Employment-related ESG obligations in Spain: are companies up to date?

Versión en español

A new year has begun with particular relevance for ESG in Spain, especially with regards to the "S" in ESG (Social). It is expected that companies' obligations will increase. The main issues, which have garnered considerable attention, refer to the recording of work time, the reduction in working hours and digital disconnection. Given the tidal wave of expected changes, the question remains: are companies currently complying with their ESG obligations?. 

We have prepared an informative table summarising companies' employment obligations, the minimum content that those obligations may have and the potential sanctions that companies face as a result of non-compliance:

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1. Protocol against sexual and gender-based harrasment
2. Digital disconnection policy
3. Whistleblower protection policy
4. Remuneration register
5. Time recording
6. Remote working agreements
7. Equality plans
8. LGTBI plan
9. Quota of differently abled workers

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Obligations for all companies

1. Protocol against sexual and gender-based harassment

Applicable legislation: Organic Law 3/2007, of 22 March, on the effective equality of women and men,

Key features:

• Specific protocol or procedure against sexual and gender-based harassment, as well as putting in place a reporting channel or means by which to channel complaints or claims in this area.
• Registering the measures or protocols implemented to prevent sexual and gender-based harassment at work is voluntary – by contrast with the equality plan, which is mandatory.
• These protocols or measures to prevent sexual and gender-based harassment must be part of the mandatory minimum content of the equality plan audit.

Relevant authority: In the face of sexual and gender-based harassment, the affected worker may:

• inform the company through the reporting channel provided for in the harassment protocol;
• report the matter to the Labour and Social Security Inspectorate (ITSS);
• file a lawsuit before the labour courts (or criminal courts where a criminal offence may have occurred).

Consequences for non-compliance: Serious infringement, punishable with a fine ranging from €751 to €7,500. However, it is understood that the company has complied with this obligation if it has a general protocol against harassment and violence that provides measures for members of the LGBTI community or is specifically extended to include them.

2. Política de desconexión digital 

Applicable legislation: Organic Law 3/2018, of 5 December, on the protection of personal data and guarantee of digital rights

Key features:

• After meeting with the workers' representatives, the company will draw up an internal policy aimed at workers, including those in management positions, to define how to exercise the right to disconnect; training and awareness actions will also be provided for staff on the reasonable use of technological tools to avoid the risk of computer fatigue.
• In particular, the right to digital disconnection will also apply to remote work, whether total or partial, as well as at employees' homes linked to the use of technological tools for work purposes.

Consequences for non-compliance: Fines of up to €7,500 as a result of imposing working conditions that are less beneficial than those established by law or by collective bargaining agreement.

3. Whistleblower protection policy

Applicable legislation: Law 2/2023, of 20 February, regulating the protection of persons who report regulatory and anti-corruption infringements and Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report infringements of Union law.

Key features:

• Companies with more than 50 employees or in special sectors must have in place an internal reporting system by which workers can report, anonymously if they wish, actions or omissions that may constitute an infringement of EU law or serious or very serious criminal or administrative infringements of Spanish law.
• It includes all serious or very serious criminal or administrative offences that entail pecuniary damage to the Public Treasury and Social Security, without prejudice to the safeguards established in their respective specific regulations.

Relevant authority: 

• Head of the internal reporting system.
• Independent Whistleblower Protection Authority.

Consequences for non-compliance: Article 63 of Law 2/2023 provides for serious, very serious and minor infringements.

4. Remuneration register

Applicable legislation: Royal Decree 902/2020, of 13 October, on equal pay between women and men, and the Spanish Workers' Statute.

Key features:

• All companies must keep a remuneration register of their workforce, including executive staff and senior management, which must include average values - arithmetic mean and median - of staff salaries, salary supplements and non-salary items, broken down by gender, and distributed by equivalent professional group, professional category or position or that are equal in value.
• Companies that conduct remuneration audits must include average and median salaries for positions of equal value on the basis of job valuation. If salary differences between genders exceed 25%, the employer must provide justification that the difference is not gender-based; this may not rule out potential evidence of discrimination in court.
• Workers will have access to their company's remuneration register. If no workers' representatives are in place, employees will only have access to percentage differences according to gender, according to remuneration and category. If the company has workers' representatives, employees will have access to the complete register, with averaged data; this will be subject to a confidentiality undertaking. According to recent case law of the Spanish Supreme Court, the remuneration register cannot be required to contain individualised data if its disclosure would make it possible to identify individual workers.

Consequences for non-compliance: The company's decisions that involve discrimination, whether that be direct or indirect, or favourable or unfavourable, in terms of pay on the basis of gender constitute a very serious infringement, punishable with a fine ranging from €7,501 to €225,018.

5. Time recording

Applicable legislation: Royal Decree-Law 8/2019, of 8 March, on urgent measures for the protection of employment and the fight against job insecurity in respect of the working day, and the Spanish Workers' Statute.

