Santander's early retirement plan: what conditions will the departures have, who will it affect, and what is the minimum age required?

At this time, the latest labor and Social Security reforms affecting early retirements and early retirements are channeled mainly through royal decree-laws and adjustments in pension regulations, rather than through a major specific “early retirement reform.” Several relevant measures have already been approved and published in the BOE, while others are either in parliamentary processing as draft laws or pending new regulatory developments announced by the Government. There is no single, comprehensive initiative currently in an advanced parliamentary stage dedicated exclusively to early retirement plans in the sources consulted. However, a common thread is noted: tightening access to ordinary early retirement, greater penalties for early withdrawals, and very limited use of incentivized early retirements in large restructurings, consistent with the latest pension reforms.

1. Recent general framework: pension reforms impacting early retirements

In recent years, the main reforms conditioning early retirement plans have been approved as reforms of the Social Security pension system. These regulations have modified:

a) Reduction coefficients for early retirement: Economic disincentives for voluntary early retirement have been strengthened by increasing the reduction coefficients applied to the pension when accessed before the ordinary age. This effectively makes many classic early retirements more expensive (company-worker agreements to advance exit at the cost of supplementing the reduced pension).

b) Effective retirement age: The explicit goal of pension reforms has been to bring the effective retirement age closer to the legal age, resulting in greater restrictions on generalized early exit schemes financed by companies or long-term ERTE/ERE for older workers.

c) Employment-pension compatibility rules: Reforms on active, partial retirement and compatibilities have introduced additional conditions or nuances that also affect the design of hybrid plans (part-time work + partial pension as a form of “disguised early retirement”).

All these measures are already in force, having been approved and published in the BOE after passing their respective parliamentary phases or, in the case of some royal decree-laws, after being ratified and, if applicable, processed as draft laws. No further detailed information on each of these texts is available in the sources consulted, but the pattern is clear: the reform orientation is restrictive for generalized early exits.

2. Use of royal decree-laws with labor and Social Security content

In labor and Social Security matters, the Government has frequently resorted to royal decree-laws to introduce specific adjustments that also indirectly affect early retirement plans:

a) Typical parliamentary status: Royal decree-laws come into force upon their publication in the BOE and must be ratified by the Congress. In several recent cases, after ratification, their processing as draft laws has been agreed, allowing amendments during parliamentary processing. Currently, available information indicates that these labor and pension-related regulations have already been ratified and, for the most part, incorporated into the legal system on a stable basis, with no specific royal decree-law on early retirements pending ratification noted in the sources consulted.

b) Indirect impact on early retirements: Although these decree-laws are not presented as “early retirement reforms,” they modify key parameters: contributions, protection in ERE/ERTE, incentives for maintaining employment of those over 55, or caps and requirements for early retirement derived from collective dismissals. All this conditions the viability and cost of new early exit plans.

3. Specific parliamentary initiatives and their status

The sources consulted do not currently identify a bill or draft law specifically on “early retirement plans” that is in a clearly highlighted concrete phase (committee, commission report, Senate, etc.). However, the following are mentioned:

a) Partial proposals within broad reforms: Some adjustments related to early retirement or specific groups (e.g., workers in high hardship sectors, or affected by certain EREs) have been introduced as amendments within broad pension system or labor law reforms. These amendments have been integrated into laws already approved and published, so their parliamentary status is “definitively approved.”

b) Lapsed or expired initiatives: In previous legislatures, proposals were registered to flexibilize or tighten certain aspects of early retirements and protection for those over 55 in restructurings. With changes in legislature or dissolution of the Cortes, many have expired or lapsed, and the sources do not offer a complete updated list nor recent active initiatives focused on early retirements.

4. Immediate outlook: what to expect

Available information suggests that, in the short term, changes that may continue to affect early retirement plans are likely to come as:

a) Additional adjustments to the pension reform: The Government has maintained a general commitment to system sustainability, leaving the door open to new technical tweaks affecting coefficients, ages, or specific groups. If approved, they would follow the usual scheme: government phase, approval in the Council of Ministers (if opting for draft law or royal decree-law), and subsequent parliamentary processing.

b) Sectoral regulation via collective agreements and company agreements: Beyond the Cortes Generales, a relevant part of the “engineering” of early retirement plans is channeled through collective bargaining and company agreements, always within the legal framework set by already effective pension and labor reforms. These instruments do not follow parliamentary processing but labor negotiation procedures.

