# Labor Law Basics

Business I · Business Law · https://tryals.app/learn/business-i/labor-law-basics

## The Asymmetric Contract

Labor law exists because the **employment relationship** is structurally unequal: the worker needs the job more than the firm. The law establishes minimum floors no private contract can dig beneath.

**Four defining notes** must all be present for labor law to apply, regardless of whatever label the parties choose to use:

| Note | Meaning |
| --- | --- |
| **Personal** | The worker performs the work themselves. |
| **Voluntary** | Freely agreed upon. |
| **Dependent** | Under the employer's organization and direction. |
| **For others' account** | Fruits and risks belong to the employer; the worker gets a wage. |

> **Common pitfall:** Courts look at real facts, not contract titles. A "freelance" rider with a fixed schedule and company-set prices is legally an employee under the false self-employed doctrine.

## Rules and Dismissals

**Sources are stacked** in a strict hierarchy where each upper layer sets a mandatory floor: Workers' Statute $\rightarrow$ **collective agreements** (_convenios colectivos_) $\rightarrow$ individual contracts. Lower levels can only **improve** on the layer above, never worsen it.

**Core floors** guarantee a maximum of **40 hours/week** on annual average, at least the minimum interprofessional wage (**SMI**), and 30 calendar days of annual vacation.

**Dismissals** by the employer require a justified cause and are judged in three ways:

- **Fair:** Proven disciplinary or objective cause.
- **Unfair (_improcedente_):** Unproven cause requiring reinstatement or severance compensation.
- **Void:** Discriminatory or rights-violating, leading to mandatory reinstatement.

## Practice questions

9 of this lesson's 14 practice questions, with answers. The full set is in the app.

### 1. Complete the hierarchy of labor-law sources.

**Answer:** The statute sets the floor, the **convenio** improves it for the sector, and the individual contract may only modify it **upward**.

**Why:** Law → convenio → contract, each layer improving on the last. The one-way ratchet is the whole architecture of worker protection.

Page: https://tryals.app/practice/business-i/labor-law-basics/complete-the-hierarchy-of-labor-law-sources

### 2. Order the life cycle of an employment relationship.

**Answer:**

1. Contract signed; the four notes concur
2. Probation period tests the fit
3. Wages, hours, and rests follow law and convenio
4. The employer alleges cause and dismisses
5. A court grades the dismissal: fair, unfair, or void

**Why:** Hire → probation → performance under the floors → dismissal → judicial grading. The final step prices every earlier decision.

Page: https://tryals.app/practice/business-i/labor-law-basics/order-the-life-cycle-of-an-employment-relationship

### 3. Sort each rule by the source layer it comes from.

**Answer:**

- Statute (law): The 40-hour weekly maximum, The minimum interprofessional wage (SMI)
- Collective agreement: The sector’s wage tables for each job category
- Individual contract: A personal bonus above the sector wage

**Why:** Law sets floors, convenios raise them sector-wide, contracts personalize upward. Each layer may only improve on the one beneath.

Page: https://tryals.app/practice/business-i/labor-law-basics/sort-each-rule-by-the-source-layer-it-comes-from

### 4. Match each labor-law term to its meaning.

**Answer:**

- Ajenidad → Fruits and risks belong to the employer
- Convenio colectivo → Union-employer pact binding a whole sector
- SMI → The wage floor no contract may undercut
- Dependence → Working under the employer’s direction

**Why:** Two of the four defining notes plus the two great floors, the vocabulary that decides whether labor law applies and what it guarantees.

Page: https://tryals.app/practice/business-i/labor-law-basics/match-each-labor-law-term-to-its-meaning

### 5. A firm dismisses a worker for "low performance" but proves nothing at trial. The dismissal is also unrelated to any protected right. How will the court classify it?

A. Fair, because performance is the employer’s judgment
B. Unfair (improcedente): reinstate or pay compensation
C. Valid if the worker had less than one year of seniority
D. Void, with mandatory reinstatement

**Answer:** B. Unfair (improcedente): reinstate or pay compensation

**Why:** Cause alleged but unproven → **unfair**: the employer chooses reinstatement or compensation. **Void** needs discrimination or violation of fundamental rights, and forces the worker back on the payroll.

Page: https://tryals.app/practice/business-i/labor-law-basics/a-firm-dismisses-a-worker-for-low-performance-but-proves-nothing-at

### 6. Labour law voids a contract clause where a worker freely agreed to fewer holidays for higher pay. Why does the law override a genuine agreement?

A. Because holidays are more valuable than pay in every case
B. Because the worker cannot understand the value of holidays when signing
C. Because employment contracts are not real contracts in the civil sense
D. Because the employment relationship is structurally unequal

**Answer:** D. Because the employment relationship is structurally unequal

**Why:** Freedom of contract assumes rough equality of bargaining power, and the employment relationship is defined by its absence, so the law makes minimums non-waivable. If they could be waived, competitive pressure would push every worker to waive them, which is the whole point of a floor.

Page: https://tryals.app/practice/business-i/labor-law-basics/labour-law-voids-a-contract-clause-where-a-worker-freely-agreed-to

### 7. Which are minimum floors the individual contract cannot dig beneath?

A. The exact salary of 2,000€ for every Spanish worker
B. The legally set wage floor
C. The 40-hour average weekly maximum
D. The 30-day minimum annual vacation

**Answer:** B. The legally set wage floor; C. The 40-hour average weekly maximum; D. The 30-day minimum annual vacation

**Why:** Wage floor, vacation floor, hours ceiling, all mandatory minimums. Actual salaries above the SMI are set by convenio and contract, not by a universal figure.

Page: https://tryals.app/practice/business-i/labor-law-basics/which-are-minimum-floors-the-individual-contract-cannot-dig-beneath

### 8. Unfair dismissal lets the employer choose reinstatement or compensation, while void dismissal compels reinstatement with back pay. What does that difference in remedy signal?

A. That unfair dismissals are harder to prove in court
B. That the two categories differ only in the length of service required
C. That a void dismissal violates a fundamental right
D. That void dismissals involve larger sums of money

**Answer:** C. That a void dismissal violates a fundamental right

**Why:** Where discrimination or a protected right is involved, allowing payment in lieu would price the right. The mandatory remedy is what stops it becoming a fee.

Page: https://tryals.app/practice/business-i/labor-law-basics/unfair-dismissal-lets-the-employer-choose-reinstatement-or

### 9. If a contract labels a worker "independent contractor," labor courts must respect that label even when the work is dependent and for the firm’s account.

**Answer:** False

**Why:** The employment relationship is defined by facts, dependence and ajenidad, not by the parties’ wording. Otherwise every employer would relabel its payroll into self-employment by lunchtime.

Page: https://tryals.app/practice/business-i/labor-law-basics/if-a-contract-labels-a-worker-independent-contractor-labor-courts