Labor Protocol

What is a Labor Protocol? Background.

In Leialta we are aware of our clients’ needs and many of them ask us: what is a labor protocol and what are its benefits? The fact that two or more companies belong to the same commercial business group is not enough to consider the existence of a joint liability of them all regarding to the obligations undertaken by one of the companies with its own workers (Supreme Court Decisions of January 23rd, 2002 and January 26th, 2000).

Labor protocol
Some decisions taken by the Supreme Justice Courts of Madrid, Basque Country and Catalonia assert that the very fact that one company owns a 100% of the shares belonging to other society in the group reveals no existence of a company group in terms of labor law.

Basing on information obtained from your company and provided there is a Company Group (Section 42 of the Spanish Commercial Code), we would take care of establishing an operative work protocol for the companies in the group, aiming to prevent being considered a labor corporate group for the purpose of responding with joint efforts to an objective dismissal. Each company or part of the commercial business group has its own area of responsibility, as the independent legal persons they are.

General guidelines to be taken in account

Basing on the sixth legal basis of Decision STS 03/05/90, the list of additional elements that define the responsibility of the different companies in the group could be as follows:

  1. the unified functioning of labor organizations inside the group’s companies, shown by the indistinct work provision – simultaneously or successively – in favor of several of the group’s companies;
  2. patrimonial confusion;
  3. cash unit;
  4. the fraudulent use of the legal personality by creating an ‘apparent’ company;
  5. and the abusive – abnormal – use of the unified management with prejudice to the workers rights.

As it is stated in the Decision of May, 27th 2013 QSJ 2013/142865, “In any case, it should also be remarked – basing on the stated STS March/20/13 – that the concept of labor corporate group, and especially the determination of the spread of the group’s companies’ responsibility, depends on every concrete situation that could flow from a proof that has been demonstrated and assessed in each case, without being possible to perform a closed-requirement numerical ratio so it can be understood that this spread of responsibility exists. Among other things, this is because in a company… network…, the intensity or the position of the companies regarding the workers or the group is not the same”.

Contents of the labor protocol

It is about establishing a periodically-updating operative-working labor protocol that will have to signed by the workers representatives under the following criteria:

  • A labor organization chart of the group will be established. If there should be a provision of services between the group’s companies delivered by the same worker, a contract for provision of services between the companies would be established, with the corresponding documentation that would certify the stated provision of services through an invoice and its corresponding incoming and outgoing cash flow in and from each company.
  • The managerial chart of the company group would be defined aiming to prevent the existence of the unified management, although the coincidence of some members in the companies’ organization bodies does not compulsory involves the existence of a unified management.
  • Identification of each company with their identifying data, registration details, address where the company’s activity takes place, details of the bank accounts from each company, current bank accounts, distinct financial assets and liabilities, details of loan transactions between group’s companies that remain in market situation, etc.
  • Updating of the contracts for provision of services between the group’s companies.
In conclusion, a labor protocol intends to set the basic guidelines for an operative work in an organized way, in order to prevent future labor prejudice due to the possible future spread of responsibility derived from a wrong operative work between the group’s companies. Additionally, we will try to establish the most optimal corporate conduct with the aim of professionalizing family companies and guarantee their sustainability over time, and equally intending to ensure employment in the long term.

Labor protocol for SMEsIf you manage a company group and would like to have more information from a consultant specialized in the labor protocol area, contact us and we will gladly help you.