2022 Labour Law Updates

 

Approval of 2021 Labour Market Reform

On 30 December 2021, Royal Decree-Law 32/2021, of 28 December, on urgent measures for labour market reform, the guarantee of employment stability and the transformation of the labour market was published. The Royal Decree-Law entered into force on 31 December 2021, even though the main measures will be applicable three months after the publication, on 31 March 2022.

This important and much discussed legislative rule is based on four main pillars:

1. Simplification of contracts to reduce the rate of temporary employment.
2. Modernisation of Collective bargaining.
3. Adjustment of contracting and subcontracting in companies.
4. Increased internal flexibility in the event of potential economic crises through a new legal regime of Temporary Redundancy Programmes (“ERTEs”)

 

1) Simplification of contracts to reduce the rate of temporary employment

• Training contracts are amended

As a novelty, the Training and Learning Contracts as well as the Internship Contract are replaced by the Training Contract to obtain the appropriate professional practice to the level of education and the Alternate Training Contract.

1. 1. Alternate Training Contract:

• • Maximum duration of 2 years.
  • The maximum age is up to 30 years.
  • The actual working time may not exceed 65 per cent, during the first year, or 85 per cent, during the second year, of the maximum working day provided for in the collective bargaining agreement applicable in the company.
  • The company must prepare an individual training plan with the content of the professional practice and assign a tutor.
  • There may not be any trial period.

1. 2. Contract to obtain appropriate professional practice to the level of education (replaces the previous Internship contract)

• • It must be subscribed within 3 years, or 5 years if it is signed with a person with a disability, following the completion of the corresponding studies.
  • The duration may not be less than 6 months or exceed 1 year.
  • The trial period may not exceed one month, except as provided for in collective bargaining agreement.

• Permanent contracts attached to work

The current fixed contract for work regulated in the construction collective bargaining agreement is removed.

A new modality of indefinite-term attached to work is created.

After completion of the work on which the employee provides services, the company is obliged to make a proposal for relocation, prior to the development, if necessary, of a training process.

The contract may be terminated for the following reasons inherent to the employee:

• • The employee concerned refuses the relocation.
  • The qualifications of the person concerned are not suitable for new works in the same province.
  • There are no works in the same province in which the person is hired, according to his/her professional qualification.

The termination of the contract for the aforementioned reasons shall result in compensation of 7% on the salary concepts set out in the collective bargaining agreement tables.

• Structural temporary recruitment

The Contract for Work or Service and the Temporary Contract disappear.

The Contract due to Production Circumstances is introduced, and the Interim Contract is modified and renamed as Replacement Contract.

The use of the Contract due to Production Circumstances is limited to the following cases:

• • The occasional and unforeseeable increases and the fluctuations that, even in the event of normal business activity, generate a temporary mismatch between the stable employment available and the one required.
    • Maximum duration of 6 months. It may be extended up to one year, by sectoral collective bargaining agreement.
    • If the contract has been concluded for a shorter duration than the legal maximum, it may be extended only once.
    • The fluctuations include the situation arising from the use of holidays.

When the reason for the use of the contract is to deal with occasional but foreseeable situations, companies may use this modality of contract for a maximum of 90 days in the calendar year. These 90 days may not be used on a continuous basis.

Fixed-term contracts may be concluded for the replacement of an employee with job reservation rights by means of a Replacement Contract.

• • This modality of contract may be concluded a maximum of 15 days before the absence of the employee entitled to the job reservation.
  • It may be arranged to complete the employee’s working day reduction, when such reduction is covered by legally established causes or regulated by the applicable collective bargaining agreement.

A surcharge is established for fixed-term contracts of less than 30 days, to be paid by the employer upon completion of the contract. (Formerly applicable to contracts of less than 5 days).

The entry into force of changes in the contractual modality shall be 3 months after the publication of the regulation. Therefore, temporary contracts signed before December 31 will be governed by the aforementioned regulations, until their maximum duration is met. Temporary contracts signed after December 31 will be governed by the current conventional regulations, but their duration may not exceed six months.

 

• Permanent-Seasonal Contract (“fijo-discontinuo”)

The circumstances for its use are clarified, in an attempt to encourage its use and thus reduce the number of temporary contracts.

