On February 10th, 2012 the Council of Ministers passed the Royal Decree-Law 3/2012, of February 10, 2012 on Urgent measures to reform the labour market, which entered into force this past February, 12th, 2012, introducing major amendments to the Spanish labour legal system that we are pleased to briefly summarize here below:
1.- MEASURES TO PROMOTE EMPLOYMENT.
The reform provides a new approach to the role of Temporary Work Agencies, also known as “ETT’s”, allowing them to act as private employment agencies.
The training of employees to encourage continuous and permanent learning within the company is recognized as an individual right with the creation of training account, a training check and paid leaves for training purposes.
The reform also introduces a new training contract for young people between sixteen and twenty-five years old, with a limited duration of one year up to a maximum of three, which combines training and work, and which establishes the remuneration according to the effective work carried out by the employee. This training contract might also be extensive to employees under the age of thirty until the rate of unemployment in Spain is reduced below 15%.
2.- PROMOTION OF INDEFINITE HIRING AND OTHER MEASURES TO CREATION EMPLOYMENT.
The reform creates an indefinite new contract for companies with less than 50 employees, with a trial period of one year that entails tax benefits for the company.
The reform allows part-time employees to perform overtime hours, in proportion to the number of hours of a usual working day.
The prohibition of linking temporary contracts beyond 24 months will be restored as from December 31st, 2012.
The reform recognizes the possibility of remote employment, i.e. telework.
Finally, the reform stipulates a series of Social Security benefits for internship contracts, replacement or substitution contracts that become indefinite.
3.- MESURES TO PROMOTE INTERNAL FLEXIBILITY IN COMPANIES.
Professional classification: will be established by agreement between the company and its employees. The professional categories are deleted, remaining only professional groups.
The reform gives greater agility in the procedures of functional mobility, geographical mobility and substantial modifications of working conditions. The reform gives more flexibility to the causes that justifying the adoption of such measures:
- Geographical mobility: the employer can unilaterally order the transfer of employees as a result of economic, technical, organization or production causes, with 30 days notice, giving the worker the right to choose between the payment of the expenses derived from the transfer or the termination of the contract with the compensation of 20 days per year of service with a maximum of 12 months’ salary. The workers' representatives, workers with family responsibilities, workers with certain age or disabled workers will have preference of permanence.
- Substantial modifications of working conditions: based on economic, technical, organisation or production causes and in relation to the following aspects: working day, working hours, shift system, remuneration, work output and functions.
Work time: The possibility to agreed irregular distribution for the working day is introduced. Without agreement, it can be carried out on 5% of the annual working time.
The process to suspend employments contracts and modifying the working day has been simplified by abolishing the intervention of the Labour Authority that from now on, will only need to be notified of the commencement and final result of the consultation period between the Company and the workers representatives.
- The reform favours the suspension of contracts and the reduction of the working hours to prevent further dismissals, granting allowances of 50% to the company’s Social Security contributions of employers with suspended contracts or with reduced working hours for economic, technical, organizational or production causes. Such allowances will be subject to a time limitation that will correspond with the unemployment benefit of the relevant worker, not exceeding 240 days.
- To be eligible to such allowances the employer shall maintain the workplace of the employees involved, for at least 1 year after the suspension or time reduction has expired. If during that time an unfair or a collective dismissal is made involving the affected employees, the company shall be excluded during 12 months of Social Security allowances, in same amount to the number of contracts extinguished.
- Restitution the unemployment benefit: Once the suspension or working hours reduction has finalized, the labour authorities will consider the time that the employee has benefited from the unemployment subsidy, and worked days in the event of a future dismissal, up to a maximum of 180 days.
Collective bargaining: The new reform contemplates the possibility for the company to decide not to implement the collective agreement due to economic, technical, organizational or production reasons. Moreover, the collective company agreements will now have preference over the autonomic or state ones and the extension of their duration will now be limited to a maximum of two years once the agreements have been denounced after their expiration.
4.- MEASURES TO PROMOTE EFFICIENCY AND REDUCE EMPLOYMENT DUALITY.
The new reform clarifies all the grounds to conduct objective dismissals typified in the law, comprising the lack of adaptation of the employee to any technical changes, justified absenteeism and economic, technical, organizational and production grounds.
The reform also establishes a new procedure for collective dismissals, eliminating the need to obtain previous administrative favorable authorization to proceed with the collective dismissal based on any of the typified grounds (economic, technical, organizational or production causes)
There is also a generalization of the redundancy payment for unfair dismissals, which is now set in 33 days for each year of service with a maximum of 24 months of salary. The redundancies for unfair dismissals of employment contracts signed before the reform, will still be subject to 45 days redundancy per year of service until February 12th, 2012 with a maximum of 42 months of salary, and to 33 days per year of service from February 13th, 2012, with a maximum of 720 days of salary.
Furthermore, a Company with less than 25 employees that dismisses an employee based on any of the objective grounds mentioned above, will be compensated by the FOGASA (a public fund that guarantees salaries in Spain) with an amount equivalent to 8 days of salary per year of service of the dismissed employee.
5.- NEW AMENDMENTS IN THE REGULATION TO PROMOTE CONCILIATION BETWEEN WORK AND FAMILY LIFE.
Men and women are now considered equal in terms of requesting breastfeeding leaves and the temporary reduction of working hours for child legal guard.
At the same time, the reform establishes that the collective bargaining agreement might regulate the exercise of the parents’ right to reduce the working hours after the maternity leave has expired, in order to improve productivity and organization, being the employer the one to decide how the reduction is implemented.
The main novelty in this area concerns the employees that are temporarily disabled to work and cannot enjoy their vacation period, fully or partially, due to such cause. The reform grants those employees the opportunity to take their earned vacation periods after their recovery, as long as they exercise such right within the eighteen months after the end of the year in which the vacation days have been earned by the employee.
The information contained in this note should not be regarded in itself as specific advice on the matter discussed, but only a first approach to the subject. Therefore it is highly recommended that the recipients of this note search professional advice about their particular case before taking specific measures or actions.