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The new labour reform that has just been approved is the result of fourteen months of negotiations, culminating in an agreement between all parties involved. This is a reform achieved through the joint participation of the Government, Trade Unions, and Employers' Associations.
The agreement aims to continue driving both job creation and business flexibility, but beyond increasing employment levels, its primary focus is on improving the quality of employment.
The reform is structured around three main pillars, each introducing new instruments and measures:
1.- MEASURES AGAINST TEMPORARY EMPLOYMENT
1.1- Promoting permanent employment:
· The possibility of converting fixed-term contracts concluded on or before 31 December 2007 into contracts designed to encourage permanent employment.
1.2- New incentive scheme and extraordinary plan for converting temporary employment into permanent positions:
· Eligible groups receiving incentives: women, young people between sixteen and thirty years of age, workers over forty-five, jobseekers registered at an employment office for at least six months, people with disabilities, workers in situations of social exclusion, and victims of gender-based violence.
· On an exceptional basis, incentives will be granted for the conversion of fixed-term contracts concluded on or before 31 December 2007 into contracts designed to encourage permanent employment.
1.3- Reduction of employer Social Security contributions:
Article 110 of the 2006 General State Budget Act is amended as follows:
- From 1 July 2006, employer unemployment contributions for permanent contracts will be reduced, falling from 6% to 5.75%, and from 1 July 2008 onwards they will be further reduced to 5.50%.
- From 1 July 2006, the employer unemployment contribution rate for full-time fixed-term contracts concluded through temporary employment agencies will be brought into line with that applicable to direct fixed-term hiring, falling from the current 7.70% to 6.70%.
- From 1 July 2006, the contribution rate to the Wage Guarantee Fund (FOGASA, Spain's statutory fund that guarantees workers' outstanding pay in the event of employer insolvency) will be reduced to 0.2%.
2.- MEASURES FOR BETTER USE OF FIXED-TERM CONTRACTS:
2.1.- Chaining of fixed-term contracts:
The wording of Article 115 of the Workers' Statute has been amended to provide that employees who have been employed for more than 24 months within a 30-month period, in the same position and at the same company, automatically acquire permanent employee status.
2.2.- Training contract:
The training nature of these contracts is strengthened by establishing that they may be entered into with workers aged between 16 and 21 who do not hold the qualifications required for an internship contract.
2.3.- Abolition of the insertion contract.
2.4.- Subcontracting of works and services:
Article 42.2 of the Workers' Statute has been amended to provide that when a company enters into a contract for the provision of works or services with a contractor or subcontractor company, it must notify its employees' legal representatives of the following information:
· The registered name, address and tax identification number of the contractor or subcontractor company.
· The subject matter, location and duration of the contract.
· The measures planned for the coordination of activities from a Health and Safety at Work perspective.
· Where applicable, the number of workers to be employed by the contractor or subcontractor at the principal company's workplace.
2.5.- Unlawful labour supply:
Unlawful labour supply occurs in the following circumstances:
· Where the subject matter of the service contracts between companies is limited to the mere supply of workers from the supplying company to the receiving company.
· Where the supplying company lacks its own stable and independent activity or organisational structure.
· Where the supplying company does not have the resources necessary to carry out its activity, or does not exercise the functions inherent to its role as employer.
2.6.- Labour Inspectorate and Social Security:
· Before the end of the current parliamentary term, the staff of the Labour Inspectorate and Social Security system will have grown to 954 Senior Inspectors and 968 Sub-Inspectors.
· Improvements to IT infrastructure and the provision of new premises for Provincial Inspectorates where required.
· Social partners will be involved in defining the objectives and programmes of the Labour Inspectorate and Social Security system through the establishment of advisory representative bodies at both national and regional level.
· The Inspectorate's activities will focus on raising awareness of employment law, rather than being limited to a purely punitive function.
3.- MEASURES TO STRENGTHEN PUBLIC EMPLOYMENT SERVICES AND IMPROVE PROTECTION FOR THE UNEMPLOYED:
3.1.- Unemployment benefits:
· The unemployment subsidy of 6 months will be extended for individuals over the age of 45 with no family dependants who have exhausted a contributory benefit of less than 12 months.
· Expansion of unemployment protection for permanent seasonal workers.
· The Active Reintegration Income (Renta Activa de Inserción) will be recognised as a subjective right and will accrue Social Security contributions.
3.2. Wage Guarantee Fund (FOGASA) benefits:
· The protection provided by the FOGASA (Spain's Wage Guarantee Fund) in respect of unpaid wages in cases of employer insolvency is being strengthened:
- The maximum salary amount payable by the FOGASA will be increased from twice to three times the daily national minimum salary.
- The maximum number of days of outstanding salary payable by the FOGASA will be raised from 120 to 150 days.
- The FOGASA payment will be extended to include the pro-rata portion of extra payments.
· FOGASA protection for dismissal, contract termination and contract expiry compensation will be strengthened:
- For the purposes of payment by the Wage Guarantee Fund (FOGASA) in cases of dismissal or contract termination, the compensation amount will be calculated on the basis of 30 days per year of service (up from the current 25), with a maximum of one year.
- The compensation covered by FOGASA will be extended to include compensation arising from termination on objective grounds as provided for under the Workers' Statute, as well as compensation payable upon the expiry of fixed-term contracts.
3.3. Active Policies of the Public Employment Service:
· Modernisation of the Public Employment Services: the government undertakes to implement, within three months, a comprehensive Modernisation Plan at both national and regional level, which will be reflected in the General State Budget for 2007.
· Review of Active Employment Policies: the government commits to ensuring that, within six months of registering with the Employment Office, jobseekers will receive an offer of guidance, vocational training or job placement support.
· Tripartite working group: within the framework of the State Public Employment Service, a tripartite working group (comprising trade unions, employer associations and the government) will address the development of the Employment Act and the active employment policies to be applied in the future, with particular focus on women, young people and persons with disabilities.
These are the key measures introduced by this labour reform to improve the quantity and quality of employment at both national and regional level. Should you have any questions in this regard, we are at your disposal to provide the guidance you need.
