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Spain

January 26, 2021

By Jorge Aranaz

Back to International Employment Law

Spain

KEY DEVELOPMENTS FOR 2020


 

Extension of Spain's ERTE furlough scheme

In light of the ongoing COVID-19 pandemic, businesses on temporary furlough (also known as ERTE) will continue to be exempt from paying employer Social Security contributions until 31 January 2021 under certain circumstances and conditions, such as the commitment to maintain employment for six months and the prohibition to distribute dividends corresponding to the tax year in which these ERTE were carried out (usually 2020). Workers on an ERTE and permanent seasonal workers will also continue to receive unemployment aid until that date.


 

Regulatory changes in employment law

The new Government has announced its intention of reformulating certain aspects of the 2012 labour reform. The most relevant changes that were announced affect termination (grounds for redundancies), internal flexibility (limiting the right for employers to make unilateral decisions), collective bargaining (limitation of the company agreement), decentralisation of production, and the regulation of employment contracts. However, the actual scope of the reforms are yet to be seen.

In February 2020, the Government eliminated the right for companies to make employees redundant on the basis of the number of absences (even if those terminations would otherwise be justified).

In June 2020, the Ministry of Labour drafted a new regulation in relation to remote working. According to the draft legislation, companies will have to pay all expenses (both direct and indirect) incurred by the worker while working from home. The draft legislation also allows those who telework to alter their ordinary working hours while respecting the general regulations on working time, provided that the period of availability is previously agreed with the company.


 

New ways of work

The Government and trade unions have also announced the need to review the current legislation in order to decide whether it should be modified to account for new ways of work, brought about by platform companies and the gig economy. Opinions are divided on this issue, as some believe that new ways of work are adequately covered by the current legislation, whereas others believe it is not adequate and should be reformed accordingly.


 

Recording working time

The European Court of Justice has to rule on whether paid leave should start on the first working day after the event triggering the leave takes place, or on the day after the event (Rulings nº 229/2020 and nº 257/2020 of the Labour Chamber of the Supreme Court of 11 March 2020 and of 17 March 2020 respectively).

Due to the new regulation regarding the obligation of companies to record the effective working time of each employee daily, it is also foreseeable that more rulings on the consideration of time as 'effective working time' may be issued, as it has become a source of conflict in employment relations.

 

KEY DEVELOPMENTS FOR 2019


 

Pensions and public benefits increases

The maximum public pension limit has increased from EUR 2,580 per month to EUR 2,659. Recipients of pensions that were re-valued in 2018 will be compensated in 2019 with a single payment equivalent to the difference between the pensions received in 2018 and the Consumer Price Index.


 

Increase to standard pay

A proposal to increase the minimum standard pay (salario mínimo interprofesional) by more than 22% (up to 900 euros from 735.9 euros) is likely to come into force in 2019. This has raised considerable concern for employers, as some collective bargaining agreements salaries are linked to the minimum.


 

CBAs to include clauses allowing for mandatory retirement

Collective bargaining agreements can include clauses allowing for mandatory retirement when the employee has reached the legal retirement age set out in the social security regulations, provided that (1) the worker complies with the requirements of the social security regulations to be entitled to receive 100% of the ordinary contributory retirement pension and (2) the termination must be linked to coherent employment policy objectives set out in the bargaining agreement, for example improving employment stability or hiring new workers.

 

KEY DEVELOPMENTS FOR 2018


 

Legislation Affecting Subcontractors

A change in how subcontracting is regulated is predicted for the first quarter of 2018. The modification is expected to extend working conditions of subcontractors’ employees to be similar to the conditions enjoyed by the principal company’s employees, either because they are set forth in the applicable collective bargaining agreement or because they are actually applied by the company. Essential working conditions will include remuneration and salary amount, hiring conditions, working time and rest periods, equality, paternity and maternity rights and risk prevention.


 

Potential Modification to Employment Contract Regulation

Trade unions and employers’ associations are negotiating modifications to the employment contract regulation, in order to reduce reliance on fixed-term employment. Severance payments may be introduced, to reduce the difference between permanent employment and fixed-term employment contracts.


 

Amendment to Law for Autonomous Employees

The Law for Autonomous Employees has been modified to facilitate their professional activity and increase their social rights. The modifications affect tax and social security obligations and many of them come into force on January 1st, 2018.

 

KEY DEVELOPMENTS FOR 2017


 

More changes to labour law

The Law for Autonomous Employees has been modified to facilitate their professional activity and increase their social rights. The modifications affect tax and social security obligations and many of them come into force on January 1st, 2018.

 

KEY DEVELOPMENTS FOR 2016


 

CJEU decision affecting termination of fixed-term employment contracts

On September 2016, the Court of Justice of the European Union (“CJEU”) held that the current Spanish regulation on fixed-term contracts is contrary to the Framework Agreement on fixed-term work as it breaches the principle of non-discrimination. Namely, it does not establish any compensation for the termination of cover contracts, while granting compensation to “comparable permanent workers,” but with no objective reason for this different treatment.

Since this ruling, some courts have applied the compensation typically awarded for termination of a permanent contract (i.e. 20 days’ salary per year of work, capped at 12 monthly salaries) to fixed term contract terminations for this reason.


 

CJEU considers specific issues on collective dismissal regulation against the EU directive

The CJEU has considered Spanish legislation relating to collective dismissals in the context of the applicable EU directive in relation to the number of employees that need to be affected in order for them to use the collective redundancy procedure.

Several court decisions after the ruling have applied this interpretation.

With thanks to Jorge Aranaz of Cuatrecasas, Gonçalves Pereira for his invaluable collaboration on this update.

Contributors

Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department