In Spain, cases of merger, scission, separation or acquisition of a part or a whole company are more and more frequent. The change of one company owner for another raises many doubts.
For example, a company may integrate the workers from another company through the process of subrogation, and some of these workers may have been workers’ representatives. In these cases, the issue arises of whether these representatives must continue their functions, or if their mandate ends because of the subrogation.
First, it is important to underline that the Workers’ Statute, the principal legislation on the rights of workers in Spain, establishes that a change in ownership of a company, a work centre, or an autonomous production unit does not extinguish the employment relationship. That is why the new owner will have to keep the same rights and work and social security obligations as the previous employer with respect to the employees.
Generally, when a company substitutes another, taking control of the work centre and the delivery of services, the new company must assume the workers of the former company.
With regard to the collective agreement applicable at the completion of the transmission, unless otherwise agreed to between the workers and the workers’ representatives, the collective agreement in force when the transmission took place remains applicable to the workers.
Concerning the workers’ representatives, they can be subject to the following conditions:
- When the object company of the transmission keeps its autonomy, the change of the company’s owner does not terminate the mandate of the workers’ legal representatives, who keep exercising their functions in the same terms and under the same conditions.
- In the case where the process of transmission involves the extinction of the company, the mandate of the workers’ representatives is over.
Nevertheless, it would be advisable to undertake a case-by-case study, and remember that Spanish jurisprudence aims at preserving representation.
This article is not considered as legal advice