In the face of a growing economic crisis, a 23% unemployment rate and an unemployment rate of 50% affecting the youth, the Spanish Parliament recently passed drastic reforms relevant to Spanish labor law known as Royal Decree Law 3/2012 ("Spanish Labor Reforms"). The enactment of these reforms will make it easier and cheaper for employers to lay off workers, will provide incentives for employers to hire younger workers, and is expected to increase employer confidence. This article will provide some basic information relevant to labor law in Spain and introduce some of the more critical provisions of the reform law.
Sources of Spanish Labor Law
The basic sources of labor law in Spain are the Constitution of 1978, treaties such as the International Labour Organization Agreements No. 87 (Agreement on Trade Union Freedom and Protection of the Right to Form Trade Unions of 1948) and No. 98 (Agreement on the Right to Form Trade Unions and Right to Collective Bargaining of 1949), the 1995 Labor Act, Parliament Acts, Royal Decrees, the government regulations that implement the 1995 Labor Acts, collective bargaining agreements, individual labor contracts and case law.
General Requirements of Employment Contracts
Although not required in all situations, it is recommended that
employers utilize written employment contracts with their
employees. The Spanish government has created model form contracts;
however, additional clauses may be added. At a minimum, all
employment contracts should include the name of the employer and
employee, the domicile and work location of the employer, the date
of commencement of employment, a summary of the job position,
amount of base salary and any additional compensation, work hours
and schedule, the amount of vacation time permitted, and if
applicable, prior notice relevant to termination.
The duration of an employment contract is presumed to be entered
into for an indefinite period of time unless the contract sets
forth a specific term of employment. Employers should review
current collective bargaining agreements prior to executing
definite term contracts in order to ensure that the definite term
contracts are in compliance with such agreements.
Employers should note that pursuant to the Spanish Labor Reforms,
employers may now deviate from the provisions of a collective
bargaining agreement for certain economic, technical,
organizational or production reasons.
Contract Termination and New Rules Applicable to Severance Payments
The Labor Act provides a list of various reasons that an
employment relationship can be terminated, including but not
limited to: mutual agreement of the employer and employee; reasons
set forth in the contract to the extent permitted by law;
disciplinary reasons; constructive dismissals (for economic
reasons, technical reasons, organizational reasons, and production
reasons); resignations and death; or disability of the employee.
Collective bargaining agreements typically set forth in detail the
various permissible grounds for terminating employment and required
procedures to be followed by the employer.
Prior to the Spanish Labor Reforms, the Labor Act required, under
certain circumstances such as unjustified dismissals, that
employers make severance payments to the terminated employee
computed on the basis of 45 days' gross salary per year of
employment with a maximum of 42 months' salary. The reform law
reduces the required severance payments to 33 days per year of
employment and caps payments at a maximum of 24 months.
Additionally, if an employer can demonstrate three consecutive
quarters of losses, the employer will now only be required to pay
20 days of severance per year of employment.
Additionally the Spanish Labor Reforms have eliminated the need to
obtain official authorization prior to proceeding with collective
dismissals and, as a result, the reasons for and procedures
applicable to the dismissals are monitored exclusively by the labor
courts.
Leave Entitlement and New Rules Applicable to Paternity Leave
Leaves of absences pursuant to Spanish law include short-term paid leaves of absences to which employees are exceeding their vacation and holiday time. Paid leaves of absences are typically governed by the employment contracts or collective bargaining agreements. Types of paid leave include, but are not limited to: leave for marriage (a minimum of fifteen days); maternity or adoptions (sixteen weeks for a single child); paternity (two days); leave for serious illness of a relative (two-to-four days depending upon the circumstances); and leave to perform public duties. The time permitted depends on the purpose of the leave. Pursuant to the recent reforms, an employee seeking to take paternity leave must give fifteen days notice prior to commencing leave and specify a start and end date for the leave.
New Incentives Created by the Spanish Labor Reforms for Employers to Hire More Employees
The Spanish Labor Reforms create various incentives for employers to employ more staff, including providing tax incentives to employers with fewer than 50 employees and providing a reduction to employer's social security payments for hiring employees 45 years and over, women in sectors which traditionally employ few women and individuals under the age of 30.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
