Substantial Changes to Working Conditions within the Company (II): How to Correctly Implement a Collective Measure and Avoid the Risk of Invalidity
In a recent article, we examined individual substantial modifications of working conditions (SMWCs), including what aspects of employment may be modified and the grounds required to justify such changes, the role of the Employees’ Representatives, how the measure must be communicated, and other key considerations. However, a substantial modification does not always affect a single employee or only a very small group of employees.
In many cases, the employer’s operational requirements extend beyond individual circumstances, for example where it is necessary to alter the working hours of an entire company or department, introduce a shift-working system, amend incentive schemes, or implement new working methods or performance criteria, thereby affecting a group of employees exceeding the statutory thresholds. In such cases, it is essential to follow a specific procedure in order for the measure to be regarded as legally valid.
When is a substantial modification of working conditions regarded as collective within an undertaking?
Article 41(2) of the Workers’ Statute (Estatuto de los Trabajadores) regards a modification as collective where, within a period of ninety days, it affects at least:
- Ten employees, in undertakings employing fewer than one hundred employees.
- Ten per cent of the workforce, in undertakings employing between one hundred and three hundred employees.
- Thirty employees, in undertakings employing more than three hundred employees.
The ninety-day reference period is of particular importance, as it prevents the employer from artificially dividing a collective measure into a series of successive individual decisions in order to circumvent the consultation procedure.
Likewise, where an employer implements substantial modifications of working conditions (MSWCs) during successive ninety-day periods without individually exceeding the statutory thresholds, but exceeding them when considered cumulatively, and no new grounds exist to justify the measures, such conduct may be regarded as a circumvention of the law, having been undertaken with the purpose of avoiding the collective consultation procedure. Consequently, the modifications may be declared null and void and, therefore, of no legal effect.
Accordingly, the first issue the employer must consider is the number of employees who will be affected by the proposed measure, in order to determine whether the contemplated decision exceeds the applicable statutory threshold.
Which working conditions may be modified collectively within an undertaking?
The matters that may be affected by a collective substantial modification of working conditions are the same as those applicable to an individual modification, namely: working time, working schedules and the distribution of working time, shift-working arrangements, remuneration systems and salary levels, work organisation and performance systems, and duties that exceed the statutory limits applicable to functional mobility.
However, it is also important to bear in mind that not every employment condition may be altered through this mechanism. Where the condition that the employer seeks to modify is established by a collective bargaining agreement, it cannot be unilaterally amended by means of a substantial modification of working conditions. In such circumstances, consideration must be given to whether it is possible to apply the procedure for opting out of, or derogating from, the applicable collective agreement.
Procedure for the collective modification of working conditions within an undertaking
Unlike an individual substantial modification of working conditions, a collective modification requires the employer to conduct a consultation period with the employees’ legal representatives (RLPT).
Where there are no employees’ legal representatives, the employees may assign their representation either to a committee composed of employees of the undertaking itself or to a committee made up of representatives of the most representative trade unions with standing to participate in the consultation process.
This will also depend on the workplaces affected by the proposed measure.
This issue is of considerable practical importance in mid-market companies with multiple workplaces, geographically dispersed organisational structures, or workforces that are only partially represented. In such cases, the composition of the negotiating committee may prove to be just as significant as the underlying grounds relied upon to justify the proposed measure.
The consultation period may last for a maximum of fifteen days and must address the grounds underlying the employer’s proposed decision, the possibility of avoiding or reducing its effects, and any measures that may be necessary to mitigate the consequences for the affected employees.
In other words, the consultation process involves examining the proposed measure, the grounds relied upon to justify it, the available alternatives, and any accompanying or mitigating measures that may be adopted to lessen its impact on the affected employees.
The consultation process must be conducted in good faith. Accordingly, although the employer may enter the negotiations with a clearly defined and properly substantiated proposal, it must demonstrate a genuine willingness to consider alternative proposals, assess any observations made, and provide reasoned responses to the issues raised during the consultation process.
