6 things you need to know about the new Employment Law in Spain

With the view to modernizing the employment market as well as to simplifying contracts in order to lower the temporary employment rates, on December 30, 2021, a royal decree-law was passed amending a few provisions in the Worker’s Statute.

This new legislation is also aimed at fulfilling the undertakings given by the Spanish Government in the Recovery, Transformation and Resilience Plan submitted to the European Commission, which, under the heading "New public policies for a dynamic, resilient and inclusive labor market”, sets out a balanced and coherent package of structural reforms.

Below are the six key points that need to be learned about the new labor rules. Note that, although the new legislation entered into force on the day following its publication, some of the provisions were held in a “transition period” and will enter into force on March 30, 2022, namely 3 months after its publication. 

1. Temporary contracts

The major goal of the labor reform. The temporary contract for a specific project or service disappears and the contract for backlogs and relief contracts are redefined placing a limit on the length of their duration.

Penalties for fraudulent temporary hiring are to be imposed for each employee involved which means substantially stiffening the penalty.

2. Training contracts

Training contracts are also redefined. The training contract to make paid work compatible with training processes (with a maximum duration of two years) and the contract for obtaining practical experience commensurate with current level of study (with a maximum duration of one year) are defined with the aim of covering a broader range of scenarios in which to sign these contract.

3. Permanent contracts for intermittent work

This type of contract is strengthened as opposed to temporary contracts. It may be entered into for the performance of seasonal work or work linked to seasonal activities, as well as for the performance of work that is not seasonal in nature but is nevertheless intermittent, due to having to be performed in specific or non-specific periods of time.

They can be used for the fulfillment of contracts that are foreseeable and form part of the company’s ordinary activities.

4. ERTE and RED Mechanism

Inspired by the recent COVID-19 provisions, the rules on Temporary Collective Layoffs (ERTEs, especially those due to force majeure) are changed.

Also, the so-called Red Mechanism for Employment Stability and Flexibility is created with two categories: cyclical and industry-related, which must be activated by the Council of Ministers to allow a reduction of working hours or suspension of contracts.

A fund for financing benefits and exemptions from social security contributions and training costs is included.

5. Collective bargaining and collective agreements

The priority of provisions in company-wide collective bargaining agreements over those in sector-wide collective bargaining agreements is retained, except with respect to amounts of pay.

The indefinite validity of the collective bargaining agreement in the absence of a replacement is restored: if after the end of the term of the collective bargaining agreement no agreement is reached within the negotiation period, the collective bargaining agreement will remain in force until a new agreement or solution for a new agreement exists.

6. Outsourcing of services

The possible restriction on outsourcing services was one of the main issues in the negotiation stages of the labor reform.

Ultimately, the fundamentals of the former provisions are retained, with the addition of clarification that the collective bargaining agreement applicable to the employees of the outsourcing companies will be that of the sector for the activity carried out under the contract.

Author:

Misericòrdia Borràs Cabacés, partner in the Labor and Employment Law Department at Garrigues

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