What’s new in the new Labour Reform
On 31 December 2021, Royal Decree-Law 32/2021 of 28 December, on urgent measures for labour reform, the guarantee of employment stability and the transformation of the labour market, which amends the Workers’ Statute and other labour regulations, all of which implies a genuine labour reform, came into force.
This amendment affects training contracts, temporary contracts, ERTEs and subcontracting, among other matters. Below, we explain the main changes introduced:
Training and fixed-term contracts
Training contracts have been redesigned, with the existing contracts (training and apprenticeship contracts, work experience contracts and dual university training contracts) disappearing and new ones being introduced, i.e. the alternating training contract and the training contract for obtaining professional practice.
The law establishes the premise that the employment contract is presumed to be concluded for an indefinite period of time, and modifies fixed-term contracts (contracts for specific work or services, interim and temporary contracts due to circumstances of production), and from the reform onwards, only contracts due to circumstances of production (only in very specific cases) and replacement contractsmay be concluded. The new contracts (training and temporary) will enter into force three months after the publication of the regulation in the BOE, i.e. on 30 March 2022.
Training and interim contracts entered into before the entry into force will remain in force until their maximum duration according to the previous regulation.
Temporary contracts and work and service contracts entered into before 31 December 2021 will be governed by the previous regulation and up to their maximum duration.
Temporary contracts and contracts for work and services concluded between 31 December 2021 and 29 March 2022 shall be governed by the legal or contractual regulations in force on the date on which they were concluded and their duration may not exceed six months.
The most characteristic points of each of the new contractual modalities are set out below:
| Contractual modality | Particular characteristics: | Common characteristics in training contracts: |
| Training contract in alternation (art. 11.2 ET) | Personal requirement: The person to be hired must be pursuing relevant studies (vocational training, university studies, etc.). Purpose: To reconcile paid work and studies. The contract must be directly related to the training activities that justify the hiring. Requirement of a training plan that includes:
Duration: the duration established in the training plan or programme, with a minimum duration of 3 months and a maximum of 2 years. Probationary period: no probationary period may be established. Limits:
Working hours: may not exceed 65% in the first year and 85% in the second year. Prohibitions:
Remuneration: Shall be that established in the applicable collective bargaining agreement. Failing this, it may not be less than 60% in the first year and 75% in the second year, compared to that established for the professional group in question, nor less than the minimum wage in proportion to the effective working time. |
The age and duration limits do not apply to people with disabilities or at risk of social exclusion. Situations of temporary disability, birth, adoption, foster care, foster care, risk during pregnancy, risk during breastfeeding and gender-based violence will interrupt the calculation of the duration of the contract. The contract must be formalised in writing and must contain the TRAINING PLAN. The Collective Bargaining Agreement may set out the jobs that may be filled by means of such training contracts. If the company is applying an ERTE, it may hire in these modalities, as long as functions or tasks performed by affected persons are not replaced. If at the end of the ERTE the employee continues in the company, NO new trial period may be established and the period worked in this modality counts for seniority purposes. Training contracts entered into in fraud of the law or those in respect of which the company fails to fulfil its training obligations shall be understood to have been entered into as ordinary permanent contracts. The protective action of persons who sign a training contract will include all protectable contingencies and benefits, including unemployment and coverage by the Wage Guarantee Fund. |
| Contract for obtaining professional practice (art. 11.3 ET) | Personal requirement: possession of the corresponding training qualification (vocational training, university degree, etc.), and formalised within three years of completion of studies, or five years in the case of disability. Purpose; To obtain professional practice appropriate to the level of studies obtained. An individual training plan must be drawn up and a tutor with appropriate experience must be assigned.
