The Labour Reform


On Friday 10 February 2012 the new Labour Reform bill was approved; it was published in the Spanish Official Gazette on Saturday 11 February and it came into effect on Sunday 12 February. The following is a summary of the most relevant and important points of this reform:

Measures related to training and to encourage permanent employment:

1. As regards professional training:

a) Training contracts: these are modified in the following terms:

- These contract will now be for a minimum term of 1 year and a maximum of 3 years (before the minimum term was 6 months and the maximum two years). They may be entered into with employees of between 16 and 25 years old, although until the unemployment rate in Spain falls below 15%, these contracts can be entered into with workers of up to 30 years old. They maintain the 100% reduction in Social Security payments.

b) The companies are obliged to implement training activities and programmes designed to facilitate workers’ adaptation to the modifications introduced in their work posts. The reform recognises an entitlement of 20 paid hours per year for training linked to the work post. This training will be recorded in an individual training account.

2. Contracts for an unlimited term to support entrepreneurs:

This is the most important new feature within the area of contracts. It is designed for companies with less than 50 employees; it must be for a full working day, with a trial period of one year and will give entitlement to a tax reduction of €3,000 when the person hired is under 30 years old, although the employer must keep the worker on the payroll for at least three years.

If the person employed was receiving unemployment benefits, there will be an additional deduction of 50% of the unemployment benefits that the employee had still to receive, with a limit of 12 monthly payments. Said employee will be able to continue to receive 25% of the unemployment benefits or conserve the right to receive it.

- Furthermore, there will be a Social Security allowance, which will depend on the age of the persons hired and the group to which they belong; the amounts go from €1,000/year to €1,500/year.

3. Teleworking:

The reform regulates teleworking or remote working (working from home), which  is deemed as that in which the work is carried out mainly in the employee’s home or in a place freely chosen by the employee, as an alternative to carrying it out in the company’s facilities.

Measures to encourage internal flexibility in companies as an alternative to job losses:

This means notable changes for companies, seeking to increase flexibility and competition among businesses. Among other aspects, these changes mean:

1. Professional classification system: a new professional classification system is introduced, no longer based on categories.

2. Working hours: the employer may unilaterally decide an irregular distribution of 5% of the employee’s working day.

3. Operational mobility: the possibility of modifying the employee’s duties will be limited by the professional group to which the employee belongs.

4. Geographic mobility: as regards group transfers, the employer’s authority to decide the transfer will prevail, which is recognised by the Administration.

5. Substantial modifications in working conditions:

- Although modifications still need to be justified based on financial, technical, organisational or production reasons, the consideration of these reasons are extended to a wider or more general scope and a unilateral decision of the employer can affect the working conditions that employees have under their labour contract.

These modifications affect the following aspects:

a) Working day

b) Work timetable and distribution

c) Shifts scheme

d) Remuneration and amount of salaries

d) Working system and performance

f) Duties, when they exceed the limits established for operational mobility

These modifications will require 15 days prior notice and in the cases established under points a), b), c), d) and f), when these modifications are detrimental to employees’ interests, they will be entitled to rescind their labour contract and receive compensation equal to 20 days salary for year worked, up to a maximum of nine months’ salary.

6. Suspension of contract or reduction of the working day due to financial, technical, organisational or production reasons or derived from force majeure circumstances:

Taking these measures is made easier, eliminating the need for administrative authorisation; the employer may suspend the contract or reduce the working day, fulfilling the requirement to implement a 15-day consultation period.

7. Collective bargaining:

Without a doubt, this is the most significant change in this reform. A new feature that appears, in relation to the matters mentioned in point 5, is that the employers can cease to apply the working conditions established in the corresponding collective bargaining agreement, by agreement between the company and the workers’ representatives, provided there are persistent financial reasons during two consecutive quarters; technical, when there are changes in the area of production resources or instruments; organisational, when there are changes in the personnel’s working systems and methods, or production, when there are changes in demand for the products or services the company offers.

Measures to promote efficiency in the labour market and reduce job duality:

1. Extinction of the labour contract:

The compensation for unfair dismissal is reduced to 33 days’ salary for year worked, with a limit of 24 months’ salary, and the interim salary has been eliminated, except for some very specific cases. This compensation of 33 days will be applicable to contracts entered into as from the date of entry into effect of the new regulations.

2. Collective dismissal:

No administrative authorisation is now required for personnel restructuring procedures (ERE). The Labour Authority’s duties are limited to receiving a copy of the initiation of the procedure, notifying the management entity of the unemployment benefits and receiving the mandatory Labour Inspection report, as well as ensuring the effectiveness of the consultation period, sending notices or recommendations, but without authority to halt or suspend the procedure under any circumstances. It is specified that financial reasons will be deemed to exist when there has been a reduction in income or sales during three consecutive quarters.

3. Objective dismissal:

a) Failure on the part of the employee to adapt to the technical modifications in the work post will be cause for dismissal, as was the case up to now, although it will be compulsory to have previously offered the employee a training course.

b) Absence from work: Absence from work, even when justified but intermittent, during a period equal to 20% of the working days in two consecutive months, or 25% in four non-consecutive months within a period of twelve months.

We hope that this summary has provided better understanding of some of the most significant changes brought about by this reform.

If you have any queries or need any further information, please do not hesitate to contact us.

Rafaela García López

Labour Advisor