Certain labor law provisions are particularly relevant when acquiring or selling a going concern in Spain. For example, if a business is transferred, both the seller and the buyer are jointly and severally liable in the three years following the transfer for any labor obligations arising prior to the transfer.
When a business is transferred, the new employer is subrogated to the previous employer’s labor and social security rights and obligations, including pension commitments on the terms provided in the specific legislation and, in general, to as many supplementary employee welfare obligations as may have been entered into by the previous employer.
The seller and buyer must inform their respective workers’ representatives in advance of certain aspects of the upcoming transfer. Specifically, the information provided must comprise at least the following:
- Proposed date of transfer.
- Reasons for the transfer.
- Legal, economic and social consequences of the transfer for the workers.
- Envisaged measures with respect to the workers.
If there are no workers’ statutory representatives at the affected companies, the information must be supplied directly to the workers affected by the transfer.
There is also a binding obligation to hold a consultation period with the workers’ statutory representatives where, as a result of the transfer, labor measures are adopted for the personnel affected. The consultation period will address the envisaged measures and their consequences for the workers and must be arranged sufficiently in advance of the date on which such measures are to be implemented.
In the case of business succession or a significant change in ownership, which results in the renewal of the governing bodies or changes to the content and purpose of its core activity, senior management personnel will be entitled to terminate their employment contract within the three months following the occurrence of such changes and to receive severance equal to seven days’ pay in cash per year worked, up to a maximum of six months’ pay, or such severance as may have been agreed on.