Spain and the revolutionary change in working time rules

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Ángel Olmedo Jiménez
J&A Garrigues SLP, Spain
angel.olmedo.jimenez@garrigues.com

In recent months, Spain’s legal framework has experienced changes relating to a significant employment issue: the tracking of working time. The issue has given rise to an in-depth debate between political parties, unions and employer organisations that remains ongoing. Several factors have brought the debate to the parliamentary arena, such as a high rate of overtime worked by Spanish employees, a lack of control in relation to maximum working hours schemes and the deficit in Social Security contributions, among others.

Proposals on the potential tracking of working hours were exchanged, with the aim of ensuring compliance with working time limits. These concerns were finally re-addressed from a legal standpoint in March 2019, when the Spanish Government passed a new law (Royal Decree 8/2019, of 8 March 2019) obliging companies to keep records of their employees' working hours on a daily basis. This constituted a notable obligation for Spanish companies, which have been subject to the new regulatory order since then.

Legal background

Until the adoption of the Royal Legislative Decree 8/2019, Spanish employers did not have a general obligation to keep daily records of their employees’ working hours. There were only two exceptions: part-time employees and employees who work overtime.

In accordance with Article 12 of the Spanish Workers’ Statute, companies had (and still have) the obligation to keep daily records of part-time employee working hours, providing them with a summary of all hours worked on a monthly basis. This summary must be delivered together with the relevant pay slips.

In addition to the above-mentioned obligation relating to part-time employees, Spanish companies also had (and still have) to track working hours when an employee works overtime. This was expressly stated in article 35.5 of the Workers’ Statute as a way of ensuring that the maximum limit of overtime hours was not exceeded. It also helped to potentially follow-up on social security contributions made as a result of working hours (which have to be limited – ie, 80 hours of overtime per year).

As we can see, there was no general obligation for Spanish companies to register working hours, with the exception of the aforementioned cases (part-time employees or overtime).

However, authoritative voices started discuss establishing a daily tracking of working hours. The concept appeared because the lack of a working hours tracking system generally prevented companies from full transparency in relation to working schemes and shifts. Initial proposals became a reality not through legislative change, but rather through cornerstone court rulings (overtime paid by way of time off in the following four months. This time is not considered as overtime due to its compensation by the way of rest).

Pioneer judgments on working time tracking systems and the beginnings of change

It must be noted that, before the new regulations were passed, the Spanish National Court (Audiencia Nacional) analysed three class-actions related to the issue (ie, 4 December 2015, 19 February 2015 and 6 May 2016) filed against banks. In particular, the Court stated that, in order to determine the employee’s working hours, it was necessary to keep a prior record of working hours. In short, the Court established that it would not be possible to assess overtime hours without a working hours tracking system.

In addition, the lack of any kind of tracking system could also be considered an infringement of worker representatives’ rights. The criteria were based on former Supreme Court rulings in 2003 and 2005. These rulings could be considered the origins of the legislative change that was to come.

Other public bodies were also affected by these rulings. The Labor Inspectorate took note of the National Court’s criteria and, through its Instruction 3/2016, concluded that it was necessary for all companies to keep daily records of working hours. This criterion also supported compliance with the representatives’ right to receive information in this regard.

However, these resolutions were all challenged before the Spanish Supreme Court. The Court issued new rulings that took us back to the starting point of the debate. In particular, the Supreme Court revoked the National Court’s rulings on the basis that Article 35.5 of the Workers’ Statute could not be interpreted in a broader sense, since the tracking system indicated in the article was only related to overtime hours (not a general obligation). The Supreme Court concluded that, if the legislators had intended to regulate a general obligation to track working time on a daily basis, they would have expressly said so (as they did with part-time workers). Thus, the legislation at the time could not be extensively applied to situations that were not expressly foreseen by law.

Due to the above, the Supreme Court urged the legislative bodies to undertake the relevant reforms with a view to clarifying the issue and establishing a general obligation on all companies to track working hours (even if the employees do not work part time or work overtime).

