The corporate code of conduct represents in Spain a set of rules of behaviour with the purpose of outlining the practices that the company considers acceptable.
Recently, my attention has been drawn to a collective conflict that arose in one of the most important banks in Spain, Banca MARCH (40/2018 of March 6 decision, of the National Court, Social Chamber). The unions with a presence in the bank demanded the company’s ethical code and conduct be nullified, which the company had unilaterally established for its staff (excluding the manager), published on the internet and sent on paper to each worker. The union members understood that the code overreached and violated fundamental rights as important as dignity, freedom of speech and privacy.
The case is interesting from a legal perspective because it is uncommon to encounter workers making demands against the internal codes of conduct of a company, codes that, on the other hand, companies tend to use more and more, whether the company be a small-to-medium enterprise (SMEs) or multinational.
In this specific case, the Bank’s code of ethics and conduct called for such extremes as:
- Reporting to Human Resources before completing a professional activity secondary to work
- Obtaining express authorization from Human Resources in order to:
o Participate as a speaker at conferences or in external courses and classes in educational institutions
o Participate as a bank professional in forums, chats and Internet sites
o Collaborate with any sort of publication
- Refraining from making statements in the media or on any social network regarding the company without explicit, prior authorisation from the department of external communication
- And even the creation of a confidential complaint channel for any conduct of harassment or discrimination.
It is worth adding that the bank’s code of conduct was regarded as mandatory for staff and non-compliance could imply disciplinary sanctions, which would be determined based on the seriousness of the facts. Circumstances arose that indicated that the bank had previous codes of conduct and that, to date, no worker had been sanctioned for breaching a particular condition.
On the basis of its decision, the Court considers important aspects. It holds that the corporate code of conduct can be set unilaterally by the company or dealt with by the legal representatives of the workers or be included in collective agreements or in other types of agreements. The code of conduct manifests the power of business management. When the code is set by the company, it can only complement, not replace, existing national or international legislation, the social dialogue or the collective negotiation. These corporate codes of conduct are closely related to the principal of transparency and the policies of Social Corporate Responsibility. They feature a compilation of the ideal or more appropriate set of rules for a specific group of professionals. The ethical code of conduct intends to outline the practices the company considers acceptable and those it does not.
The decision analyses the clauses of the ethical code discussed and determines:
- The validity of the confidential complaint channel, as it is a resource added to the power that the legal representatives of the Workers have and does not limit or exclude any other reporting mechanism already in place at the company such as the protocol for the prevention of sexual and moral harassment in the workplace.
- It is permissible for the company to establish the principles of action that its employees must comply with, such as that its workers cannot use positions of power to obtain capital advantages or business opportunities. It is also permissible that the ethical code prohibits conflicts of interest and maintains a system of prior authorisation of an employee before they offer work to clients or suppliers of the company. Or that any professional activity related to any of the activities developed by the group should be formally communicated to Human Resources prior. In relation to this point, the Court validates instances in which an activity of competition or collision with the interests of the bank arise.
- However, it is considered void, for its violating of the privacy and dignity of the worker and its imposed requirement of prior authorisation of professional activity outside the company.
- Likewise, the power of management and control of the entrepreneur exceeds the obligation to report either to Human Resources or to the person directly responsible for the speaker, prior to the entrepreneur´s participation as a speaker in external courses or seminars. For the Court, this measure supposes an unjustified inference with the individual’s right to personal and familial privacy. It declares, therefore, that this clause in this section is void.
- The Court rejects the validity of the requirement of prior explicit authorisation from external communication regarding any contact with journalists or media of any kind – including news, reports, economic data, accounting, business objectives, or even social networks. For the Court, this limitation breaches upon the freedom of expression and the right to information. It declares, therefore, the clause is void in this point.
- On the contrary, it holds that it is necessary to establish in the agreement that the dissemination of data, news or information about the bank and related to strategy, business forecasts or corporate image should be done with extreme caution in order to avoid the disclosure of confidential information.
As a final reflection, it is important to note that corporate codes of conduct in Spain are subject to the judicial control of legality. They must respect the normative order, the collective agreement and, above all, the fundamental rights of workers. The degree of corporate control is limited in aspects such as the activities of the workers as teachers or lecturers, or their statements in media or social networks.
This article is not considered as legal advice