Duration: minimum 6 months and maximum 1 year. Probationary period: one month unless a longer period is stipulated in the collective agreement. Prohibitions:
Remuneration: That established for these contracts in the applicable collective bargaining agreement. In the absence thereof, that of the group and pay level that corresponds according to the functions performed. It may not be less than that which corresponds to the contract for work-linked training or the minimum wage. |
| Contractual modality | Particular characteristics: | Characteristics common to fixed-term contracts: |
| Fixed-term contract due to production circumstances (art. 15.2 ET) | Due to unforeseeable circumstances: Purpose: Occasional and unforeseeable increases and fluctuations that, although they are part of the normal activity of the company, generate a temporary mismatch in employment (including those derived from annual leave). Duration: maximum 6 months, extendable to 1 year by sectoral collective agreement. It may be extended only once if the previous maximum limit has not been exceeded. For foreseeable circumstances: Purpose: To deal with occasional, foreseeable situations of short duration Duration: maximum 90 days per year, regardless of the number of workers needed to deal with the specific situation justifying the hiring. This 90-day period may not be used continuously. Obligation to inform the RLT: the company must inform the workers’ legal representatives during the last quarter of the year of the annual forecast for the use of these contracts. | The causes justifying the temporary hiring, the circumstances and their connection with the foreseen duration must be precisely specified. The performance of work within the framework of contracts, subcontracts or administrative concessions that constitute the habitual or ordinary activity of the companyshall not be a cause of the contract due to circumstances of production (in any of its types). They shall acquire the status of permanent employees:
Persons on temporary contracts will have the same rights as permanent workers. The company must inform persons with temporary contracts (also training contracts) of the existence of vacancies (public announcement) and of their conversion to permanent status within 10 days of the expiry of the deadlines (written communication). The RLT must be informed of this. The worker may request from the SEPE a certificate of the fixed-term contracts concluded for the purpose of accrediting his status as a permanent employee in the company. |
| Fixed-term contract for substitution (art. 15.3 ET) | Purpose: They may be concluded for the replacement of workers in the following cases:
Beginning: They may begin up to fifteen days before the absence of the person being replaced occurs. |
Permanent-discontinuous contract (art. 16 ET):
The new reform gives prominence to the permanent-discontinuous contract as a solution to normalise existing illegal temporary contracts, with the majority of temporary contracts that we know today (temporary contracts and contracts for specific work or services) having to be converted into this type of contract. As with previous contracts, this new regulation will come into force three months after its publication, i.e. from 30 March 2022. For this purpose, the factual assumptions have been extended and its content has been substantially modified, as detailed below:
| Contractual Modality | Characteristics: |
| Permanent-discontinuous contract (art. 16 ET) | Purpose: Their scope has been extended, and they may be entered into for the performance:
Formalities: It must be in writing and must reflect the essential elements of the activity, i.e. it must include at least an estimate of the duration of the period of activity, the working day and the timetable. Call for workers:
Periods of inactivity linked to contracts/concessions:
Other forecasts:
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Subcontracting (art. 42 ET)
The most important and novel modification in this area is that, by legal mandate, it puts an end to the existing doubts as to the collective agreement applicable in the case of contracts and subcontracts, which from 31 December 2021 will be that of the sector of the activity carried out in the contract or subcontract (art. 42.6 ET).
When the contractor or subcontractor has its own collective bargaining agreement, this will apply, under the terms set out in article 84 ET, as discussed in section 6 below.
ERTE
The regulation of ERTEs is modified to adapt it to the regulation that arose as a result of the pandemic, and as of its entry into force (31/12/2021), these flexibilisation mechanisms incorporate the following new features:
| Typology | News |
| ERTE ETOP | It is established that the consultation period may not exceed seven days for companies with fewer than fifty workers (previously 15 days). The maximum period for the constitution of the representative committee is reduced from seven to five days, when there is legal representation of the workers. If there is no such representation, the period will be ten days instead of 15. Provision is made for the possibility of extending ERTEs after a new consultation period, the duration of which may not exceed five days. |
| FORCE MAJEURE REDUNDANCY | The procedure shall be initiated by means of a request to the workers’ representatives and to the labour authority, the latter being competent to verify the existence of force majeure or not within a period of 5 calendar days. If no resolution is issued within the established period, the positive administrative silence will operate, that is to say, the existence of force majeure will be understood to be accepted. The labour authority will request a mandatory report from the Labour Inspectorate. In the event that the force majeure is still present at the end of the period of the file, a new verification of the existence of the force majeure must be requested. To the concept of force majeure is added the impediment or limitations to normal activity due to decisions of the public authority . In this case, it will not be necessary to request a report from the Labour Inspectorate and the company will be obliged to justify the specific limitations or impediments to its activity. |
| Common measures | Reduced working hours should be prioritised over the suspension of employment contracts. The reduction in working hours may be between a minimum of 10% and a maximum of 70%. While these measures are in force, no overtime may be worked, no new contracts may be established, unless the persons affected by training, qualification or other objective and justified reasons are unable to carry out the duties entrusted to them (after informing the workers’ legal representatives of all this). Training actions are boosted, and companies may be entitled to an increase in credit for the financing of training actions. During the period of application of the dossier, the company will be able to disaffect and affect according to changes in circumstances. The contribution benefits linked to the ERTE will be conditional on the maintenance of employment and, in some cases, on the development of training actions. |
Employment Flexibility and Stability RED Mechanism (art. 47 bis ET)
A new RED mechanism is created, as soon as it is activated by the Council of Ministers, which will allow companies to apply for reduction and suspension measures, as detailed below: This mechanism will have two modalities:
- Cyclical: when there is a macroeconomic situation that advises the adoption of stabilisation instruments, lasting no longer than one year.
- Sectoral: when there are permanent changes in a given sector that generate the need for re-qualification and professional transition. In this case, it will be accompanied by a retraining plan. This measure will have a duration of one year with the possibility of two extensions of 6 months each (total of 24 months).
The procedure will be initiated by means of a request from the company addressed to the competent labour authority and simultaneous communication to the workers’ representatives, with the mandatory consultation period.
The labour authority must obtain a mandatory report from the Labour and Social Security Inspectorate on whether the corresponding requirements have been met and issue a decision within 7 calendar days of notification of the conclusion of the consultation period. Positive silence is again provided for.
