At the time of writing, the only document available to us is the government briefing paper El Gobierno informa ("The Government Reports"), distributed to the press.
Written by Josep Conesa
Employment and insolvency lawyer
According to the document, on 2 March the Council of Ministers approved a labour reform of clearly limited scope, perhaps because it was drawn up unilaterally by the Government rather than agreed with the social partners.
It appears, in effect, to be little more than an extension of the previous 1997 reform, given that it does not address collective bargaining, the termination of the employment contract, or compensation amounts in any clear or decisive way, even if the issue of fixed-term contracts has also been partially resolved.
There are differing views on whether this reform has a built-in expiry date, that is, whether by 2005 we would once again be facing the need for a new reform, but in any case what matters here is the substance of the current one.
severance pay:
Current permanent employees on standard contracts will continue to receive, in the event of unfair dismissal, 45 days' salary per year of service, capped at 42 monthly payments.
Workers covered by the contract to promote permanent employment, introduced in May 1997, will continue to receive 33 days' salary per year of service, capped at 24 monthly payments, as compensation in cases of unfair dismissal.
Until now, the categories of workers eligible for this type of contract were very limited. The current reform provides that the Royal Decree implementing it will define the groups entitled to this reduced compensation as: young people aged between 16 and 30, unemployed women hired in occupations with low rates of female employment, workers over 45, jobseekers who have been registered as unemployed for at least 6 months, and workers with disabilities.
COMPENSATION IN FIXED-TERM EMPLOYMENT:
In addition to what will be discussed below regarding this type of contract, it should be noted that, in order to discourage the use of the fixed-term contract, a new compensation of 8 days' salary per year worked has been established for all fixed-term contracts.
This means that the measure has retroactive effect, as this compensation will apply both to fixed-term contracts currently in force and to those entered into going forward. This may give rise to claims where the company takes the view that it can terminate a previously signed contract without paying this compensation, while the employee argues, as the legislation appears to intend, that it applies retrospectively. However, given the relatively modest amounts involved, it is likely that such disputes will be resolved through conciliation agreements.
RESTRICTIONS ON FIXED-TERM EMPLOYMENT:
To limit the use of fixed-term contracts, the maximum duration has been reduced from the current thirteen and a half months to twelve months, that is, to a one-year period.
The Workers' Statute will also be amended to align the rights of fixed-term workers with those of permanent employees, introducing an obligation on the employer to inform employee representatives of any open-ended vacancies within the company.
Finally, the existing margin available to collective bargaining agreements to restrict the use of this type of contract has been extended.
PART-TIME EMPLOYMENT:
The previously established threshold, under which a part-time contract had to fall below 77% of standard working hours to qualify as such, has been removed, in order to better meet the needs of both workers and businesses.
As a result, employers will now be able to hire an employee on a part-time basis for a number of hours that may represent as much as 90% or 95% of standard working hours. An added benefit is that those hours may be arranged with full flexibility.
The distribution of working time has also been made more flexible, with hours now calculated on the basis of total hours worked, regardless of how they are distributed throughout the working period.
TRAINING CONTRACTS:
The groups eligible to benefit from this arrangement are extended to include immigrant workers during the first two years in which they hold a work permit, unemployed people in situations of social exclusion, those who have been unemployed for more than three years, and workers from training workshops or vocational schools.
SUBCONTRACTING:
This is a particularly significant area, one that trade unions had been closely watching, especially given the impact that subcontracting activity has on workplace accidents. As a result, a new framework governing contracting and subcontracting was approved, with the aim of establishing more clearly and precisely the liability along the chain of contracts, with regard to pay, Social Security, and occupational health and safety. However, the Council of Ministers' press release did not set out the details of the new framework.
What is established is the obligation on companies to inform the workers' representatives of the subcontracted company, or the workers themselves, of the identity of the principal company, while workers of that company must likewise be made aware of any contracts and subcontracts entered into.
CONCLUSION:
By way of conclusion, in response to the question of whether this reform is a compromise or a phased measure, that is, whether the government has managed to satisfy employers and workers in equal measure, or whether this reform is the final word or merely a bridge between the 1997 reform and a possible further reform in 2005, only the results in unemployment rates and economic growth following the entry into force of these rules will provide the answer and indicate what course of action best serves the interests of society.
SUMMARY OF THE NEW LABOUR REFORM:
· PROMOTING PERMANENT EMPLOYMENT
· This type of contract, with a dismissal cost of 33 days' pay per year, is extended to the following groups:
· Young people aged 16 to 30.
· Women who are unemployed in sectors with lower female employment.
· Workers aged over 45.
· Unemployed people with a minimum of 6 months registered unemployment.
· Persons with disabilities.
· LIMITING FIXED-TERM EMPLOYMENT:
· Compensation of 8 days' pay per year worked upon termination of the employment contract.
· FIXED-TERM CONTRACT: the maximum duration is reduced from 13.5 months to 12 months
· RIGHTS OF TEMPORARY WORKERS: aligned with those of permanent employees. Employers must notify temporary workers of permanent vacancies.
· COLLECTIVE BARGAINING: greater autonomy is granted in negotiations to restrict the use of temporary contracts, by broadening the scope for collective action.
· INCENTIVES: employer contribution rebates of between 70% and 90% are maintained for permanent contracts involving workers with disabilities, for the full duration of the contract, plus a grant of 650,000 pesetas.
· PART-TIME EMPLOYMENT:
· Existing employer contribution rebates are maintained and increased where women are hired on a part-time basis.
· CONVERSION OF FIXED-TERM CONTRACTS INTO PERMANENT CONTRACTS:
· The rebate for converting training and relief contracts into permanent contracts is increased.
· Rebates are extended to other types of fixed-term employment contracts.
· PROMOTION OF PART-TIME WORK:
· The regulatory framework is improved to allow greater flexibility in line with labour market needs and to bring Spain closer to European standards.
· The 70% cap on working hours is removed, allowing arrangements to be tailored to the needs of both workers and company. Social protection levels are also maintained.
· Working hours are made more flexible. Hours are calculated on the basis of total hours worked, independently of output.
· NEW RULES ON SUBCONTRACTING:
· Liability under subcontracting arrangements will be clarified with regard to wages, Social Security contributions, and health and safety obligations.
· The works council must be informed of all contracts and subcontracts entered into for the purpose of preventing workplace risks.
SOURCE: Ministry of Labour and Social Affairs.
