Ministry of Employment
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Cooperatives and worker-owned companies
Worker-owned companies can hire non-member workers on an open-ended basis, but those workers cannot work for more than 15% of the total hours' work devoted in the year by the worker members. If the company has fewer than 25 member workers, that percentage is raised to 25%. They can also hire workers on fixed-term contracts. In such cases, these arrangements are not taken into account in calculating the above-mentioned percentages.
If those working-time percentages are exceeded, the company must start complying with them within three years by reducing the excess work-time initially arising by at least a third each year. Any excess over those limits must be reported to the Register of Worker-Owned Companies.
With respect to cooperatives , a distinction is drawn between associated work cooperatives and other cooperatives.
a) Associated work cooperatives can hire workers who are not members, but those workers cannot work for more than 30% of the hours worked per year by the member workers. Article 115 of Law 18/2002 on Cooperatives gives a list of cases that do not count for the purpose of calculating that percentage.
b) Other cooperatives can hire workers, either permanently or through fixed-term contracts; if they do, labour regulations apply to those workers. The Cooperatives Law also provides that the Memorandum and Articles of Association of 'first degree' cooperatives (except 'associated work cooperatives') and 'second degree cooperatives' can acknowledge 'work member' status for workers so desiring. The same rules apply to 'work members' as to worker members of 'associated work cooperatives'.
Article 21 of Law 4/1997 of 24 March on worker-owned companies, as amended by Law 50/1998 of 30 December on Fiscal, Administrative and Welfare Measures, stipulates that worker members of worker-owned companies have the right to unemployment benefit and to the Wage Guarantee Fund, with the following exceptions:
a) Worker members who are directors of the company, with remunerated management and administration duties, and regardless of whether their relationship with the company is an 'ordinary' or 'special' labour relation.
b) Worker members who are directors of the company, with management and administration duties, whose relationship with the company takes the form of a special senior-management relation in terms of labour law.
Royal Decree 1043/1985 of 19 June stipulates the extent of unemployment cover for worker members of associated work cooperatives in these terms:
- Worker members of associated work cooperatives included under the General Social Security Scheme or under any of the Special Schemes providing protection against unemployment are entitled to the unemployment benefits specified in the General Law on Social Security.
- Worker members finding themselves in any of the following situations are regarded as being unemployed for legal purposes:
a) Members who have ceased definitively to work in the cooperative, losing the attendant economic rights, as a result of: unfair expulsion; economic, technological or force-majeure reasons; or the expiry of the period for which their fixed-term contract with the cooperative was made.
b) People who had been candidates for membership but who have ceased to work during their trial period as a result of a unilateral decision by the cooperative's Governing Board.
What steps must be taken to constitute a cooperative?
1- Application for certification of a business name: this is available from the Judicial Provisions and Registry Service or the Ministry of Employment web page. The name for the cooperative must be decided. The Administration has one month from the date of presentation of the application to reach a decision and the condition of administrative silence being positive is applicable.
How is the work of members of a cooperative remunerated?
In a cooperative, members are paid under different concepts.
For the work they do: when the same person has the double condition of member and worker (working member in a working cooperative, or employed member in other cooperatives), they receive payment according to their qualifications and tasks, corresponding to the time worked. Therefore, this salary must be similar to that of a paid worker in a conventional company in the same sector and geographic area.
Cooperatives must obligatorily have a reserve fund as well as a fund for cooperative education and promotion.
These funds are not to be considered as the property of members, but as property of the cooperative, and in the final instance, they are considered to be unpaid taxes which, in turn, enable:
These funds are not to be considered as the property of members, but as property of the cooperative, and in the final instance, they are considered to be unpaid taxes which, in turn, enable:
- The cooperative to justify benefiting from tax rebates.
- Paying lower taxes.
- Generating a financial fund at zero cost for earlier consolidation as a business or to cover negative results.
- Implementing activities for social projection.
- Performing inter-cooperation activities to achieve a higher level of business development.
