On December 30, Royal Decree-Law 32/21 on urgent measures for labor reform was published in the BOE.
What does this new reform consist of? What can we expect from it?
The main objective of this labor reform is to combat the temporary employment rate in the Spanish labor market, which exceeds 25%, the highest in the European Union.
The
main measures established by the reform to reduce temporary employment are:
- The establishment of the permanent contract as the standard employment contract.
- The reduction from 24 to 18 months of the period after which consecutive temporary contracts are considered permanent.
- The disappearance of the contract for specific projects or services as of March 30, 2022. During the transition, contracts signed before December 31, 2021, will maintain their duration, and contracts signed between December 31, 2021, and March 29, 2022, will have a maximum duration of six months.
- The reduction to two types of fixed-term temporary contracts: the contract for production circumstances, with a maximum duration of 90 days when production circumstances are foreseeable and 6 months (extendable to 1 year) when they are not, and the substitution contract to replace a worker due to illness, maternity, leave of absence, and others.
- The new regulation of fixed-term discontinuous contracts for all seasonal or temporary work, intermittent tasks, commercial or administrative subcontracts, and temporary employment agencies.
- The new regulation of training contracts, establishing two types: the alternating training contract (formerly the apprenticeship contract adapted to dual training), which is reduced from a maximum duration of 3 to 2 years, and the contract for obtaining professional practice (formerly the internship contract), which is reduced from a maximum duration of 2 years to 1.
- The penalty for companies that abuse temporary contracts of less than 30 days, which must pay an additional Social Security contribution of 26 euros for each of these contracts they terminate.
- The increase in fines from 8,000 to 10,000 euros for each breach of the rules regulating temporary hiring, which will now be applied per worker rather than per company, as was previously the case.
The reform also contains measures to
facilitate flexibility for companies when the volume of work is reduced, avoiding layoffs, including:
- The consolidation of temporary employment regulation files (ERTE), whether due to force majeure or economic, technical, organizational, or production reasons, which proved their utility during the pandemic.
- A new mechanism, called RED, which, upon activation by the Government, will allow companies to request a reduction in working hours or the suspension of contracts during general crises (in which case the maximum duration will be 1 year) or sectoral crises (in which case the initial 1-year duration may be extended twice for a period of 6 months).
It seems these measures will be effective in reducing temporary employment, at least in the short term. For example, if all project or service contracts are converted into fixed-term discontinuous contracts, the temporary employment rate will drop to 17%. However, the reform will not end the abuse of temporary employment if the administration does not provide
more resources for inspection procedures.
In the long term, it is more difficult to make forecasts, as we will need to see the effects of the flexibility mechanisms in a recessionary environment and because a change in government could end the reform measures. We hope that the fact they were agreed upon with social partners will make them last over time and
help more people have stable work, lead their lives, and be who they want to be.
