The 10 main points of the new Labor Reform

DATA and SERVICES present the main news of the new Labor Reform, approved by the Congress on February 3, and we tell you how they can affect the day to day of your company.

• Collective bargaining. The company agreement ceases to have priority in terms of salary, to avoid the practices of salary devaluation. In addition, the indefinite ultraactivity of collective agreements is recovered. In other words, once the agreement has expired, the signed conditions will be respected until a new agreement is signed, whether or not negotiations between employers and unions are delayed. Employees of multi-service companies who offer their activity to others will no longer be affected by the agreement of the subcontracted company, but will be regulated by the agreement of the sector of the activity carried out by the contracting company.

• Goodbye to the work and service contract. A temporary contract modality is eliminated which, according to the Government, is the one that concentrates the highest level of fraud. Current works and service contracts may remain in force for a maximum of six months from the entry into force of the Labor Reform.

In the construction sector, when a work has been completed, the company must offer a relocation proposal to the worker, which in the event of being rejected or unable to produce will lead to the termination of the contract with compensation of seven percent, calculated on salary concepts of the agreement.

• The temporary contract is limited to circumstances of production and replacement of the worker and priority is given to the indefinite. The temporary contract due to production circumstances due to unforeseen situations or temporary employment mismatch cannot last for more than six months, which can be extended to a further six months. For foreseeable and delimited situations it can be used for a total of 90 days, never continuously.

• The temporary worker will be permanent if he accumulates 18 months of work in two years. Fraudulent storms and those that accumulate 18 months of work within a period of 24 months, in the same or different place of work with the same company or group of companies, will become indefinite.

• Fines are levied and imposed by each unduly hired worker. Infringements for the improper use of temporary contracts are applied by each affected worker, rather than by company, and amount to 8,000 to 10,000 euros in the maximum degree.

• Penalty of 26 euros for each contract of less than one month . Temporary contracts of less than 30 days have an additional Social Security contribution of 26 euros each time they unsubscribe.

• Discontinuous fixed-term contract for seasonal activity . The discontinuous fixed-term contract is established for seasonal or seasonal work, with certain execution periods. For the purposes of seniority, the entire duration of the employment relationship will be taken into account and not the time of services actually provided.

• Training contract with two modalities . The training contract has two modalities: alternating training and obtaining professional practice. The first is designed to combine with studies, is limited to 30 years and a maximum duration of two years, with a working day not exceeding 65 percent in the first year and 85 percent in the second, and a salary adapted to the agreement that does not it may drop by 60 percent in the first year and by 75 percent in the second.

• The current model of temporary employment regulation (ERTO) is reviewed . The ERTOs for economic, technical, organizational and production reasons (ETOP) set exemptions for Social Security contributions of 20 percent, conditional on the carrying out of training actions.

Force majeure ERTOs add as a specific cause (already applied to the pandemic) the impediment or limitations to the activity by decisions of the governmental authority, have exemptions of 90 percent and the reduction of working hours can be between a ten and 70 percent.

• The RED mechanism is created for economic or sectoral crises . The RED Flexibility and Employment Stabilization RED mechanism is created to promote ERTOs to the detriment of redundancies. It allows companies, once activated by the Council of Ministers, to request temporary measures to reduce working hours and suspend employment contracts.

It will have two modalities:

A cyclical, when a macroeconomic situation is seen that advises the adoption of stabilization instruments, which will have a maximum duration of one year. During this process, the training of workers will be encouraged and 60 per cent exemptions will be enabled in the first four months, 30 per cent from the fifth to the eighth month, and 20 per cent thereafter.

The sectorial one, when in a certain sector changes are appraised that generate needs of requalification and thus to facilitate the passage of their workers to another company. The duration will be one year, but can be extended to two by two six-month extensions. In this case, the company that accesses this mechanism will be able to obtain a bonus of 40 percent as long as it carries out training activities, and the destination company to one of 50 percent for six months.

Although Labor Reform is already underway, not all approved points will apply for now. The government set a transitional period (vacatio legis) of three months for companies to adapt the temporary contracts they now have (more than four million) and ERTOs to the new rule, a period that is extended to six months in the case of works and service contracts, which disappear. In other words, the maximum duration of the works and service contracts in force today will be six months. The rest of the measures are already mandatory

Another of the promises of the Executive is to evaluate the Labor Reform on a regular basis. According to unemployment data for January, the first month of the Labor Reform, the results are positive. However, the major overhaul that will measure the effectiveness of the new Reform will take place in January 2025. Temporary data and new indefinite contracts will be analyzed in the current period, and the data obtained will be disseminated. This study will be done every two years.

If you need more information do not hesitate to contact DATA and SERVICES.