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The trend over the past two decades or more has been towards deregulation of the employment sphere. Since the reform introduced by Law 11/1994, there has been a gradual effort to reduce the role of legislation in favour of collective bargaining agreements. This reflects the view that individual sectors are best placed to reach agreements that meet their own specific needs.
The current reform of collective bargaining reshapes the hierarchy of employment law, placing the company-level agreement at its centre. Without fundamentally altering existing legislation, this type of agreement allows companies to set their own ground rules.
What is a company-level agreement? These are legally binding agreements reached between an employer and "certain employees". Unlike sector-wide agreements, which are signed by trade unions, company-level agreements can be negotiated directly with the works council, staff delegates, or trade union branches within the company.
Until now, company-level agreements could not regulate many matters that were reserved for national, regional, or provincial sector agreements. However, this reform inverts the hierarchy: the company-level agreement now takes precedence and can regulate virtually everything, except in specific cases expressly provided for. This represents a significant opportunity for companies whose particular needs are not adequately addressed by sector-wide agreements, they can now create their own.
What matters can company-level agreements now regulate on a priority basis? As noted above, the scope is broad: the amount of base salary and salary supplements; payment for overtime or time off in lieu; shift work remuneration; working time arrangements, provided the maximum hours set by the sector agreement are not exceeded; annual holiday scheduling, which may modify the distribution of holidays while respecting the total number of days set by the sector agreement; employee job classification, allowing companies to create their own categories; types of employment contract, which the company may adapt to its needs, for example, by defining the grounds that justify project-based or service-specific contracts; and measures to support work-life balance, allowing amendments to the sector agreement in all respects except the right to voluntarily reduce working hours until a child reaches the age of eight.
Beyond everything outlined above, at Conesa Legal we have long advised certain clients that companies should consider negotiating their own company-level collective agreement, which until recently had limited scope for independent terms, in order to avoid the cumbersome task of managing up to 12 different provincial agreements within the HR departments of businesses operating across multiple locations.
As is clear from the above, the new role of the company-level collective bargaining agreement, properly understood, removes significant obstacles to internal flexibility within businesses. Going forward, each individual company, whether or not a sector-level agreement applies to it, will be able to set its own rules and reach arrangements with some of its employees, provided the sector agreement does not expressly prohibit this. In our view, those who appreciate the full range of arrangements this opens up will recognise that this reform is far from inconsequential.
From the moment the applicable rules are shaped by the agreements reached, the art of negotiation becomes absolutely central, and cannot be left to anything other than expert hands. At Conesa Legal, we have years of experience as negotiators of sector-level collective bargaining agreements, as well as an in-depth understanding of businesses' needs and the intricacies of trade union relations and dealings with employee representatives. Making the most of the opportunity to create a bespoke set of rules within the company itself will depend, to a very great extent, on sound advice.
