Summary Labour Reform

We present a summary of the Labour Reform published in RDL 32/2021, on the 28th of December, validated by Resolution of the Congress of Deputies on the 3rd of February 2022.

Remember, that on Thursday the 17th of February at 18:00 you can connect to the webinar we have prepared on this reform and its consequences on the economy of companies and businesses like yours. Find the links at the bottom of this page.

Summary of the Labour Reform, main measures adopted  

• Reduction of temporary contracts and measures to discourage temporary employment.
• Indefinite ultra-activity of collective agreements and repeal of the prevalence of company agreement wages.
• Establishment of a new system applicable to Temporary Redundancy Proceedings (ERTE).

Temporary contracts

Firstly, the temporary contract for a specific job or service is abolished.

The aim of the reform is to reduce the number of temporary contracts as much as possible. Therefore, the general rule must be indefinite contracts, so that the temporary contracts that remain are as follows:

1.Training contracts:

a. Training in alternation: combines work activity with theoretical training within the framework of vocational training or university studies.

• Minimum duration 3 months and maximum 2 years.
• No severance pay upon termination.
• The effective working hours may not exceed 65% (during the first year) and 85% (during the second year) of the maximum legal or conventional working hours.
• Remuneration cannot be less than the minimum wage (in proportion to the actual work) and according to the agreement (not less than 60% in the first year and 75% in the second year).
• No overtime is allowed (except in cases of force majeure), no trial period or night work.

b. Training contract: for professional practice, minimum duration 6 months and maximum 1 year.

• Aimed at those with a university degree, intermediate or higher degree, specialist, professional master’s degree or certificate from the Vocational Training system.
• Remuneration is fixed by the collective agreement according to the functions performed by the worker. In any case, it cannot be less than the minimum wage (in proportion to the work performed).
• The company must have an individual training plan and assign a tutor.
• Overtime is not allowed, but complementary hours are allowed.

2. Temporary contract due to circumstances of production, has two possible qualifying causes:

a. Occasional and unforeseeable increase in the normal activity of the company.

• It has a maximum duration of 6 months, which may be extended for an additional 6 months if the sectoral agreement permits.
• Companies may enter into contracts for unforeseeable production circumstances to cover the holidays of permanent staff.

b. To cover an occasional and foreseeable situation of short and definite duration.

• Companies may use this type of contract for a maximum of 90 days in a calendar year, but these 90 days may not be used continuously.

In both cases, the reason for the temporary contract, the specific circumstances justifying it and its connection with the planned duration must be precisely specified.

A worker hired under a temporary contract for more than 18 months in a 24-month period will be presumed to be permanent.

In addition, an additional contribution of €27 is established for the cancellation of each temporary contract concluded for less than 30 days.

3. Temporary contract for the replacement of a worker with job reservation or with a reduction in working hours for legal reasons.

• The worker being replaced must be identified.
• The substitute may begin to provide services for a maximum of 15 days prior to the start of the substitution.
• It may also be concluded for the temporary coverage of a post during the selection or promotion process for its definitive coverage by means of a permanent contract. In this case with a maximum duration of 3 months.

The company shall inform employees on fixed-term or temporary contracts, including training contracts, of the existence of job vacancies in order to ensure that they have equal opportunities to access permanent positions.

Discontinuous fixed-term contract (art. 16 ET)

The aim is for this contract to replace temporary employment. It may be concluded in the following cases:

1. for work that is seasonal in nature or linked to seasonal productive activities
2. for the intermittent provision of services with fixed or indefinite periods of performance.
3. for the performance of commercial or administrative contracts.

The new features are as follows:

• It can be concluded by temporary employment agencies with the workers they place at the disposal of the user companies.
• Workers will enjoy the same rights as permanent workers.
• Special reference to seniority: the new regulation states that the entire duration of the employment relationship will be calculated from its beginning, regardless of the periods of effective work.

However, the most sensible approach would seem to be to distinguish between the calculation of seniority for the purpose of accrual of salary concepts such as seniority bonuses, in which case the entire duration of the contract will be taken into account, and the calculation of seniority for the calculation of severance pay, for which it seems doubtful that the entire duration of the contract should be taken as a reference instead of the periods of actual work performed. In fact, this is the view of the Supreme Court Judgment on the 30th of July 2020, despite the fact that it did not interpret the current regulations.

• Provision is made for the creation of a job bank for periods of inactivity of workers due to sectoral agreements, as well as preferential access for this type of worker to training actions.
• The agreements may also provide for permanent part-time contracts. They may also establish a minimum annual call-up period and an end-of-call-up amount to be paid by companies, when this coincides with the termination of the activity and there is no new call-up without interruption.
• The company must inform workers of the existence of vacant regular permanent jobs, so that they can make requests for voluntary conversion.

New developments in subcontracting of companies (art. 42 ET) 

• The sectoral agreement will be applied according to the activity carried out by the workers of the contractor / subcontractor company.
• Unless the contractor or subcontractor company has its own agreement, in which case this agreement shall apply.

Developments in the application of collective agreements

• Ultra-activity of the agreement: the agreement whose term has expired will remain in force for the time necessary for the approval of the new one, without any time limit.
• Company agreements may not apply less beneficial conditions than those provided for in sectoral collective agreements.

New developments in penalties for companies

The regulation states that non-compliance with the regulations on contractual modalities, fixed-term and temporary contracts, their use in fraud of the law or with respect to persons, purposes, assumptions and time limits other than those foreseen will be considered a serious infringement for each of the workers affected, punishable by fines of between €1,000 and €10,000.

In other words, in addition to increasing the amount of the penalties, these will be applied by reference to each worker or contract with which the regulations are breached, not collectively by company as was the case until now.

Update on ERTE

1. The ERTEs for ETOP causes (economic, technical, organisational or production) are maintained, with certain novelties:

• The consultation period in companies with fewer than 50 workers is reduced to 7 days.
• The maximum period for setting up the workers’ representative committee is reduced to 5 days, when there is legal representation; if there is none, the period will be 10 days.
• Provision is made for the possibility of extending the ERTE, following a proposal and negotiation with the workers’ representatives, within a maximum period of 5 days.

2. The grounds for ERTE due to force majeure are extended to include the limitation or hindrance of the company’s activity by decisions of the competent public authority (closure obligation, limits on opening hours or capacity, etc.).

3. New developments common to both types of ERTE:

• It is expressly provided for the possibility to effect and affect workers depending on the situation in which the cause justifying the measures is found, after informing the legal representatives of the workers and notifying the SEPE.
• During the implementation of the ERTE, it is prohibited to work overtime, outsource new activities and hire new workers.
• Contribution rebates are applied under the commitment to maintain employment for 6 months and the development of training actions for the workers. In the case of ERTE ETOPs, they will be 20%, and in the case of ERTEs due to force majeure, 90%.

4. A mechanism for flexibility and stabilisation of employment is also foreseen to allow companies to request the application of measures to suspend contracts and/or reduce working hours for 1 year in the event of situations of general macroeconomic crisis, or crises in specific sectors, subject to prior authorisation of the opening of this mechanism by Agreement of the Council of Ministers.

Entry into force of the standard

• Temporary contracts entered into before the 31st of December 2021: they will be valid until the date of their maximum duration, with the previous regulations governing them being applicable.
• Temporary contracts entered into between the 31st of December 2021 and 30th of March 2022: they will be governed by the legal or contractual regulations in force on the date on which they are entered into and their duration may not exceed 6 months.

Link to the event on Linkedin and Youtube, Google Calendar link with all the details.

If you have any doubts about how these changes affect your company, don’t hesitate, we are here to help you.