- Implement training actions to meet its necessities.
The taxation, economic and financial use of these funds also depends on the cooperative's policy for distribution of results, remuneration of members, allocations to funds and, finally, its policy for consolidation of funds.
- Paying lower taxes.
- Generating a financial fund at zero cost for earlier consolidation as a business or to cover negative results.
- Implementing activities for social projection.
- Performing inter-cooperation activities to achieve a higher level of business development.
- Implement training actions to meet its necessities.
The taxation, economic and financial use of these funds also depends on the cooperative's policy for distribution of results, remuneration of members, allocations to funds and, finally, its policy for consolidation of funds.
What happens if a worker-owned company or a cooperative is not entered in the Register? Can business be started without registration?
In the case of worker-owned companies, unless the Memorandum and Articles of Association stipulate otherwise, business operations commence on the date on which the public-record Deed of Incorporation is executed. Deeds can be carried out and contracts executed on behalf of the company before it is entered in the Register of Companies; in such cases, the persons performing those actions are jointly and severally responsible for them. When the company is registered, it is bound by any actions performed, by any contract executed on its behalf, and by any actions it consents to when three months have elapsed from the time it was registered; consequently, the joint and several responsibility of the persons who had originally performed the actions or executed the contracts no longer applies.
If it is ascertained that there is no intention to register the company, and in any event if a year has elapsed since the Deed was executed with no application for registration having been made, any member shall be entitled to take action to have the company being formed wound up, and to demand, after the company's assets have been liquidated, that his or her contribution to it be returned. If the company has started trading or continues in business, the regulations for general partnerships or, if applicable, for partnerships, shall apply.
In the case of cooperatives, the founder members, acting in the name of the future cooperative, can take all the steps required to register it, and must accept joint and several responsibility for any action taken and any contracts executed in the name of the cooperative before it is registered in the Register of Cooperatives. When the company is registered, it is assumed that it will take responsibility thereafter for all the action taken and all the contracts executed, the initial joint and several liability accepted for them thus ceasing to apply. Until such time as the planned company is registered in the Register of Cooperatives, the tag “in the process of formation” must be added to the company's provisional name.
If registration in the Register of Cooperatives has not been applied for within six months from the execution of the Deed, or before that time if it is ascertained that there is no intention to register it, any member may take action to have the cooperative that is being formed wound up and, when its assets have been liquidated, to demand the return of what the member has contributed to it. If the cooperative has commenced or continues pursuing its corporate purpose without applying for registration, or if it is ascertained that registering it is not intended, then the members will automatically hold unlimited several liability for it.
Neither inscription in the Cooperatives Registry nor the issue of the certificates corresponding to the Registry of Worker-Owned Companies are subject to any duty and therefore, inscription is free of charge.
In the case of Cooperatives, the cost of constitution must be less than that of any other commercial company because no taxes are paid on subscribed capital and it is subject to lower legal rates than other types of company.
Furthermore, the Ministry of Employment supports the constitution of new cooperatives, providing detailed information about the constitution process on-line, together with models of the documents required.
In addition, it provides free advisory services to entrepreneurs through the Business Creation Service. In the case of Cooperatives, it also offers specialised advice to a groups of businessmen and to advisors and private managers through Ara_Coop.
Furthermore, the Ministry of Employment supports the constitution of new cooperatives, providing detailed information about the constitution process on-line, together with models of the documents required.
In addition, it provides free advisory services to entrepreneurs through the Business Creation Service. In the case of Cooperatives, it also offers specialised advice to a groups of businessmen and to advisors and private managers through Ara_Coop.
What steps must be taken to constitute a cooperative?
1- Application for certification of a business name: this is available from the Judicial Provisions and Registry Service or the Ministry of Employment web page. The name for the cooperative must be decided. The Administration has one month from the date of presentation of the application to reach a decision and the condition of administrative silence being positive is applicable.
