Employment Promotion Programme for 2005

Each year, at the end of December, the Spanish General State Budget Act for the following year is approved. On 28 December, the Budget Act 2/2004 was enacted, and it includes the Employment Promotion Programme for 2005.

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This Act establishes contribution rebates for companies, self-employed workers, non-profit organisations, and worker cooperatives or employee-owned companies that take on unemployed workers on permanent contracts, provided those workers are registered at the employment office and belong to certain target groups (women, older unemployed workers, etc.). One specific case is the application of rebates to employers who hire individuals who have been recognised as victims of gender-based violence by a member of their household.

The Act also incentivises the conversion of fixed-term or temporary contracts into permanent ones, as well as the conversion of training contracts, relief contracts, and early retirement substitution contracts into permanent employment. Further rebates are available for permanent contracts entered into with workers aged 60 or over who have at least 5 years' seniority with the company, and for permanent contracts with female workers whose contracts are suspended due to maternity leave or unpaid leave to care for a child.

Beneficiaries must meet the following requirements:
    · They must be up to date with their tax obligations and Social Security contributions, both at the time the rebates are granted and throughout the period during which they are received.
    · They must not have been excluded from access to employment programme benefits as a result of committing a serious and unexpired infringement as provided for in Article 46.2 of the Act on Infringements and Sanctions in the Social Order.

The incentives, as a general rule and subject to certain specific provisions, consist of the following rebates on employer Social Security contributions for common contingencies:

    a) Hiring unemployed women aged between 16 and 45: 25% for the twenty-four months following the start of the contract.
    b) Hiring women to work in occupations and professions with a lower female employment rate, who additionally have been continuously registered at the employment office for a minimum of six months, or who are over 45 years of age:
    · 70% during the first year of the contract;
    · 60% during the second year of the contract.
    · If the additional requirements above are not met, the rebate will be 35% for the twenty-four months following the start of the contract.
    c) Hiring unemployed workers who have been continuously registered at the employment office for a minimum of six months: 20% for the twenty-four months following the start of the contract.
    d) Hiring unemployed workers aged between 45 and 55: 50% during the first year of the contract; 45% for the remainder of the contract.
    e) Hiring unemployed workers aged between 55 and 65: 55% during the first year of the contract; 50% for the remainder of the contract.
    f) Hiring recipients of unemployment benefit benefits or subsidies with one year or more of entitlement remaining at the time of hiring: 50% during the first year of the contract; 45% during the second year of the contract.
    g) Hiring unemployed recipients of the subsidy for workers covered by the Special Agricultural Scheme of the Social Security, as well as recipients of the agricultural income support payment: 90% during the first year of the contract; 85% during the second year.
    h) Hiring unemployed workers admitted to the programme providing the specific support known as the active inclusion income (renta activa de inserción): 65% for the twenty-four months following the start of the contract; 45% for the remainder of the contract in the case of workers aged between 45 and 55; or 50% for the remainder of the contract in the case of workers aged between 55 and 65.
    i) Hiring unemployed women registered at the employment office who are taken on within the twenty-four months following the date of childbirth: 100% for the twelve months following the start of the contract.

Employers who take on workers on a permanent basis who have been officially recognised by the competent authority as victims of gender-based violence by a member of their household may apply a 65% reduction on the employer's Social Security contribution for common contingencies, for a maximum period of twenty-four months.

Conversions to permanent contracts carried out before 31 December 2005, in respect of fixed-term or temporary contracts concluded on a full-time or part-time basis prior to 1 January 2005, as well as training contracts, relief contracts, and early retirement substitution contracts, shall give rise to a 25% reduction for a period of twenty-four months from the date on which the new contract takes effect.

Concurrence of reductions: as a general rule, where a given situation could simultaneously fall within more than one employment promotion category, only one set of reductions may be applied; the choice shall rest with the beneficiary of the deductions provided for under the law.
Exclusions: the reductions provided for under this scheme shall not apply to:
    · special employment relationships as defined under the Workers' Statute, with the exception of persons serving sentences in penitentiary institutions and minors held in detention centres, to whom the reduction scheme established for unemployed workers in situations of social exclusion may apply.
    · Hiring of family members of the employer up to and including the second degree of kinship.
    · Hiring of workers who were previously employed by the same company, group of companies, or entity under a permanent contract.
    · Workers who have ended a permanent employment relationship within the three months prior to the conclusion of the new contract.
    · Admission of worker-members to cooperatives or labour companies where they have maintained a prior contractual relationship of more than twelve months.

The General Social Security Treasury (TGSS) shall provide the Public Employment Service (SEPE) on a monthly basis with the information necessary regarding contracts affected by the application of the reductions provided for under the law, which shall be funded from the corresponding budget allocation of that body. The same information shall likewise be made available to the Directorate-General of the Labour and Social Security Inspectorate, so that it may carry out the necessary inspection activities to monitor the proper application of the reductions by their beneficiaries.