Not every management title is senior management
The special senior management employment relationship applies to people who exercise powers inherent in the company’s legal ownership and related to its overall objectives, with autonomy and full responsibility limited only by direct instructions from the individual or the company’s most senior management bodies. That is the test in Spain’s Royal Decree 1382/1985. A title such as “director”, “CEO” or “managing director” is not enough, by itself, to bring the role within this regime.
We look at the work in practice: which decisions the person makes, how much discretion they have, who they report to, which powers have been delegated and how the role fits into the organisation. If the duties do not meet the legal test, an ordinary employment relationship may apply, even where the role carries major responsibility or a high salary. Getting the classification right helps shape the right terms and avoids surprises when the relationship ends.
Negotiating the appointment and contract
Before taking up the role, the contract should clearly describe the duties, decision-making remit, delegated authority, reporting line to the company’s management body and duration. The special senior management contract must be in writing and include, at a minimum, the parties, the purpose of the engagement, the different components of remuneration and its duration.
Pay may combine fixed salary, performance bonuses, long-term incentives and benefits in kind. It is important to specify how targets are measured, when each item is earned and paid, what happens if the financial year ends early and how accrued but unpaid remuneration is settled when the relationship terminates. We also review exclusivity, confidentiality, retention and post-termination non-compete clauses. These terms can restrict future options and need clear drafting and compensation that reflects their scope.
The previous employment relationship: suspend or replace it
If you already work for the same company—or another company in its group—and move into senior management, article 9 of Royal Decree 1382/1985 requires a written new contract that states what happens to the ordinary employment relationship: it may be suspended or replaced by the special relationship. If the contract says nothing, the law presumes suspension. Replacement is also subject to a specific timing rule, so the proposed structure should be checked before signing.
When the ordinary relationship is suspended, there may be a right to resume it when the special relationship ends, subject to the statutory limits. Notice requirements, leave, exclusivity or non-compete terms, potential conflicts of interest and any agreed departure from the previous employer need separate review.
Termination of the senior management relationship
A senior management relationship may end at the manager’s initiative, through employer withdrawal, through disciplinary dismissal or for other legal reasons. These routes are not interchangeable: they have different requirements for notice, communications, financial consequences and challenge. The special regime, for example, provides notice rules for a manager’s resignation and a separate process for employer withdrawal; the contract may regulate important terms within the limits of the law.
Before accepting an exit proposal, we review the stated reason, effective date, notice, contractual or statutory compensation, unpaid bonuses and commissions, deferred incentives, shares or options, holiday pay and any terms that continue after exit. The end of employment should also be coordinated with any removal as a company director or board member. Claim deadlines can be short, so keep the documents and have the dates reviewed promptly.
Ongoing advice throughout the senior management relationship
In a senior management employment relationship, contracts, amendments and changes to terms, as well as decisions concerning duties, remuneration, appointments and departures, can carry significant legal and financial consequences. Each document should therefore be assessed in context and before it is finalised—not only on its own wording, but also in light of the original contract, subsequent agreements and the role as actually performed.
Ongoing legal advice throughout the relationship allows changes to be reviewed as they arise, decisions to be properly documented and their effects assessed before they are formalised. It can include periodic review of the contract and its amendments, changes to terms, decisions about duties and remuneration, appointments, departures and exit agreements. This provides a full view of the relationship and enables questions requiring clarification or negotiation to be addressed in an orderly way.
Useful documents to get started
- Offer, senior management contract and amendments
- Previous employment contract and any suspension or termination documents
- Role description, organisation chart and delegated authority
- Bonus, target and long-term incentive policies
- Employer-withdrawal or dismissal letter, exit proposal and relevant dates
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Frequently asked questions
Is a director or CEO title enough to make someone a senior manager?
No. Classification depends on the actual duties, powers, autonomy and responsibility—not just the job title. The contract should be checked against how the role works in practice.
Is my previous employment contract suspended when I move into senior management?
If the move is within the same company or group, the new contract should state whether the ordinary relationship is suspended or replaced; if it does not, the law presumes suspension.
Are employer withdrawal and disciplinary dismissal the same?
No. They are distinct routes with different requirements and effects for notice, compensation, communications and legal challenges. The decision should be reviewed alongside the contract and supporting documents.
What should I keep if the company tells me I am leaving?
Keep the contract and amendments, payslips, bonus and incentive plans, target communications, the letter received and any proposed agreement. Deadlines can be short, so have the dates reviewed promptly.