In summary, the key regulations governing early retirement plans and early retirements are already approved and in force; no major specific reform in advanced parliamentary processing appears in the sources. Any current company plan must therefore be designed according to this already consolidated framework, awaiting possible future adjustments that, if they occur, will again pass through the circuit of royal decree-laws and draft laws on pensions and employment.

The CEO of Banco Santander does not have absolute freedom alone to decide on a workforce restructuring, but does concentrate decisive power for driving, designing, and executing within the framework set by the Board of Directors, Spanish labor regulations, and financial regulation. In practice, the CEO proposes the reorganization strategy, negotiates (through their team) with worker representatives, and executes agreements, while the most relevant decisions must align with policies approved by the Board. Additionally, any collective dismissal or ERE process must comply with the Workers’ Statute and Spanish case law, so discretion is limited by formal procedures. Therefore, their “legal powers” derive both from internal powers (by-laws and powers granted by the Board) and respect for labor and regulatory legislation.

1. General framework: who really decides the restructuring

In a listed and systemic entity like Banco Santander, workforce restructuring is essentially a decision of the governing body, not just one person. The Board of Directors sets the overall strategy, approves major efficiency plans, and authorizes operations with significant impact on the group’s structure (mass office closures, subsidiary integrations, acquisitions, etc.). The CEO acts as the top executive responsible for proposing, developing, and executing that strategy within the margins delegated by the Board.

In practice, in a large bank, an ERE or significant workforce restructuring is not proposed or executed without the knowledge and support of the Board (or at least its Delegated Committee), although daily negotiation is led by the management team under the CEO’s authority.

2. Internal powers of the CEO: by-laws, delegations, and authorities

The CEO’s powers are defined by three internal layers: corporate by-laws, Board regulations, and delegation agreements. These usually establish that the CEO has ordinary management of the entity, resource organization, and execution of the strategy approved by the Board.

Regarding personnel, this usually translates into the ability to:
– Propose to the Board or the Appointments and Remuneration Committee major workforce adjustment plans and high-impact organizational changes.
– Decide and execute internal reorganizations within approved quantitative and budgetary frameworks (transfers, reassignments, small unit closures, non-replacement of vacancies).
– Sign, directly or through proxies, the agreements reached with worker representatives in collective dismissal processes or substantial changes in working conditions.
– Approve individual hirings, objective or disciplinary dismissals, and geographic or functional mobility measures that do not reach the threshold of “collective dismissal” under the Workers’ Statute.

Legally, these CEO powers are valid as long as they respect limits set by collegiate bodies (Board, General Meeting when applicable) and do not encroach on matters expressly reserved to those bodies by the by-laws.

3. Key limit: Spanish labor regulations

In any workforce restructuring, the CEO of Banco Santander is subject to Spanish labor law, especially the Workers’ Statute and regulations on collective dismissals (art. 51 ET) and substantial changes in conditions (art. 41 ET).

This implies, among other aspects:
– If the employment adjustment exceeds certain thresholds (number of dismissals relative to workforce within 90 days), it is considered a collective dismissal and requires opening a consultation period with legal worker representatives.
– The company, led by the CEO, must negotiate in good faith, provide economic and organizational documentation justifying the measure, and respect legal deadlines.
– Any agreement reached at the negotiation table binds the company and its compliance is the responsibility of the executive team under the CEO’s direction.
– The final company decision can be challenged before the labor courts, which will review whether the procedure and causes complied with the law.

The CEO, therefore, cannot evade these mechanisms: even if the Board asks to “reduce personnel costs,” the specific way to do so is constrained by collective dismissal rules and sectoral and company collective bargaining.

4. Financial regulation and supervisors

As Banco Santander is a significant credit institution, its workforce decisions are also viewed from the perspective of financial stability and governance. Although the European Central Bank or Bank of Spain do not directly authorize EREs, they do supervise the impact of cost reduction decisions on:
– The solvency and profitability of the bank (a usual objective of restructurings).
– The quality of governance, meaning that the Board and CEO act in an informed, documented, and coherent manner with the business plan and entity risks.

This requires the CEO to internally justify, with reports and scenarios, that the restructuring is compatible with capital requirements, shareholder remuneration plans, and commitments made to supervisors.

5. CEO’s personal responsibility and limits

From a legal standpoint, the CEO may incur liability if they adopt or execute restructuring decisions that:
– Contravene labor law (e.g., violation of fundamental rights in selecting affected employees, discrimination, retaliation against union representatives).
– Exceed powers delegated by the Board or contradict valid agreements of the Board or General Meeting.
– Constitute gross mismanagement harming the bank or shareholders, potentially triggering corporate liability actions.

