Senior Manager’s Role in Spain: Exploring Contract Termination Dynamics

In Spain, Senior Managers are those employees who, with full autonomy and under direct responsibility, exercise powers relating to the legal ownership of the company and the achievement of its general objectives. Their independence and duties are limited only by the company’s governing body. 

These defining notes are of great importance since the consideration or not of a Senior Manager involves the application of a different set of legislation that applies to regular employees. 

Applicable legal framework

Royal Decree 1382/1985 of 1^st August regulates the specific labour relationship of Senior Management Spain (Royal Decree)

The remaining provisions of the general labour legislation, including the Workers’ Statute, apply only when expressly referred to in the Royal Decree or specifically set out in the contract between the Senior Manager and the company. 

Finally, in cases where a matter is not regulated by the Spanish Royal Decree or by the agreement between the parties in the employment contract, it shall be regulated by civil or commercial law and its general principles. 

Features in the termination of a Senior Management contract

Conflicts in employment relations often arise following contract terminations, a scenario that is not uncommon in the work dynamics of Senior Management. Here are the main aspects of the termination of a  Senior Manager’s contract:

Prior notice

The notice period refers to the period of notice required by both the company and the Senior Manager to terminate the working relationship. Unless otherwise agreed, the minimum notice period for both parties to terminate the working relationship is three months, except in cases of serious non-compliance by one of the parties.

In both cases, total or partial non-compliance with this notice period will mean that the defaulting party will have to compensate the other party with compensation equivalent to the salary for the period of non-compliance. 

It is worth noting that this period of notice is considerably longer than the standard employment relationship of the usual period of 15 days, as laid down in the Collective Labour Agreement).

Causes of termination

In this case, a distinction must be made between termination at the will of the Senior Manager and termination at the will of the company. 

• As regards the Senior Manager: the Senior Management contract may be terminated in the event of substantial changes in working conditions, delayed or continued non-payment and business succession or change of ownership. Unless otherwise agreed in the employment contract (which is common), the Senior Manager will be entitled to seven days’ salary in cash per year of service, with a limit of six instalments.

• As for the company: the company may terminate the Senior Management contract, either by resignation, with compensation of seven days’ salary in cash salary per year of service, with a limit of six instalments (or the amount agreed in the contract), or through a dismissal. If the dismissal is deemed unfair, the Senior Manager will be entitled to a compensation of twenty days’ salary in cash per year of service, subject to a maximum of twelve instalments (or the amount agreed in the contract). 

Since these compensations (unless otherwise agreed) are lower than those for the dismissals of regular employees, labour disputes frequently arise after dismissals where the true nature of the employment relationship is questioned.

For this reason, we recommend a thorough analysis before recruitment to determine which regulations will apply to the employee (Senior Manager or ordinary manager). Additionally, ensure to draw up a contract following the relevant employment legislation. 

If you have any questions regarding the recruitment or contract termination of Senior Managers in Spain, please do not hesitate to contact us.

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