2- Drafting the company by-laws: a model for this is available from the Judicial Provisions and Registry Service or the Ministry of Employment web page. The drafting of the by-laws corresponds to the cooperative, though this may be done by a business agent. The by-laws describe the operation of the cooperative. The minimum content is described in Article 11 of Law 18/2002, dated 5 July, for Cooperatives.
3- Holding the constitutive assembly: a model for this is available from the Judicial Provisions and Registry Service or the Ministry of Employment web page. The constitutive assembly is attended by founding members who agree to constitute the cooperative, approve the company by-laws and the distribution of office holders. These agreements constitute a record which is included in the deed.
4- Public deed: This must include the minutes of the constitutive assembly, a list of the names of all members, the company by-laws, declaration of constitution, a declaration of subscription and disbursement of allocations, the social allocations subscribed by each member, non-monetary allocations (official report of the value attributed to assets), valid certification of the business name of the cooperative, and the bank certificate referring to disbursement of the registered capital.
5- Taxation department: it is necessary to obtain a Tax Identification Code (CIF).
6- Taxes: the tax on patrimonial transmissions and duty for legal documents (operation exempt from payment), but which must be presented before the Taxation Department for liquidation.
7- Inscription in the cooperatives registry: presentation of an application together with a certified and simple copy of the deed of constitution, receipt for payment of taxes and the provisional CIF.
8- Social Security: enrolment of working members and employed members.
What is the difference between a first degree and a second degree cooperative?
What is the difference between a first degree and a second degree cooperative?
In first degree cooperatives the members may be individuals or legal bodies. There are various types of first degree cooperatives: agriculture; seas, rivers and lakes; insurance; consumers and users; education; housing; healthcare; services; associated work and mixed.
The members of second degree cooperatives are mainly first degree cooperatives and legal bodies.
The purpose of the Register of Worker-Owned Companies is to record and certify documents referring to worker-owned companies (limited liability worker-owned company or public liability worker-owned company), such as the constitution, the acquisition of the condition of worker-owned by a corporation or limited liability company, the increase or reduction of the share capital, modification of by-laws, change of name, change of address, transfer of shares or participation of members, loss of the condition of worker-owned to continue as a corporation or limited liability company, dissolution or dissolution-liquidation.
Loss of the condition of worker-owned company requires taking the following steps:
- agreement of the members, in a General Meeting, to waiver the condition of worker-owned company.
- certification of this agreement.
- making certification official by means of a public deed.
- inscription in the Administrative Registry of Worker-Owned Companies in the General Directorate of Cooperative Economy Business Creation. This requires presenting a certified copy or the original and a simple copy of the deed of constitution.
- inscription in the Commercial Registry of the province or region.
- certification of this agreement.
- making certification official by means of a public deed.
- inscription in the Administrative Registry of Worker-Owned Companies in the General Directorate of Cooperative Economy Business Creation. This requires presenting a certified copy or the original and a simple copy of the deed of constitution.
- inscription in the Commercial Registry of the province or region.
How is the work of members of a cooperative remunerated?
In a cooperative, members are paid under different concepts.
For the work they do: when the same person has the double condition of member and worker (working member in a working cooperative, or employed member in other cooperatives), they receive payment according to their qualifications and tasks, corresponding to the time worked. Therefore, this salary must be similar to that of a paid worker in a conventional company in the same sector and geographic area.
In addition, members must receive the corresponding part of the profits (surpluses) according to their contribution to cooperative work:
- In the case of the agricultural, services, consumption and other similar cooperatives, the benefits are received according to the deliveries, consumption or services rendered.
- The working members of worker cooperatives and employed member of other types of cooperatives, receive benefits according to the work done, their corresponding qualification and the responsibility involved in the activity they perform.
- In the case of the agricultural, services, consumption and other similar cooperatives, the benefits are received according to the deliveries, consumption or services rendered.
- The working members of worker cooperatives and employed member of other types of cooperatives, receive benefits according to the work done, their corresponding qualification and the responsibility involved in the activity they perform.
