Key points of the Spanish Labour reform

On 28 December 2021 the Cabinet of Ministers passed a significant reform of the Spanish labour market. The reform was agreed on by the Government, the Trade Unions and the Employers’ Associations and has been enacted through Royal Decree Law 32/2021, of 28 December (Real Decreto-ley 32/2021, de 28 de diciembre, de medidas urgentes para la reforma laboral, la garantía de la estabilidad en el empleo y la transformación del mercado de trabajo). Here is a summary of the most relevant points:

Elimination of temporary contract for a specific project or service (contrato de obra y servicio determindo)

• This type of contract is abolished and its use will no longer be possible after 31 March 2022.
• Any contract for a specific project or service entered into before 29 December 2021 will not be affected by the new regulations and contracts entered between this date and 31 March 2022 will have a maximum duration of 6 months. This also applies to contracts based on production circumstances.

New scheme for the contract based on production circumstances (contrato eventual)

This type of contract is completely redefined and its use will now be lawful to cover:

1. Unforeseeable increases in production or fluctuations in production that are within the employer’s normal activity (this includes employees on vacation). In this case, it has maximum duration of 6 months extendable to 6 additional months, provided that the applicable Collective Bargaining Agreement (“CBA”) allows it.
2. Foreseeable situations of short duration. In this case, it can only be used for a maximum of 90 days per year.

Extension of the use of the contract for substitution (contrato de sustitución).

In addition to sick leave, unpaid leave, maternity or paternity leave, this contract can now be used to cover an employee’s voluntary reduction of working hours, and may begin 15 days prior to the absence of the person that is substituted.
 
Tougher sanctions for fraud in the use of temporary contracts 

The sanctions for the misuse of temporary contracts will now be of a maximum of 10,000 € for each of the contracts entered into, whereas before the maximum amount was 7,501 € irrespective of the number of fraudulent contracts entered into by the company.
 
Changes in the CBA

• A company CBA can no longer set a minimum salary that is below the minimum salary established by the CBA applicable in the company’s sector.
• Irrespective of the agreed term, once it expires the CBA will continue to be applicable until a new applicable CBA is published.

Changes on the regulation of furlough (ERTE)

• It is now possible to extend and ERTE based economic, technical, productive of organizational grounds beyond its initial duration without need to negotiate a new ERTE.
• There is a new type of ERTE call RED Mechanism. The RED Mechanism must be activated by express agreement of the Cabinet and will allow companies to obtain discounts on social security contributions and employees to receive special benefits.