Spain Introduces New Obligation to Notify Unions Six Months in Advance of Workplace Closures

The Spanish government has introduced Royal Decree 608/2023, a new employment law that requires any company closing operations to notify trade unions, autonomous community labour authorities, and the central government six months in advance of commencing consultation with employees, and, therefore, six months before informing the workers themselves. The existing obligation to consult with employees prior to implementing dismissals remains intact and starts at the end of the six-month period. This new requirement, which took effect on 13 July 2023, will apply to any company seeking to completely close down operations in a workplace with fifty workers or more.

Quick Hits

• In an unexpected move, the Spanish government published a law in July 2023 that requires employers to notify unions, labor authorities, and the central government six months in advance of closing down a work center.
• The law will add significantly to the closure timetable companies must follow when closing a workplace and took effect on 13 July 2023.
• A lack of clarity on the detail and a lack of consultation with employers’ organizations or unions has created controversy.

Some commentators have reacted with surprise and concern that a law with such major ramifications was published without warning in the Official State Gazette (Boletín Oficial del Estado) on 12 July 2023. Normally, major changes are debated in parliament and passed as an act of parliament, with Royal Decrees reserved for secondary legislation of minor importance or adding detail to the primary legislation.

Employers are now faced with a much lengthier period during which unions and authorities might dispute a closure decision, starting before the consultation period with workers can even begin. For any companies in economic strife, the additional time may pose a real threat to a swift and discreet workplace closure.

There are a number of uncertainties about the new law. It does not define what steps or processes should be taken over the six-month period, although one presumes it is time the employer would use to try to find investors or implement changes that may avoid the closure. There are, however, references to some employers qualifying for an exemption from the new rules, but there is a lack of detail as to which employers. The government has also offered little reasoning for the new law and has not specified what consequences a company that breaches the rule may face.

Neither employer associations nor trade unions were consulted on the new law, and they were not informed in advance of its approval.

Commentators have expressed concern that this recent measure was introduced under the radar without proper scrutiny and debate. It was introduced as part of a Royal Decree that was not even about collective redundancies.

In time, the Spanish courts may provide guidance and certainty to these issues through decisions, although many employers will hope that the new law is instead removed as quickly as it came in.

Ogletree Deakins’ Global Reorganizations Practice Group will continue to monitor developments. Further information can be found on the firm’s Cross-Border and Reductions in Force blogs.

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