Our labour laws include various formulae for recruiting workers, allowing companies to choose one or another depending on their corporate needs at the time or the personal or professional circumstances of the recruited employees.
Article 10 of the Spanish Labour Relations Act includes a recruitment method that is not used very much and is overlooked by many, maybe due to its practical defects or maybe because its features are not known, i.e. the group contract.
A group contract involves entering into one sole employment contract with a single labour relationship being created that affects various workers.
A group contract can be defined as a contractual system that allows an employer and a group of workers to enter into a labour relationship by means of one sole employment contract.
Once the formalities have been carried out, the group contract creates a single legal relationship between the employer and the group of workers that reciprocally implies a commitment of the employer with the group. This system is normally used when entering into employment contracts, among others, with choirs, music bands, groups in variety shows and entertainment events or groups of workers who collect fruit and vegetables.
A group contract requires a head of group must be appointed.
The first issue that must be taken into account is the way the contract must be drawn up. Group contracts, regardless of whether they are entered into permanently or for a specific term, must always be drawn up in writing, the signatories being the employer and the head of group, who will be the person that, as a member of the recruited group, is appointed by it to act as a representative and as an intermediary with the employer.
A group contract must also have minimum contents consisting of a description of the services to be rendered by the group, the term the services will be rendered, the overall remuneration, working hours and identification of the members of the group.
Certain clauses may be included when carrying out the formalities for a group contract that link the contract remaining in force to the presence of certain members in the group; an example of this could be when a music group is hired and, if the singer leaves the band, automatic termination of the employment contract takes place.
However, the only aspect that has nothing to do with the group condition, which these kinds of contracts have at any time, is related to the social security obligations because the employer must individually register each of the workers included in the group in the general system and contribute in a separate manner for each of them.
A single overall remuneration is paid that the head of group must share among the group’s members.
Regarding the salary, the employer must pay all the remuneration to the head of group who will then individually share it among all the members of the group.
Termination of group contracts can be based on various reasons, such as breach of the obligations agreed by the parties or completion of the object of the contract or when it no longer exists, being possible that one or some of the members in the group continue rendering their services to the employer according to a new contractual employment system, this situation being considered a novation of their employment contract and it can be deemed that the seniority of these workers in the company will be counted from the date when the group contract was entered into.
In fact, the group contract is not used as a system very much within the current scope of labour relations but, in many cases it can be imply a good contractual formula in particular depending on the activity performed by the employer.
Author: Rafael Rojas, partner at RSM Spain