Key features:

• Companies must guarantee a daily record of workers' working hours, which must include specific working day start and end times per worker.
• The company must keep working time records for four years and they must remain available to workers, their legal representatives and the Labour and Social Security Inspectorate (ITSS).  Under current regulations, paper records do not meet the required security and invariability standards.
• The burden of proof lies with the worker when overtime is claimed for periods prior to 13 May 2019. Conversely, for periods after that date, the burden of proof lies with the employer, which has the obligation to keep a record of working hours per worker, regardless of the existence of overtime or otherwise.

Relevant authority: Works' Council.

Consequences for non-compliance: Fines from €751 to €187,515.

6. Remote working agreements

Applicable legislation: Law 10/2021, of 9 July, on remote work.

Key features: Remote work that is rendered, in a reference period of three months over a minimum of 30% of working hours, or equivalent proportional percentage depending on the duration of the employment contract – collective bargaining agreements may establish a lower percentage or reference period.

Consequences for non-compliance: Serious administrative offence of labour relations, punishable with a fine ranging from €751 to €7,500.

in the case of companies with more than 50/51 employees

7. Equality plans

Applicable legislation: Royal Decree 901/2020, of 13 October, regulating equality plans and their registration and amending Royal Decree 713/2010, of 28 May, on the registration and filing of collective bargaining agreements and arrangements.

Key features:

• Companies must negotiate measures with the workers' representatives aimed at promoting effective equality between women and men, and to remove any potential discrimination in their organisation.
• These measures must be set out in an equality plan, after conducting an audit within the organisation.
• Equality plans are also mandatory: (i) if the applicable collective bargaining agreement has established that they must be implemented, or (i) if the labour authority has, in the context of infringement proceedings, ruled that ancillary sanctions may be replaced with an equality plan.
• They must include a remuneration audit to glean the information necessary to check whether their system of remuneration applies the principle of equality between women and men, to define requirements to prevent obstacles to that equality and to ensure transparency and monitoring of the system. Before an equality plan is drafted, the company must have implemented a remuneration register and a valuation of job positions to identify potential gender gaps within the company.

Relevant authority: Negotiation committee, which has powers both prior to negotiation of the plan and afterwards.

Consequences for non-compliance:

• Serious infringement punishable with a fine ranging between €751 and €7,500. If the obligation to draw up and implement an equality plan emerges because a labour authority has decided to replace ancillary sanctions, non-compliance constitutes a very serious infringement punishable by a fine ranging between €7,501 to €225,018.
• Prohibition to enter into contract with the public sector.
• Disqualification from social security rebates.

8. LGTBI plan

Applicable legislation: Organic Law 4/2023, of 27 April, amending Organic Law 10/1995, of 23 November, on the Criminal Code, having regard to crimes against sexual freedom, the Spanish Law of Criminal Procedure Organic Law 5/2000, of 12 January, regulating the criminal liability of minors and Royal Decree 901/2020, of 13 October, which regulates equality plans and their registration and amending Royal Decree 713/2010, of 28 May, on the registration and filing of collective bargaining agreements.

Key features:

• Companies must have in place a set of planned measures and resources to achieve real and effective equality for members of the LGBTI community.
• Measures must be agreed through collective bargaining.
• Companies with a collective bargaining agreement or with workers' representatives have a maximum of three months from the entry into force of RD 1026/2024 (10 January 2025) to start negotiating the measures of the LGTBI plan by setting up a negotiating committee to that end.
• Companies without a collective agreement or legal representatives and that are obliged to negotiate an LGTBI plan have a maximum of six months to set up the negotiating committee from the entry into force of RD 1026/2024 (10 January 2025).

Relevant authority: Commission in charge of the investigation.

Consequences for non-compliance: Reference to art. 79 et seq. of Law 4/2023.

9. Quota of differently abled workers

Applicable legislation: Royal Legislative Decree 1/2013, of 29 November, approving the recast general law on the rights of persons with disabilities and their social inclusion.

Key features:

• Companies employing 50 or more workers have an obligation to ensure that at least 2% of those workers are differently abled.
• Companies may otherwise adopt alternative measures.

Consequences for non-compliance: 

• Serious infringement punishable with a fine ranging from €751 to €7,500.
• A ban on engaging with the public administration.
• Failure to comply with positive action measures pursuant to regulatory obligations, such as those relating to the quota on differently abled workers, constitutes direct discrimination.

The trend in the European Union and in Spain continues to be to strengthen ESG measures and, as far as the social/employment element is concerned, with special emphasis on DEI (Diversity, Equity and Inclusion) measures. However, the radical change of direction in the US has caused a stir both domestically and abroad.

In Spain, President Donald Trump's decision to require embassy suppliers to certify that they do not implement DEI measures has caused the first head-on collision between legal obligations in Spain (obligations to establish an equality plan and LGTBI plan), in line with European trends in DEI, and the new stance of the US. Will this trigger a change of direction here?

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