The possibility to include clauses in employment contracts is, a priori, allowed for both employers and employees; however it should be recalled there are limits in the parties being able to include these clauses.

In this respect, the judgment analysed, ruled by the National Court on 13 October 2022, pointed out the limits that an employer is subject to, specifically regarding the possibility to unilaterally impose a minimum performance clause on a worker and to be able to automatically terminate such worker’s employment contract if performance level is not achieved.

What case was examined in the judgement of the National Court?

The class action filed by the UGT, USO and CCOO trade unions against the company began after they received notification sent by the company to the union sections by means of which it was stated that the following clause would be included in the future contracts entered into as of a certain date:

“Within the scope of the provisions in Article 49.1 b) of the Spanish Labour Relations Act (with initials in Spanish “ET”) and by virtue of both parties’ contractual independence (Article 3.1c of the ET), by mutual agreement, they hereby accept that a valid reason for the termination of the contract is the worker’s low performance in THREE consecutive months or FOUR alternate months over a period of SIX months, when it does not reach 75% of the average monthly production achieved by workers in the same job as the one to which he/she is assigned. The worker considers the aforementioned system of termination due to low performance is reasonable and proportionate.”

The company planned to include such clause in the contracts that were related to certain campaigns in which the number of sales was directly linked to the remuneration received by the company, which would allow it to actively control the workers’ performance and, if need be, immediately terminate their contracts in order to achieve the highest profitability possible.

The trade unions immediately challenged such clause and petitioned its revocation due to considering it infringed both the provisions in the ET and the applicable collective bargaining agreement, in addition it would imply unilaterally creating a new reason for dismissal, which would place the workers in a situation of complete lack of protection.

Conclusions and the court’s decision on this dispute.

The petitions made by the trade unions were admitted by the court, which ruled revocation of the disputed clause for the following reasons:

Firstly, it should be pointed out that, as specified by the National Court, although the disputed clause includes a comparative object to determine the performance to be achieved, the reality is that it functions as an automatic mechanism to terminate the contract, without taking into account the subjective or objective elements that could have caused such low performance.

Therefore, in the opinion of the National Court, the challenged clause would imply a clear abuse of law, since by means of its application it was intended to avoid needing to apply the reason for dismissal included in section e) of Article 54.2 of the ET in order to terminate the contract due to a decrease in work performance, which requires that the culpability and seriousness of the conduct must be proven, and the formal requirements imposed by Article 55 of the ET, since the low performance in the terms referred to in the clause would allow the company to simply terminate the employment contract without needing to meet any further requirements.

The National Court also deemed that, since the voluntary and continued decrease in performance is included as a very serious offence in the applicable collective bargaining agreement, the use of the challenged clause by means of individual collective bargaining would imply ignoring the clauses in the collective agreement and not applying the required voluntary wishes that low performance must be used as a reason for disciplinary dismissal.

As we have already mentioned, although the parties in a labour relationship have a certain freedom to determine the rules that will govern such relationship, it is clear that the judgement analysed herein recalled the limits in such freedom.

In this respect, drawing up a contract that complies with the legally stipulated requirements could be complicated in certain situations. It is therefore of the utmost importance to obtain legal and labour advice when drawing up an employment contract.

Therefore please do not hesitate to contact us so that the Labour Department of RSM Spain can advise and help you to carry out these kinds of procedures.