• • Its use may be arranged for the development of seasonal works or related to seasonal production activities.
  • Its use is possible for commercial or administrative contracts that, being foreseeable, form part of the company’s ordinary activity. In this case, the period of suspension or inactivity may not exceed three months.
  • Between temporary employment companies in order to assign workers to a user company.

 

2) Modernisation of collective bargaining

Priority is given to sectoral collective bargaining agreement over the company agreement in salary matters. This amendment will be applied once the applicable collective bargaining agreements cease to be in force and, at the latest, within one year of the entry into force of the Royal Decree-Law.

The extended validity (“ultraactividad”) of collective bargaining agreements is restored, becoming indefinite, until a new text is signed. One year after the denunciation from the collective bargaining agreement without a new collective agreement having been agreed, the parties must submit to a mediation procedure. When the negotiation process has elapsed without an agreement being reached, the collective bargaining agreement will remain in force.

 

3) Adjustment of contracting and subcontracting in companies

In the matter of contracting or subcontracting, it is established that the collective agreement of the activity carried out in the contracting or subcontracting operation shall apply, unless there is another applicable sectoral collective agreement. In the event that the contracting or subcontracting company has its own collective agreement, it shall apply in the matters covered by the new rewording of Article 84.

 

4) Increased internal flexibility in the event of potential economic crises through a new legal regime of Temporary Redundancy Programmes (“ERTEs”)

• Flexibility of ERTEs ETOP and by Force Majeure

The consultation periods and the maximum period for the constitution of the representative committee in companies with fewer than 50 workers are reduced.

It is envisaged that, at any time during the validity of the measure of reduction of working hours or suspension of contracts due to ETOP (economic, technical, organisational or production) reasons, the company may notify the employee’s representatives of a proposal to extend the measure. The extension must be dealt with in a consultation period lasting a maximum of five days, and the company’s decision must be communicated to the labour law authority within seven days.

Priority will be given to reducing working hours rather than suspending contracts.

The working day reduction will range from 10% to 70% of the normal working day.

Exemptions of 20% in Social Security contributions are established linked to training processes.

The company will be able to affect and disaffect the employee depending on changes in circumstances, provided that they are justified.

During the duration of these processes, no overtime hours may be worked, nor may new contracting or subcontracting of the activity be carried out. This prohibition shall not apply in the event that persons under contractual suspension or reduction of working hours who provide services in the workplace affected by new contracting or subcontracting are unable, due to training, qualification or other objective and justified reasons, to carry out the functions entrusted to them.

 

• “RED” Employment Flexibility and Stabilisation Mechanism

This instrument for suspension and reduction of working hours due to force majeure appears whose application must be activated through the Council of Ministers.

Two modalities are envisaged:

a) Cyclical, when there is a macroeconomic situation that advises the use of additional flexibility and stabilisation employment instruments, lasting a maximum of one year; and

b) Sectoral, where permanent changes are introduced in a given sector of activity generating the need for retraining and professional transition processes, with a maximum duration of one year, which can be extended up to twice for six months each.

Once the mechanism has been activated, companies may voluntarily request the labour law authority to reduce or suspend employment contracts, following the opening of a consultation period.

Employee covered by a “RED” Mechanism will benefit from the social protection measures provided for in the forty-first additional provision of the “TRLGSS” (consolidated text of the General Law on Social Security).

Companies may voluntarily avail themselves of Social Security exemptions on the employer’s contribution for common contingencies and for joint collection concepts. These exemptions will be 40 per cent for Sectorial “RED” mechanisms for their duration. In the Cyclical modality, the exemption will be 60 per cent during the first four months; 30 per cent during the next four months; and 20 per cent during the last four months.

 

 

Other 2022 Labour Law Developements

1) Contributions increase

The maximum contribution base is now EUR 4,139.40 per month (previously, EUR 4,070.10).

Surcharge on contracts of less than 30 days.

A surcharge on the contribution for contracts of less than 30 days is established, replacing the surcharge previously provided for contracts of less than 5 days, which consisted of 40 per cent of the employer’s contribution for common contingencies. The employer’s contribution will now be increased by EUR 26.57, for each temporary employee who leaves the company.

 

2) New companies obliged to register the Equality Plan.

According to Royal Decree 901/2020, 7 March 2022 is the deadline for companies with more than 50 employees to deposit their Equality Plan in the Companies’ Equality Plan Register.