When a group of businesses is considered to be at labour level?

Many of our clients maintain a structure with various interrelated corporate organizations, but ignore exactly which are the consequences that this act can lead to.

This is why we should differentiate between “a group of businesses” and “business group”. The first concept is safer in terms of the possible consequences in a labour level, while the second one transcends with the joint and several liability of all businesses that are part of that structure, knowing them as well as “pathological businesses group”  when the objective data that is taken to consideration of the existence of that labour relationship are framed in the occultation or fraud areas.

The concurrence of the simple fact of two or more businesses pertaining to the same business group is not enough to derive into joint and several liability regarding to the taken obligations by one of them with its own workers, but the presence of the additional elements is essential. This is because the group components have in principle their own area of liability due to being independent legal entities.

The additional elements that lead to the determination of the joint and several liability of every business organization that are part of the group structure, have been defined by the Supreme Court’s jurisprudence, and can be resumed in the following:

• The unitary functioning of the group’s business organizations: manifesting in the indistinct exercise of the job – simultaneously or successively – in favour of various group’s businesses. In this sense, the Jurisprudence has been qualifying that we are before an only labour relationship in which the holder is the group in its real subject condition and effective in the unitary exploitation on behalf of the relationship provided by the workers services. These situations are framed in the article 1.2 of the workers statute (Estatuto de los Trabajadores), that qualifies both natural and legal persons as entrepreneurs, but also in the property communities that take the workers services.

• Asset confusion: what has to be taken into consideration of this element is that alludes to the belonging and use of the social assets in an indistinctive way, that does not block the use of joined infrastructures or common production resources, as long as the joined belonging or the transfer of its use are clear and adequately formalized. It is also relevant that it is not considered the turnout of this element when these elements or social assets are disorganized or physically mixed, or unless the separation cannot be formally rebuilt.

• Cash unit: Has to be considered as an additional factor to the asset confusion explained previously, entailing the extreme level of it, to the point of the identification of both judgements being sustained. It makes reference to what in theory it is called “promiscuidad en la gestion económica” and when it is said of the jurisprudence alludes to a situation of an operative and accounting situation, which is not identifiable with the new situations of “cash pooling” between businesses from the same Group, in which the cash unit is merely accounting and it is not followed by any asset confusion. This is because it has a centralized management of the treasury for groups of businesses, with the corresponding advantages of information and cost reduction.

• Fraudulent use of legal personality with the creation of the simulated company: This element points out to a create a simulated company as a concept closely linked to asset and staff confusion, and alludes to a fraud of the personification use, which is what precisely determinates the application of the piercing of the corporate veil, in the cases in which a real business and another that works as a screen for it can be appreciated.

• Abusive or anormal use of the unitary direction with prejudice for the worker’s rights: It is evident that the legitimate direction in a business group is not worth having in mind as a determinant circumstance of the existence of joint and several liability between all the group businesses in relation with the labour obligations, but this unitary direction can be a target of abusive exercise when it is practiced abnormally and causes a damage to workers, such when actions are taken for the exclusive benefit of the group or dominant business.

Lastly, we should notice that the labour businesses group and, in consequence, the extension of the liability in the accomplishing of the labour obligations to all businesses that are part of the group’s structure, by the joint  and several liability  applied to all of them, should be applied and consider in those cases or specific situations, where the proof in each case has been showed and valued, and that the ahead explained element concur, always having in mind that those elements are not accumulative, it is to say, that the concurrence of all of them it is not  a necessary or indispensable requirement, therefore each  of them will be considered in function of the rest  of the concurring circumstances and in function of the displayed signs in one sense or another.

José Luis Valverde Moreno – Manzanero

Lawyer in charge if the Labour Area of Devesa & Calvo.