Hi Peter - you have a "fun" project there!

Spain isn't one of the countries where I have a deep understanding, but I am pretty sure of the following points from variours file notes - hope this helps:

• If he's an employee of a UK company (I assume this is the case), any UK conditions will apply, except where Spanish provisions are more generous. If a local company (a subsidiary of the UK one?) is employing him, then pure Spanish labour law applies.
• A  "conciliation agreement " system of termination by mutual agreement exists. The signed document has to be submitted for ratification to the "conciliation chamber". This approach is common, and as long as the agreement dosn't call for waiving statutory rights, and the wording is clearly understandable for a layman, then most get approved. The downside is that any payments are taxable, whereas redundancy and unfair dismissal payments are tax free up to about 175k€. For this reason, payouts are higher than dismissal rates without the "concilitation" - in the order of +25-40%
• Dismissal for discipline or redundancy call for the application of appropriate Spanish procedures - potentially costly in time, but if appropriately followed will permit tax free payments as mentioned above, and avoidance of hiccups (unless dismissal is unfair) - entitlements are 20 days per year of service up to 12 months salary in total
• If the dismissal is contested and found unfair, penalities are 45 days per year of service up to 2112(?) and 33 days thereafter

given that the dismissal is potentially for for "mixed" reasons, the settlement route may well be safer

Perhaps someone else can give chapter and verse?

best regards

Ray

In reply to Ray:

Peter
"2112" in my post should is of read course 2012
my slingers fipped on the beykoard :-)

Hi Peter,
Was the business that was taken over by your client established in Spain or was it a UK Business? Is the employee on an UK employment contract or Spanish contract? In most likelyhood the Spanish law would apply since the employee is based in Spain and I am assuming he is also paying taxes and social security in Spain? Let me know if my assumption is wrong.

Assuming he is on a Spanish contract the next steo would be to establish if there is any CBA applicable to the business. If yes is it a National CBA or the regional one.

With regard to mutual termination Ray has already pointed out that it needs to be ratified at the "conciliation chamber". and both parties have to be present. You (your client) may send your representive on your behalf but you will need to provide him with Power of Attorney.
The redudnacy process is not too complex and Ray has outlined the severance entilement with regard to 33 days salary for each year of service for employment period upto Fen 2012 and 45 days salary per year of service after that. So when it comes to mutual termination the offer has to be higher than this amount else it will not make sense for the employee to sign the mutual termination agreement. Also Ray is right the severance/ redundancy payment is tax free and the tax free allowance is now capped at €180,000, provided that the parties ratify the settlement agreement before an official body (so-called Conciliation Chambers).

I think you need specialist advise and it is better if you consult specialist so that they handle the process for you. If you get it worng it will be a costly affair.

I would recommend going for Global HR Consulting firm such as MCN Assocaites who have lot of expericen in dealing with such issues and are cheaper that local law firms so good value for money.

Thanks
Raj

Peter, if you are looking for an employment law firm in Spain with excellent English speaking staff, Sagardoy Abogados regularly comes high on the recommended list within my European network. Never used them myself so can't comment directly.

Their site indicates which lawyers speak which languages, so just click on the name of each person at the following address to find contact details

http://www.sagardoy.com/en/lawyers

For what it's worth......

In reply to Raj:

He is English on an English contract and paid/taxed in the UK.
My guess is that he will not even think of Spanish employment law

In reply to Peter Stanway:

Thank you Ray and Raj. Very helpful (if disappointing!)

In reply to Peter Stanway:

Hi Peter,
In that case you may go for the standard UK settlement agreement. However, just bear in mind that there is a risk that the employee does have the option to challenge you in Spanish courts should he wish to do so.
But as you said this is highly unlikely plus if he signs the settlement agreement in UK than you can be rest assured he will not consider trying that gig. Now the next thing for you to consider would be how much you are willing to pay as a settlement amount and if that is going to be cheaper than what you would have paid in Spain for the settlement.

Raj

In reply to Peter Stanway:

Peter, if you plan to go down the UK settlement agreement route, then an approach for estimating costs could be :

1. Calculate what you would offer in UK, plus associated employer's costs
2. Calculate dismissal allowance for Spain (20 days/year to a max of 12 months salary)
3. Gross-up the figure in 2 since - unlike the statutory dismissal payment route - this would be taxable
4. Target a figure somewhere between 1 and 3, leaving wiggle room for negotiation to move up towards the figure in 3 (or a little more if necessary to close the deal)

As Raj says, there will still be a risk of a challenge in the Spanish courts, but this really is a judgement call for your clients. 

all the best

Ray

In reply to Ray:

Thank you Ray&Raj

I have advised them to do a straight UK redundancy and a SA if he expects more.