The BOE publishes the labor reform that restricts temporary hiring, balances collective bargaining and assists companies in trouble
The entry into force of the labor reform will alter some (BOE) has published this Thursday the text of the royal decree-law whose entry into force alters some aspects that have conditioned professional relations since 2012. Although the main objective of the new legislative framework is to put an end to temporary employment in the labor market in Spain (26,02%), it will also serve to correct imbalances within collective bargaining and provide greater flexibility to companies in trouble.
Regarding the most significant modifications of this new labor framework, the following stand out:
1. Temporary contracts of two types
Although one of the strong points of the reform is the disappearance of the work and service contract, fixed-term contracts are maintained, but only of two types: structural (due to production circumstances), and substitution of another worker. The first may only be extended up to six months, or one year if allowed by the agreement of the activity performed.
In the construction sector, where work and service contracts have been used the most, the ordinary contracting modality will become indefinite. Once the assigned task is finished, the company must relocate the worker to another work. If this proposal is rejected, or if it cannot be carried out, the contract will be terminated and the worker will receive compensation of 7% calculated on the salary concepts of the agreement.
2. Only 90 days for foreseeable situations
In order not to harm the internal flexibility of companies, they will have an escape route to deal with situations of greater demand. The new standard offers them the possibility of resorting to temporary hiring to deal with situations in which extra support is required, such as Christmas or agricultural campaigns.
To fill these vacancies, they will have a period of 90 days (three months) to hire a worker throughout the year. Of course, this will not be able to chain all that period continuously, and, in addition, in the last quarter of the year prior to the execution of these contracts, the union representatives must be informed of the annual forecast made by the companies to carry out these contracts.
3. For seasonal tasks, the fixed-discontinuous contract
The limitations on temporary hiring are intended to promote the use of the permanent-discontinuous contract (when an employee does not work throughout the year) for seasonal tasks. In addition, the new text establishes that their seniority will be computed for these workers during the entire period of their employment relationship, and not only for the periods in which they have carried out their activity.
This measure substantially modifies the conditions currently in force in the agricultural sector. Government sources assure that a way will be studied to adapt the particularities of the sector to the conditions stipulated in the new standard.
4. Two types of training contract
Defining a new vocational training framework has capitalized a large part of the negotiations. Finally, two types of training contracts have been defined: alternating (for those who combine it with their studies) and to obtain professional practice. Only students up to 30 years of age may apply for the first, and for a maximum period of two years. Their working hours may not exceed 65% in the first year and 85% in the second. For it they will receive a remuneration adapted to the agreement that cannot be less than 60% the first year and 75% the second.
5. Subcontracting according to the activity agreement
Multi-service companies, those that do not have a defined main activity, until now had the power to set wages based on their particular agreement. From the time the labor reform comes into force, these will be defined, at least, by what is included in the agreement for the activity carried out. That is, if a subcontracted company provides services such as cleaning, maintenance or computer support to the one that has contracted it, the workers in each of these three areas will be covered in terms of salary by what is regulated by each of the three agreements.
6. Balance in collective bargaining
One of the most controversial aspects of the labor reform approved by the Popular Party in 2012 was the limitation of ultraactivity (the period of validity of an expired agreement) to one year. This unbalanced the negotiation between workers and employers, since if the talks to renew a finalized agreement took more than 12 months, it ceased to apply and allowed the company to carry out a substantial modification of the working conditions.
The new text eliminates this temporary limitation and extends the validity of the expired agreement until its renewal is agreed, or a new one is signed to replace it. Salaries must also be adjusted to what is established in the sectoral agreement.
7. More expensive penalties to prevent fraud
To reinforce the scope of the regulatory changes, a control framework has been defined that establishes different sanctions to discourage fraudulent temporary hiring. The first one has to do with the concatenation of eventual contracts. Those people who in a period of 24 months have remained 18 of them in the same or different job with the same company or group of companies, through two or more contracts due to production circumstances, directly or through their provision by temporary work companies, will be considered as permanent.
Those companies that terminate a temporary worker who has carried out their activity in a period of less than 30 days will receive a surcharge on Social Security contributions of 26 euros for each of the terminations made. The penalty is increasing, so that for a short 10-day contract it would be 26 euros, but if the same work time were covered with two 5-day contracts it would be 52 euros.
However, the measure that seeks to force a paradigm shift in contracting is the increase in the amounts included in the Law on Offenses and Sanctions in the Social Order (LISOS). Since the entry into force of the rule, infringements for misuse of temporary contracts will be applied for each affected worker, instead of per company, and they rise from 8,000 to 10,000 euros in their maximum degree.
8. Simplification of ERTE due to covid
The Temporary Employment Regulation Files (ERTE) that are presented for economic, technical, organizational and production reasons (ETOP) will have greater processing and application facilities for SMEs, in addition to exemptions in Social Security contributions of the 20%, conditioned, of course, to the performance of training actions. For force majeure ERTEs, the impediment or limitations to activity by decisions of the government authority are incorporated as a specific cause. In this case, the exemptions will be from 90%.
9. The RED Mechanism: a structural lifeline
In addition to the ERTE, companies in crisis may resort to the NETWORK Mechanism for Flexibility and Stabilization of Employment, which will have two modalities: a cyclical one, when a macroeconomic situation is appreciated that advises the adoption of stabilization instruments; and another for the sector, which companies may take advantage of when a sector appreciates changes that generate requalification and professional transition needs.
Both mechanisms will be put into operation with the agreement of the Council of Ministers. The maximum application time for the first will be one year and the exemptions will decrease from 60% to 20%.
In the event of sectoral restructuring, it will be six months, extendable to one year, and the exemptions will reach 40%. Exemptions from the RED Mechanism are linked to the development of training actions. The RED benefit will be the 70% of the regulatory base throughout the period and will not consume unemployment.
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