Labour reform: What to bear in mind after its entry into force?

The entry into force of the new labour reform will have a significant impact on companies and workers. The new regulation gives companies until 30th of March to adapt to the current regulatory framework. This will make it essential to have the assistance of labour lawyers who can study the effect of the law on the company to ensure an effective and healthy transition.

In this article, we would like to explain the main key aspects of the Spanish labour reform. If you need more information or to audit your company to adapt it to this new regulation, please contact us. At OBN& we are specialists in labour and corporate law.

The keys to RD 32/2021, the labour reform

On 31st of December RD 32/2021, on urgent measures for labour reform, the guarantee of employment stability and the transformation of the labour market, came into force. Its main objectives are to reduce the temporary nature of employment, to balance collective bargaining and to make the regulations applicable to companies in a compromised situation more flexible.

Temporary contracts after the labour reform

The new text has eliminated work and service contracts, although fixed-term contracts remain. These are reduced to two types:

  • Structural temporary contracts. This refers to the classic temporary contract due to production circumstances. In the case of unforeseen circumstances, it may have a maximum duration of six months (up to one year when provided for in the sectoral agreement). In the case of covering occasional, foreseeable needs of limited and limited duration, it may be used for a maximum period of ninety calendar days within the calendar year, without these being continuous.
  • Hiring for substitution of workers with job reservation. The person being replaced and the reason for the replacement must be stated in the contract. It is also possible to complete the reduced working day of another worker, as long as this reduction is based on legal reasons or those set out in the Collective Bargaining Agreement. Finally, it is allowed in the case of temporary coverage of a job position during the selection or promotion process, but in this case the duration of the contract may not exceed three months, nor may a new contract be entered into for the same purpose at the end of this period.

Thus, seasonal campaigns and seasonal jobs must be governed by the permanent-discontinuous contract. This type of contract will mean that the worker’s seniority will be calculated not only during the periods of employment but throughout the duration of the contract.

Recruitment for training and apprenticeship

Two possibilities have been established for training and apprenticeship contracts:

  • Alternation regime, which allows to combine studies and work activity. It only allows the hiring of students aged 30 or under for a period of between three months and two years. The working day may not exceed 65% of the time during the first year and 85% during the second year. The remuneration may not be less than 60% of the agreement (75% during the second year).
  • Scheme for obtaining professional practice. It is concluded with persons with a university degree or vocational training certificate or equivalent, within a maximum period of three years from the completion of their studies (five in the case of a person with a disability). It is a contract of between six months and one year, which allows for a probationary period, but must always be linked to the studies of origin. It also gives the right to obtain a certificate.

Subcontracting under the new rule

In the area of subcontracting, workers will not be subject to the particular agreement of the Multiservice company to which they are subordinate, but to the agreement corresponding to their actual activity. The aim is to offer broader and more homogeneous protection in the area of subcontracting.

Collective bargaining in the new labour reform

As we have indicated, balancing collective bargaining was one of the pillars of this labour reform. In particular, the ultra-activity of collective agreements is restored, which means that, once they have expired, they can continue to apply even if it takes more than twelve months to approve the next agreement.

The sanctioning regime in the new regulatory framework

One of the measures enacted to stabilise employment has been a strengthening of the penalty regime applicable to the fraudulent use of temporary contracts. In particular, the time allowed for the chaining of temporary contracts before converting them into permanent contracts has been reduced. Surcharges on social security contributions have also been introduced and the penalties established in the LISOS  have been strengthened.

Aid to companies in crisis

Lastly, measures have been adopted as a result of the health crisis. Thus, the ERTE has been simplified and exemptions from contributions have been established, and the limitation of activity by government decision has been incorporated as a cause of ERTE due to force majeure.

A mechanism (RED de Flexibilidad y Estabilización del Empleo) has also been introduced to help companies in crisis. This will act on a structural or sectoral basis, when needs are detected in the market, and will involve exemptions from contributions linked to the development of training actions, as well as alternative benefits to unemployment.

The aim is to make the tools available to companies in crisis or in the face of cyclical changes in the market more flexible, in an attempt to avoid job destruction.

Conclusion: employment regulation after the labour reform of RD 32/2021

To summarize, RD 32/2021 has come to try to alleviate the imbalances derived from economic cycles. These, together with the temporary nature of employment characteristic of our country, have traditionally led to the destruction of employment, the widening of social gaps and the limitation of productivity gains.

The labour framework is now being approached from a more stable perspective, with a strong commitment to training and a preference for business flexibility measures rather than temporary hiring.

As a result, the sectors most affected will be those most dependent on temporary contracts and outsourced services.

  • Contracts have been revised, simplifying them, but introducing doubts about their application in sectors such as agriculture.
  • Companies have also been provided with internal mechanisms to facilitate adaptation to crisis situations or cyclical changes.
  • And the ultra-activity of collective agreements has been restored, with preference being given to sectoral agreements rather than company agreements.

The aim of this package of measures is to combat job insecurity and boost the competitiveness of companies. This will undoubtedly entail an effort on the part of companies to adapt their structures to the new regulatory framework derived from this labour reform.