a fine (some of up to €1,200).

The Omnibus Act, as it is called, has replaced the requirement of having to apply for a business opening license with a Declaration of Responsibility, where the business owner needs only to assemble the paperwork and the technical certificates required and submit them to the Town Hall, followed by a statement confirming that the applicant has complied with the requirements undertaking to maintain these throughout the duration of the activity.  

But as usual the Act has a trap: the exemption of having to apply for a license leaves out all the activities which fall under the Environment Management Act which includes, inter alia, guns & ammunitions factories (thank God for that!), mineral extraction quarries, open air cattle, hog and livestock wholesaling, F1 circuits and many other unimaginable businesses, but also (and this is the trap) pubs, bars, restaurants, butchers, fishmongers, kebab corner shops and many other joints so popular in the Spanish coasts. So as far as we are concerned the new Act will pass by and large unnoticed.

Antonio Flores Corporate Law spanish bureaucracy, spanish red tape, starting a company in Spain