The current government is seeking to remove Article 33(8) of the Workers' Statute, the well-known provision entitling companies with fewer than 25 employees to a 40% subsidy (equivalent to eight days' pay) from the Wage Guarantee Fund (FOGASA) when carrying out an objective dismissal or terminating an employment contract on objective grounds (economic, technical, organisational or production-related). The stated rationale is to restore FOGASA's original nature as an insurance body, limiting its intervention as a guarantee institution to cases of business insolvency or insolvency proceedings, while discouraging dismissal and promoting job retention.
Written by Josep Conesa
Employment and insolvency lawyer
Following the most recent labour reform, the compensation amounts payable by FOGASA were already capped downwards, the maximum used for calculation purposes was set at twice, rather than three times, the salary minimum interprofessional wage.
That reform also removed the possibility of companies claiming the subsidy directly, restricting eligibility to the employee alone.
It is likely that the Government will proceed with the definitive abolition of this provision in the coming weeks. This expectation is already prompting a rise in objective dismissals, as employers look to benefit from the FOGASA subsidy and minimise its cost impact, the equivalent of 20 days' pay, before the new legislation takes effect.
On a practical note, once the subsidy is abolished, it will be important to monitor how FOGASA handles pending applications from employees, given that the agency currently operates on an appointment-only basis with a waiting time of approximately one month. In the meantime, this firm is submitting applications through the single-window (ventanilla única) channel.