If the consultation period ends with an agreement, the labour authority will authorise the measure under the agreed terms, but if it ends without an agreement, the resolution it issues may uphold or reject the employer’s request.
During periods of suspension of contracts or reduction of working hours, companies may voluntarily apply partial exemptions in their social security contributions linked to training and job maintenance activities.
The RED Fund is also incorporated: it is attached to the Ministry of Labour and Social Economy. It will finance the needs of the RED Mechanism in terms of benefits and exemptions, including training.
Concurrence and validity of agreements
The prevalence of the company agreement over higher-level agreements is maintained, except with regard to the amount of the basic wage and wage supplements, including those linked to the company’s situation and results (art. 84 ET).
The company agreement may continue to regulate other aspects on a preferential basis, such as the choice between payment or compensation for overtime, the schedule and distribution of effective working time, the adaptation of the professional classification, the adaptation of the aspects of hiring methods that are attributed to company agreements and family reconciliation measures.
Article 86.4 ET is also amended, establishing the full ultra-activity of collective agreements. After the expiry of their initial period of validity without having been replaced by another, collective agreements will continue to be applicable, unless otherwise agreed (the 1-year limitation on the duration of ultra-activity is repealed).
Amendment of the LISOS
The reform also introduces amendments to Royal Legislative Decree 5/2000, of 4 August, approving the revised text of the law on offences and penalties in the social order, introducing new offences and penalties.
In addition, it is specifically introduced that sanctions will be imposed for each worker (which significantly increases the amounts in the case of multiple infringements), and the amount of sanctions affecting serious infringements is increased (between €1,000 and €10,000).
| Degree of infringement | New offences |
| Minor | Failure to inform those hired under training contracts or fixed-term contracts, among others, of vacancies. |
| Serious | Transgressing the regulations on temporary hiring. One infringement will be considered for each worker. In the hiring of workers during the application of an ERTE, one infringement will be considered for each worker. Formalising contracts for the provision of services for cases other than those foreseen in the law on temporary employment agencies; one infringement will be considered for each worker. |
| Very serious | Failure to comply with the procedures established for the implementation of an ERTE and the RED Mechanism. Establishing new outsourcing of activity in breach of the prohibition during the implementation of an ERTE. |
Amendment of Law 32/2006, of 18 October, regulating subcontracting in the construction sector
The 3rd additional provision of the Law regulating subcontracting in the construction sector is modified in order to harmonise it with the contractual modifications introduced.
In this sense, it regulates the possibility of terminating the open-ended contract for reasons inherent to the worker, provided that this is done in accordance with the following rules:
| Characteristics | |
| Indefinite-term contract assigned to works | Purpose: Those contracts whose purpose and result are linked to construction work, taking into account the activities established in the functional scope of the General Agreement for the Construction Sector, will be considered indefinite-term contracts assigned to construction work. Termination of the open-ended contract for reasons inherent to the person:
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Modification of the General Social Security Law
- Finally, several precepts of the General Social Security Law (LGSS) are also amended, among which we would highlight the following:
- The additional contribution rates for short-term temporary contracts (lasting less than 30 days) are increased.
- Specific contribution rules are established in cases of reduced working hours and suspension of the employment contract.
- The contribution rules applicable to alternating training contracts and the transitional contribution rules for training contracts are established.
- The list of legal situations of unemployment is updated.
- A benefit is introduced for workers affected by the RED Mechanism, for which no minimum period of prior Social Security contributions is required and its use does not imply the consumption of any contributions that may have been made previously.
- While the ERTE and the RED Mechanism are being processed, companies may voluntarily avail themselves of the exemptions applicable to the company contribution for common contingencies and for joint collection concepts, as detailed below:
- ERTE ETOP: 20% (provided that the corresponding training actions are carried out)
- ERTE due to temporary force majeure: 90%.
- ERTE due to force majeure determined by impediments or limitations of the activity: 90%.
- RED mechanism in its cyclical modality: it will be applied according to the following scale:
- 60% from the date on which the activation occurs until the last day of the fourth month thereafter.
- 30% for the four months following the end of the previous period.
- 20% the four months following the end of the previous period.
- RED mechanism in its sectoral modality: 40%
The above exemptions will be conditional on the companies undertaking to maintain the employment of the workers concerned for 6 months. In the event of non-compliance, the company will be obliged to repay the amount of the contributions for which it was exempted corresponding to the worker in respect of whom this requirement has not been met.
This undertaking shall not be deemed to have been breached in the event of disciplinary dismissal, resignation, death, retirement or total, absolute or severe permanent disability of the worker.
Nor shall it be understood to be breached by the end of the call of permanent-discontinuous workers (provided that it is an interruption thereof) or by the termination of a temporary contract concluded in accordance with the requirements set out in Article 15 of the ET.
The above consequences are also provided for in the event of non-compliance with training obligations.