In summary, the CEO of Banco Santander has a central, operational, and strategic role in any workforce restructuring, but their powers are legally framed by the Board of Directors, Spanish labor law, and financial sector supervision. Their effective power is broad in execution but conditioned in substantive decision-making and subject to judicial and regulatory control.

In Spain, an early retirement plan in financial institutions like Santander’s is legally structured by combining collective dismissals (ERE), incentivized exits, and individual agreements for suspension/termination of contracts. There is no specific “early retirement law,” but a framework composed of the Workers’ Statute, collective dismissal regulations, Social Security rules, and banking sector regulations. To be legal, the plan must respect formal collective dismissal procedures when applicable, guarantee genuine voluntariness if presented as such, ensure correct Social Security contributions, and avoid discrimination. Additionally, the entity must fulfill its information and negotiation obligations with worker representatives and, in some cases, with the labor authority.

1. Basic applicable legal framework

The starting point is the Workers’ Statute (ET), especially:

a) Collective dismissal (ERE): If the exit plan affects a relevant number of workers within 90 days (thresholds of art. 51 ET), it must be processed as a collective dismissal:

• Definition of economic, technical, organizational, or productive causes justifying the restructuring.
• Opening a consultation period with worker representatives.
• Formal communication to the competent labor authority, attaching required economic, organizational, and social documentation.
• Respect for legal deadlines for negotiation and final decision communication.

b) Terminations and suspensions by agreement: Early retirements are usually implemented, in practice, through:

• Incentivized exits (mutual agreement termination, art. 49.1.a ET) with indemnities above the legal minimum.
• Contract suspensions with company commitment to pay monthly amounts and maintain contributions until a certain age.

In both cases, the key requirement is voluntariness and full awareness of consequences by the worker.

2. Procedural and negotiation requirements

In a plan like Santander’s, with a high volume of exits, the company must:

Prior information: Provide worker representatives with:

• An explanatory report on the plan’s causes (results, digitalization, office closures, etc.).
• Numerical data of the affected workforce by centers, categories, ages, and conditions.
• Proposed selection criteria and economic conditions of exits and early retirements.

Consultation period:

• Good faith negotiation, with documented meetings and minutes.
• Search for alternatives to dismissals (reassignments, mobility, training, work time reductions, etc.).
• Negotiation of early retirement conditions: salary percentage to be paid, duration until ordinary or agreed retirement age, revaluations, pension plan contributions, insurance, etc.

Collective agreement: The result is usually a framework agreement setting access requirements (age, seniority, priority groups) and economic conditions. To be fully robust:

• It must be signed by the legal majority of union representation.
• It cannot contain discriminatory clauses (e.g., based on sex, disability, or other protected grounds).

3. Economic conditions and Social Security

In early retirement plans, the financial institution usually commits to:

• Pay the worker a monthly amount (usually a percentage of fixed gross salary) until ordinary or agreed retirement age.
• Make Social Security contributions (through special agreements) to avoid contribution gaps that harm future pensions.
• Complement, if applicable, the future pension up to a certain level.

Legally, the following must be respected:

• Rules on early retirement and benefit compatibility (if the worker will access unemployment or anticipate pension).
• Proper formalization of special agreements with Social Security when necessary.
• Income tax (IRPF) treatment of incomes and possible indemnities, according to the IRPF Law (there is no general special tax regime for “early retirements,” except exempt indemnity cases up to the legal limit in EREs).

4. Individual guarantees and judicial control

Each worker must sign an individual agreement detailing:

• Type of exit (termination or suspension).
• Effective date and payment schedule.
• Commitments on contributions, insurance, and social benefits.

It is essential that consent is free, without coercion, and that the worker receives adequate information. Even with a collective agreement, the plan can be challenged before the labor courts if fraud, abuse of rights, or discrimination is found. Courts have analyzed numerous banking early retirement plans in rulings to verify respect for objective selection criteria and adequacy of alleged causes.

5. Particularities of the financial sector

In banking, these plans are also framed within:

• Banking collective agreements, which may include references to workforce surpluses, mobility, and additional guarantees.
• Prudential and solvency requirements of supervisors (Bank of Spain/ECB), who monitor that restructuring costs are compatible with the entity’s financial stability.

In summary, any plan like Santander’s must be based on objective causes, follow collective dismissal procedures when applicable, ensure transparency and real negotiation with worker representatives, and guarantee that early retirement conditions comply with current labor, Social Security, and tax regulations.