Employee Share Plans in Europe and the USA - Sorainen

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Employee Share Plans in Europe and the USASpainthe first €6,000 and at 21% on any excess, 27 regardless of how long the shareshave been held. 287. Employee benefit trustsTrusts are not recognised by Spanish law. If a Spanish resident is a potentialbeneficiary of a discretionary employee benefit trust he will not be subject to taxunless he actually receives benefits. A Spanish company cannot claim a taxdeduction for payments made to such a trust.8. Data protectionIn addition to certain other formalities that are required, unambiguous employeeconsent must be obtained for the collection, processing, assignment andworldwide transfer of personal data in connection with an employee share plan. 29272829The increased rate of 21% applies to any amount exceeding €6,000 taking into account the entire"savings income" (which includes dividends, interest, capital gains etc) obtained by the employee in thesame year.If the employee was entitled to utilise the tax exemption referred to above, and he/she sells the shareswithin a period of three years following receipt, then the employee must reassess his/her tax situationby submitting a tax return relating to the tax year in which the shares were acquired.According to the Spanish law on Data Protection (Organic Law 15/1999, dated 13 December 1999, onData Protection), the employees involved in a share plan, as data subjects, must first be provided withcertain information as regards the personal data processing, such as (i) the purpose of the dataprocessing and the recipients of the data; or (ii) their ability to exercise their rights of access,rectification, deletion and objection.Moreover, the processing of personal data (including the data transfer) carried out in connection withthe share plan will require the prior consent from the employees (being an express written consentnecessary in the event that sensitive data is processed).Finally, as regards the eventual international transfer of employees personal data involved in the shareplan, it should be noted that, most of the time, their prior consent will be required and the procedure tocarry out the international data transfer will depend on the nature of the personal data processed andthe country of destination (e.g. transfers to countries outside the EEA will require prior authorisationfrom the Director of the Spanish Data Protection Agency).Although under Spanish regulations, the general rule is that employee's prior consent is requiredbefore transferring, communicating or processing any personal data, under Spanish Data Protectionlaw there are also several exceptions to this requirement. One such exception is the existence of alabour relationship. Under a labour relationship:• No employee consent is required for the processing of personal data provided that such data isrequired for the maintenance of the relevant labour relationship.• No employee consent is required for the communication of personal data provided that suchcommunication is for the purposes of furthering the legitimate interests of the employer.UK/1729295/03 177 September 2010
Employee Share Plans in Europe and the USASpain9. Employment law9.1 Please refer to paragraph 4 on pages 5-6 of this guide. This explains theemployment law issues which are generally applicable to a greater or lesserdegree in all the countries covered by this guide. There is a risk that employeesmay claim a right to continued participation in an employee share plan or thatrights under a plan may be included in compensation on termination.Companies should seek specific advice on these issues and other employmentlaw issues which may be applicable. In addition to these general employmentlaw issues, specific issues arising in Spain are mentioned below.9.2 On termination of employment in certain circumstances, options and similarrights granted under employee share plans can be taken into account indetermining the compensation due to the former employee. 309.3 In relation to the treatment of outstanding stock option rights where theemployees had been unfairly dismissed, the Labour Courts have decided incertain cases that employees were entitled to keep their existing option rights(including unvested rights) and that these should retain their normalvesting/exercise terms. The reasoning was that the employer could not evadeits contractual obligations to the employees by acting unilaterally in an unfairmatter. However, the decisions in termination cases which involve share optionsare issued on a case-by-case basis and are not long-established. 319.4 Unfortunately, the usual exclusion clause found in option contracts and thereference to the contract being governed by the laws of a foreign jurisdiction• No employee consent is required for the transfer of personal data provided that there is anagreement between the transferor and the transferee (excluding, therefore, the employee).Where the transfer does not have a legitimate interest and/or does not have justified purposes or in thecase of sensitive personal data, such as religion, race or sexual orientation, the exemptions statedabove do not apply.3031In this regard, some Regional Labour Courts have limited the classification of salary for severance paycalculation purposes to the income obtained by the employee through the exercise of accrued optionsin the 12 months preceding the termination. On the other hand, the Supreme Court has established ina recent ruling that, for severance pay calculation purposes, the income obtained by the employee inthe exercise should be proportionally distributed along the vesting period (assuming the vesting periodis over one year).In certain cases where the stock option plan did not specifically explain the rules or consequences inthe event of unfair dismissals, the Supreme Court applied in their place the regulations contained in theplan for cases of death, retirement or long-term disability. Even if the option contract states otherwisefor the events of dismissals, this may not prevent the Courts from disregarding such provision if there isevidence of fraud of law or abuse of law by the employer (e.g. if the dismissal is carried outimmediately before the maturity date so as to prevent the employee receiving benefits under the plan).UK/1729295/03 178 September 2010
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Employee Share Plans in Europe and the USA - Sorainen

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