Surviving without resorting to redundancies

Salary and time reductions, bonuses and training contracts can help through the crisis

The constant talk about the crisis is leading to a climate of fear and insecurity. Employees are afraid of losing their jobs and employers are piling up debt with the Tax Office or Social Security.

The first option that comes to employers’ minds in confronting the crisis is to reduce staff, but it does not have to be like this. There are other alternatives which can cut costs and help our business survive without resorting to redundancies, or at least leaving it to be the last option.

Here are some of the options we have to cushion the crisis:

  1. Reducing salaries. This option reduces the workers’ salary for the necessary period of time. It is necessary that parties are in agreement. This cannot be a unilateral decision of the employer and it is not a permanent but rather a temporary measure lasting only the indispensable time. Considering the shortage of work, maybe it would be more convenient to reduce pay rather than letting the worker go to the Unemployment Office which is always full nowadays.
  2. Reducing the number of hours. This is one way of reducing costs for the employer without being detrimental to the employee. The worker’s retribution will be less, but so will be the time worked. It is a win-win situation for both parties because the worker will have free time to take up another part-time job in addition to their current employment.
  3. Bonuses for permanent contracts. If a new employment contract is drawn up on a permanent basis, it can enjoy bonuses that reduce the social security cost, so the employer will pay less for the employee. There are some conditions though: the contract should be permanent from the start, the worker should either be registered as unemployed, be between 16 and 30 years old, or be older than 45, be a female returning to work after maternity leave, be disabled, etc. There are different types of bonuses depending on which conditions are met.
  4. Apprenticeship or training contracts. These contracts are drawn up for people who have an academic degree in their possession and have not yet used that knowledge or when a company trains someone up with suitable knowledge or skills. From the point of view of the company it is interesting to know that people thus contracted earn a much lower. In many cases the salary is established in the collective agreement. If not, the Workers Statute establishes in Article 11 that during the first and second year of the contract being executed, the amount can not be less than 60 or 70% of the minimum wage.

In short, if you are thinking about reducing costs in your company and you do not know how to do so, we advise that before starting to make redundancies, you get professional advice on a better course of action, especially since these options are only a selection of those available.

Rafaela García
Labour Advisor
De iure Laboral