29 May The 50-Employee Threshold in Spain: Legal Obligations Every Subsidiary Should Anticipate

As one would expect, in most cases the growth of a company is a sign of operational success, which is why we should always weigh the various options available to keep our Spanish subsidiary growing. That said, it is important to stress that we must also consider the right way to structure that growth and the obligations it may entail, because Spanish law contains a regulatory turning point that often stays off the radar: the 50-employee threshold.

Once a company exceeds 50 employees in Spain, a set of legal obligations of varying nature is triggered (labour, anti-discrimination and compliance obligations, among others), and failure to meet them may lead to penalties that can go well beyond a simple fine. With these obligations in mind, at Navarro Llima Abogados we wanted to briefly outline each of them, so that those in charge can anticipate and manage them properly.

Accordingly, companies that reach 50 employees should bear the following points in mind:

Equality Plan and Pay Audit

They will be required to have an Equality Plan negotiated with the employees’ representatives and publicly registered in the REGCON system of the Ministry of Labour. This plan must also be reviewed every four years and entails carrying out a pay audit intended to demonstrate that no gender-based pay gaps are arising.

LGBTI Plan

They will be required to have a set of measures in place (or a formal plan, depending on the circumstances) to guarantee equality and non-discrimination for LGBTI individuals in the workplace.

These measures include, among others: anti-harassment protocols, together with training and a review of internal human resources processes.

Whistleblowing Channel — Internal Reporting System

As a result of the transposition of the European whistleblower protection directive (Whistleblowing Directive), it will be mandatory to have an internal whistleblowing channel, so that employees can report—confidentially and, where appropriate, anonymously—irregularities, fraud and, in general, any conduct contrary to ethics or sound business practice.

The company must therefore appoint a designated officer, and the system must set out matters such as acknowledgement deadlines, resolution deadlines, confidentiality measures and safeguards against retaliation.

Reserved Quota for Persons with Disabilities

An obligation arises for at least 2% of the workforce to be made up of persons with a degree of disability equal to or greater than 33%.

That said, on an exceptional basis and provided the regulatory requirements are met, this quota may be replaced by alternative measures, such as contracting services from Special Employment Centres or making donations to foundations in the sector.

Collective Representation: Works Council and Health and Safety Committee

The collective representation of employees takes on a qualitatively different dimension.

The company is now required to facilitate the establishment of the Works Council. This body holds statutory rights of information, consultation and negotiation over business decisions, as it will have a bearing on matters such as collective redundancy procedures, substantial changes to working conditions and even business transfers or changes to the production structure.

For subsidiary executives accustomed to Anglo-Saxon or Northern European labour frameworks, this point deserves particular attention, because the Works Council is not a merely consultative body in any formal sense. Its involvement is mandatory in certain procedures, and failing to engage it may render the decisions adopted null and void.

Pay Register and Data Protection Officer

An annually updated pay register must be maintained, reflecting—broken down by sex, professional category and type of contract—the average values of salaries, supplements and non-wage benefits across the entire workforce.

As for the Data Protection Officer, this requirement is not triggered directly by the number of employees, but rather by the nature and volume of the data processing carried out by the organisation. Beyond 50 employees, a company’s processing profile commonly makes this role mandatory under the criteria of the Spanish Data Protection Agency.

A reflection for subsidiary management teams

As can be seen, the main risk of crossing the 50-employee threshold without proper preparation and structuring is essentially cumulative in nature, because we suddenly face six regulatory obligations at once. It is worth adding that each of these obligations carries its own penalties for non-compliance which, taken together and depending on the specific circumstances, can comfortably exceed one and a half million euros.

At Navarro Llima Abogados we advise subsidiaries of international groups throughout their expansion in Spain, including compliance audits, the design of collective representation structures and support in implementing the plans and protocols required under current legislation. Do not hesitate to count on our help if your company is approaching or has already crossed this growth milestone.