A BEFORE AND AFTER LABOUR REFORM?

A BEFORE AND AFTER LABOUR REFORM?

The economic crisis Spain has been experiencing since 2008 has highlighted weaknesses in the Spanish employment model. The data from the latest Survey of the Active Population describe the following situation: unemployment stands at 5,273,600 people.

The problems this reform must face are, mainly, the high level of unemployment among those under 25, long-term unemployment, the large number of temporary contracts, and the cost for companies in general (and small and medium-sized enterprises in particular) of dismissal, which is in large part subject to a court’s discretion, as well as the cost of indemnification and interim salaries.

The interim salaries are an amount equal to the sum of the salaries which the worker has ceased to receive from the date of dismissal to the notice of the resolution declaring the dismissal unfair or until the worker finds another job and must be paid if the dismissal was declared unfair in the end.

 

In effect, Royal Decree-Law 3/2012, of February 10, on urgent measures to reform the labour market (“RDL 3/2012”), makes significant changes in the institutions which have to date governed employment relations.

 

Thus, among the main developments of the reform which have a direct impact on hiring, enphasising is the fact that for the first time temporary employment agencies may operate as placement agencies in conjunction with the State Employment Service. Furthermore, a new “permanent employment contract to support entrepreneurs” is created.

This may benefit companies with fewer than 50 employees. The new contract includes a oneyear probation period, and offers companies tax incentives and rebates. Telecommuting is regulated for the first time. Likewise, for the third time in less than two years, the training and apprenticeship contract has been altered, reducing the company’s contributions to Social Security.

Also, making certain contracts (practicals, relief) permanent will be rewarded.

labour reform in spain
labour reform in spain

 

RDL 3/2012 introduces changes in the organization or work.

We point out below those measures which, in theory, are to be applied to foment internal flexibility in companies as an alternative to the destruction of jobs.

Thus, in order to promote life-long training and workers’ gamut of skills, workers in a job position at least one year will be given 20 hours per year of training. These hours will be considered “time effectively worked” and will therefore be paid.

Likewise, in order to introduce more flexibility in labor relations, overtime is now permitted under part-time contracts – it was expressly forbidden in previous legislation – in proportion to the agreed hours. Furthermore, collective bargaining agreements are given one year to adapt their professional classification systems. Since the reform, these measures must be adopted at the group level rather than by professional category, as had been the case to date.

Likewise, companies may unilaterally distribute 5% of a year’s working hours irregularly, unless otherwise agreed. Also facilitated are:

(i) functional and geographical mobility;

(ii) substantial changes in working conditions;

(iii) suspension of the contract or reduction of working hours on economic, technical, organizational, or production grounds, eliminating administrative authorization and extending the so-called reinstatement of unemployment benefits;

(iv) non-application of certain working conditions regarding salary established in the applicable collective bargaining agreement;

and

(v) emphasis on the company-level collective bargaining agreement on certain issues, and national or autonomous community-level interprofessional or sector-wide collective bargaining agreements cannot prevent this.

 

Finally, we must point out the major developments with regard to dismissals, both collective and individual. For this purpose, it is sufficient to indicate that collective dismissals – on or production grounds – no longer require administrative authorization, and the verification of the grounds for both individual and collective dismissals is simplified.

Currently, the wording of the provision only requires that the company shows a negative economic situation (actual losses and expected losses) or the persistent decrease in the level of its income or sales. In any event, it must be understood that persistent decrease means for two consecutive quarters. Regarding the other causes – technical, organizational, and production – changes in the means or tools of production or in systems and working methods or in how production is organized or in the demand for the company’s products or services must occur.

Furthermore, the compensation for unfair dismissal is lowered from 45 days’ salary with a maximum of 42 months’ salary to 33 days’ salary with a maximum of 24 months’ salary. Objective dismissal due to absenteeism is also made easier.

Likewise, the interim salaries are eliminated in unfair dismissals: only if the employer chooses to readmit the employee will the worker be entitled to this payment. The exception here is the workers’ representatives, who maintain this right as a guarantee of their position.

To sum up, we can conclude that, after RDL 3/2012 comes into effect, we will have a more flexible regulatory framework, in which the courts’ discretion in pronouncing on the grounds for dismissal has been notably limited. Nevertheless, we still have to see the definitive wording of the text after the amendments in the parliamentary debate and how the reform will be applied by the courts.