Labour Due Diligence
Description of possible reviews and their scopes of work Back to Due Diligence Panel
1. Contracting employees
What is it?
Review of company contracting policies: employees (fixed and part-time), senior management, students. Examination of all contract clauses, appendices, and present and future obligations. Analysis and evaluation of unusual contract clauses, in particular those affecting company management.
When is it recommended?
Recommended for all operations where potential labour risks exist, and in particular where a significant percentage acquisition is being considered, in order to minimize the risks assumed by the acquiring entity.
2. System of remuneration
What is it?
Review of the correct application of the company’s remuneration policies and practices: sector, company, and work centre collective agreements and non-statutory agreements etc. Examination of the remuneration policies applied to personnel excluded from agreements. Review of current obligations (bonus, vehicles etc.). Analysis of compliance with applicable legislation in the case of unusual circumstances.
When is it recommended?
Recommended for all operations in order to identify the labour risks, and, if applicable, to verify compliance with Collective Wage Agreement legislation and agreements with workers’ representatives.
3. Social Security
What is it?
Review of correct contributions made on all salary amounts, especially where there are complimentary payments or overtime. Evaluation of any risks that might exist. Review of any deferred payments, of any deductions obtained etc.
When is it recommended?
Recommended for all operations involving companies with a significant number of workers, in addition to recently-established companies, in order to identify risks relating to compliance with Social Security legislation.
4. Working calendar and holidays
What is it?
Review of the working calendar, including timetable, days worked per week, public holidays and annual leave, and of compliance with labour legislation and the applicable Collective Agreement, and, if applicable, with agreements with workers’ representatives.
When is it recommended?
Recommended for all operations involving companies with a significant number of workers or where workers perform overtime in order to identify any labour risks, and, if applicable, compliance with Collective Wage Agreement legislation.
5. Relocated workers
What is it?
Review of the employee files of relocated workers, either nationally or internationally, and of any consequences that might arise for the company.
When is it recommended?
Recommended for operations involving companies with a significant number of relocated workers.
6. Social benefits
What is it?
Review of the company’s current plans and of its adequate coverage of employee social benefits (pension plans, insurance policies etc). Review of respective contracts, and opinion on their correct application and any risks that they may bring.
When is it recommended?
Recommended for all operations where potential labour risks exist, and in particular where a significant percentage acquisition is being considered, in order to minimize the risks assumed by the acquiring entity.
7. Collective negotiations
What is it?
Review of the current company policy with regards to collective agreements. Analysis of any current or possible conflicts within the company. Review of representative bodies of company syndicates.
When is it recommended?
Recommended for all operations involving companies with a significant number of workers to identify the labour risks, and, if applicable, to verify compliance with Collective Wage Agreement legislation.
8. Employee contract termination
What is it?
Review of the company retirement policies, seniority bonuses etc., and any obligations derived. Review of agreements over continuity, exclusive dedication, non-competition, and any additional payments to senior management.
When is it recommended?
Recommended for all operations where potential labour risks exist, and in particular where a significant percentage acquisition is being considered, in order to minimize the risks assumed by the acquiring entity.
9. Disputes
What is it?
Analysis and evaluation of judicial lawsuits in progress, and claims made by labour inspectors, Social Security etc. Possible impacts to the company.
When is it recommended?
Recommended for all operations, in particular where the companies involved are or may be involved in labour litigation in order to quantify possible contingencies.
10. Subcontracted workers
What is it?
Review of services provided by freelance workers and outsourced services, and an evaluation and quantification of possible risks thereof.
Recommended for operations involving companies that use a large number of subcontracted workers.
11. Company policies
What is it?
Review of the compliance with legislation governing equality in the workplace (‘Ley de Igualdad en la Empresa’), obligations to hire handicapped workers or of the application of alternative means. Analysis of obligations derived from company training plans, in particular in the case of subsidised plans. Review of Quality Control legislation (audits etc.). If applicable, review of internal policies regarding use of Information Technology and other such policies.
When is it recommended?
Recommended for all operations where potential labour risks exist, and in particular where a significant percentage acquisition is being considered, in order to minimize the risks assumed by the acquiring entity.
12. Risk prevention
What is it?
Review and evaluation of compliance with labour risk prevention requirements, including planning, prevention services, health and safety work committees, etc.
When is it recommended?
Recommended for all operations involving companies whose business activities have high health and safety at works risks.
