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High important labour reform in Spain

On Friday 10 February, the Government of Spain passed the most significant labour reform of recent decades. It is a question of introducing major flexibility in the work system, until now one of the most rigid in Europe.

Training and apprenticeship contracts
These are reserved for workers of between 16 and 25 years old, although this age limit is extended to 30 years old until the overall unemployment rate drops to 15%. These contracts establish significant tax incentives and social security contribution allowances of up to 100%.

Working day

The option of an uneven distribution of working hours based on collective bargaining agreement, or agreement reached in the company with workers’ representatives is established. The important new feature is that in the absence of such agreement, the company can freely rearrange 5% of the working day and distribute it irregularly. This accounts for approximately 88 hours per year.

Encouragement of open-ended contracts

A full-time open-ended contract with a probationary period of 1 year has been created for companies with fewer than 50 employees. Increasing tax incentives are applicable to these contracts for three years, if the workers who are taken on are unemployed. In such cases, the worker may continue to receive 25% each month of what he or she was being paid in unemployment benefit.

Substantial change to working conditions

There are significant changes as regards modifiable items such as salary, and these changes may affect previous situations regardless of their origin.

Suspension of contract or reduction in working day
Labour force adjustment plans (EREs) will no longer require prior official authorisation. After a short period of consultation with workers’ representatives (15 days in companies with 50 or more workers and 8 in those with fewer than 50), the company may enforce the decision it has reached. Upon enforcement of this decision, appeals may be lodged before the Employment Tribunal.

Extension of measures of support to the suspension of contracts and reduction in working day

The 50% contributions allowance receivable for the periods of unemployment of affected workers remains and, in the event of subsequent termination of contract, said affected workers will not be officially counted as having been unemployed for a period of up to 180 days occurring prior to effects of unemployment arising from termination.

Termination for objective reasons

When the worker’s accumulates a 20% rate of absenteeism over 2 consecutive months or a rate of 25% intermittently over 4 months in a 12-month period, the global 5% rate of absenteeism in the company in the same periods will no longer be applicable.

Wholesale redundancies (EREs- Labour force adjustment plans)

Important new features. A fall in sales revenue is defined and established as an economic cause and said cause will, in all events, be applicable when this situation persists for three consecutive quarters. Note that the company need not necessarily be making a loss. This
measure is intended precisely to prevent such losses.
This procedure, furthermore, does not require prior official authorisation. Hence, upon expiry of the consultation period without agreement, which is 15 days at the most in companies with fewer than 50 employees and 30 days in companies with 50 or more, the employer may implement the proposed measure without further deliberation. Its decision, however, may be subject to individual appeal before the Employment Tribunal. If the appellant is on the works committee or a shop steward, the case will be dealt with urgently through the channels applicable to industrial action.

Unfair dismissal
Upon opting for compensation, back pay is no longer applicable, except in the event that the worker laid off is a shop steward. What is known as despido exprés (express redundancy) for which severance of 45 days per year of service was previously paid and for which unwarranted redundancy was acknowledged, is likewise no longer applicable. Severance pay upon declaration of unwarranted layoff has now been established at 33 days per year of service, for a maximum of 24 months for contracts agreed after the Royal Decree Law entered into force.
For contracts agreed prior to the publication of the Reform, calculation of severance remains at 45 days per year until 11 February 2012 and 33 days per year from that date onwards.

Should you require any clarification, please do not hesitate to contact us.

Begonya Pelegrin
Manager
HR Department
ADMINEX Spain

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