In practice, this entails holding meaningful consultation meetings, providing adequate information, keeping comprehensive minutes of all meetings, responding in writing to reasonable requests for documentation, and maintaining a consistent negotiating position throughout the consultation process.
A consultation period conducted merely as a formality, solely for the purpose of procedural compliance, constitutes a clear invitation to judicial challenge.
Documentation required to justify a collective substantial modification of working conditions within an undertaking
Every substantial modification of working conditions requires careful preparation in advance.
The employer must compile a robust evidential dossier capable of substantiating the reasons for the proposed change and demonstrating that the measure is appropriate, necessary, and proportionate.
The documentation to be compiled will depend on the specific circumstances of each case and, in particular, on the grounds relied upon to justify the modification, which may be economic, technical, organisational, or production-related in nature.
These include, in particular, matters relating to the undertaking’s competitiveness, productivity, or the technical organisation of, or methods of work within, the undertaking.
A broadly stated justification, or a measure that is inadequately supported by documentary evidence, carries a significant risk of failing if subsequently challenged before the courts.
What happens if agreement is, or is not, reached regarding the proposed modification of working conditions within the undertaking?
During the consultation period, the employer and the employees’ legal representatives (RLPT) may, at any stage, agree to replace the consultation process with a mediation or arbitration procedure.
Where agreement is reached
Where the procedure concludes with an agreement, the employer’s legal position is significantly strengthened.
Article 41(4) of the Workers’ Statute presumes the existence of the grounds justifying the measure, and the agreement may be challenged only on the grounds of fraud, deceit, coercion, or abuse of rights.
Although this does not render the agreement immune from challenge, it does significantly enhance the employer’s prospects of successfully defending the measure in the event of judicial proceedings.
Where no agreement is reached
Where no agreement is reached, the employer may proceed to implement its final decision, provided that it has conducted the consultation process in good faith and can demonstrate sufficient grounds to justify the measure.
In such circumstances, the employer must notify the affected employees of its decision once the consultation period has concluded. The measure will take effect seven days after such notification has been given.
It is essential that, in that communication, the employer clearly sets out the decision adopted, its effective date, the working conditions affected, the group of employees concerned, the reasons justifying the measure, and, where applicable, the proposals considered during the consultation process.
Accordingly, before embarking upon a collective substantial modification of working conditions, it is advisable to plan the entire process carefully. Not only must the proposed measure be clearly defined, but so too must the grounds relied upon to justify it and the negotiation strategy that will underpin the consultation process.
At Devesa, we advise and support companies through workforce reorganisation processes, substantial modifications of working conditions, and collective bargaining negotiations, helping them to make strategic decisions with legal rigour, commercial awareness, and effective management of employment-related risk.
FAQs: Substantial modification of working conditions within an undertaking
What is a collective substantial modification of working conditions within an undertaking?
It is an employer’s decision that alters certain terms and conditions of employment and affects a number of employees exceeding the thresholds set out in Article 41(2) of the Workers’ Statute.
When is a substantial modification of working conditions regarded as collective within an undertaking?
A substantial modification of working conditions is regarded as collective where, within a period of ninety days, it affects at least ten employees in undertakings employing fewer than one hundred employees, ten per cent of the workforce in undertakings employing between one hundred and three hundred employees, or thirty employees in undertakings employing more than three hundred employees.
Is it mandatory to negotiate a collective substantial modification of working conditions within an undertaking?
Yes. Before implementing the proposed measure, the employer must commence a consultation period with the employees’ legal representatives or, where applicable, with the relevant representative committee.
Can an employer modify working conditions governed by a collective bargaining agreement through a substantial modification of working conditions (MSWC)?
No. Conditions established by a collective bargaining agreement cannot be unilaterally modified through a substantial modification of working conditions. In such cases, consideration should be given to whether the procedure for opting out of, or derogating from, the applicable collective agreement (descuelgue de convenio) may be available.
What risks arise if the collective procedure for modifying working conditions is not correctly followed?
The measure may be challenged before the courts and ultimately declared null and void, particularly where there is a circumvention of the law, a failure to negotiate in good faith, or insufficient justification of the grounds relied upon.
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