As a result of the Supreme Court rulings, the Labor Inspectorate also changed its criteria and applied the principles highlighted by the Court. The administrative body expressly argued in its Instruction 1/2017 that its previous Instruction 3/2016 still remained applicable, with only one exception: there was no general obligation to keep daily records of working hours at that time. The absence of such records cannot imply administrative penalties imposed upon companies. However, in any case, the Labor Inspectorate recalled that it still had the authority to ask companies for working hours records if a potential infringement was identified.

Legislative reform: Royal Legislative Decree 8/2019, of 8 March 2019 on urgent measures for social protection and the fight against employment insecurity

In May 2018, the Spanish government changed as a result of a motion of no confidence. This obviously implied an abrupt change in the legislative agenda. Among the priorities of the new government was a clear decision to establish the mandatory recording of working hours for all companies, regardless of whether or not overtime was worked. Within this context, Royal Legislative Decree 8/2019 was passed with the idea of reforming the current legal scheme in relation to working hours. The new law chiefly states the following:

• all companies are obliged to implement a daily working hours tracking system, which should be agreed under the scope of collective bargaining or a collective agreement with workers’ representatives (if an agreement is not reached, the company may impose the system after a consultation period with the workers' representatives);
• employers are free to choose and agree upon the working hours tracking system they consider suitable for keeping daily records. Under this scenario, workers are obliged to clock-in and out to record the time they start and finish working every day. The implementation of such systems had to be completed by all companies by May 2019;
• working hours records must be kept by companies for a period of four years and be at the worker representatives’ and Labor Inspectorate’s disposal at any time during such period; and
• this obligation does not mean that companies must inform or provide copies of such records to the workers’ representatives, but rather they must place such records at their disposal (in case they want to consult them whenever they want).

As we can see, the law has undergone a revolution: it has created new obligations that were never put in practice under the Spanish legal system. A series of questions arose regarding the practical application of the new law (especially for employees whose working hours schemes were flexible or not associated with a specific work centre).

Implementing the new law: Labour Inspectorate Instruction 1/2019

As indicated, there were a number of difficulties in the application of the new law. This is why the Labour Inspectorate provided technical parameters to be taken into account in future inspections and requests for information. The Labour Inspectorate thus shed more light on the way in which the systems should be implemented and the types of tracking systems that would be accepted. In this regard, it should be noted that the Labour Inspectorate would not approve tracking systems that pre-drafted or pre-determined working schemes (the hours must be recorded every day). Together with this Instruction, the Ministry of Employment and Social Security issued a practical guide on the recording of working hours, which essentially provided more clarity in relation to the forms of tracking and the operators affected by the new regulations (ie, senior executive employees are not affected by the new regulations).

The new regulations still raise significant questions for legal professionals and obviously need to be developed in detail (eg, the accepted types of tracking system must still be defined and working times determined, among other areas). From a practical perspective, companies are currently implementing internal guides that define working time and tracking systems. However, as explained, there are still many unanswered questions that need to be resolved in the near future, in order to avoid disputes between companies and employees.

Conclusions

The regulation of working time in Spain has always been a controversial topic both for employees and for companies. In this regard, Spanish employment laws did not establish a general obligation for companies to track working hours on a daily basis until March 2019. The entry into force of Royal Legislative Decree 8/2019 has changed the playing field, imposing new formal obligations to be observed by all companies in Spain. In any case, the approval of this new regulation is the result of certain deficiencies existing in the Spanish system (eg, performance of excessive working hours, lack of registration and transparency in relation to such hours, non-compliance with maximum working schedules etc).

However, this legislation established a new legal regime that did not take fully into account the complexity of modern employment relations. Working systems are progressively moving away from traditional structures (with strict working schedules and a close association with the work centre). New working systems provide employees with notable flexibility in the organisation of their employment conditions and, specifically, their working time. Thus, the reform intends to ensure security (eg, limiting working hours) and transparency for employees, but also provides for more control in sectors that are progressing through flexible working models.

The new regulations imply an important change for the Spanish working system, but there are still many unanswered questions about their practical application by companies: this should be resolved by our courts and administrative bodies. One thing is clear: the law should not ignore the modernisation of employment structures and the continuous flexibility aimed at fostering, among others, work-family conciliation.

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