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5
Labor and social security regulations
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5Senior management contracts

Special rules apply to certain types of employee, including most notably the special senior management labor relationship governed by Royal Decree 1382/1985, of August 1, 1985.

A senior manager is an employee who has broad management authority in relation to the company’s general objectives and exercises that authority independently and with full responsibility, reporting only to the company’s supreme governing and managing body.

The working conditions of senior managers are subject to fewer constraints than those for ordinary employees and, as a general rule, the parties (employer and senior manager) have ample room for maneuver in defining their contractual relationship.

The following provisions are established in relation to the termination of senior management employment contracts:

  • Senior managers’ contracts can be terminated without cause by serving notice at least 3 months in advance, in which case they are entitled to severance pay of seven days’ pay per year worked, up to a maximum of six months’ pay, unless different terms of severance have been agreed on.
  • Alternatively, a senior manager can be dismissed on any of the grounds stipulated in general labor legislation (objective grounds, disciplinary action). If the dismissal is held to be unjustified, the senior manager is entitled to 20 days’ pay in cash per year worked, up to a maximum of 12 months’ pay, unless different terms of severance have been agreed on.
  • In addition, the law establishes certain grounds on which the senior manager can terminate his or her contract and receive the agreed-upon severance pay and, failing that, the severance pay established for termination due to employer withdrawal.
  • Senior manager may freely withdraw from their contracts by serving at least three months’ advance notice.

Although the statutory severance for senior managers is currently lower than that for ordinary employees, in practice, senior management contracts usually provide for severance payments that are higher than the statutory minimum.