Government approves labour law reform

On 28 December 2021, the Council of Ministers approved the Royal Decree-Law that includes the agreement reached between the government, trade unions and employers structurally reform the labour law.

This will focus on changes to temporary contracts, subcontracting, ERTEs, collective bargaining and training contracts. In particular:

Recruitment

• Reduction in the modalities of recruitment
• Temporary contracts will be limited to 6 months and only occasional work for a maximum of 90 days
• Disappearance of work or service contracts
• The training contract will be for training in alternation and for obtaining professional practice
• The types of contract available are reduce. There will only be one fixed-term contract, which may be enter into due to production circumstances or to replace the employee.

Ultra activity

• Collective agreements remain in force at the end of their express term
• Repeal of the prevalence of the company agreement in terms of wages.

ERTE due to economic, technical, organizational and production causes (ETOP) and ERTE Covid

• Flexibility in its processing and application (the consultation period is reduced to 7 days, subject to the constitution of the representative committee). Possibility of affecting or disaffecting employees depending on the company’s activity
• Rebates on social security contributions and financing if training activities are carried out for employees on ERTE
• The prohibitions on overtime and outsourcing of the current ERTE Covid are incorporated.

ERTE due to force majeure (impediment and limitation)

• The impediment or limitations to normal activity determined by decisions of the governmental authority are add to the existing regulation as a specific cause
• They will require a mandatory report from the Labour Inspectorate
• Flexibility to affect and disaffect employees depending on the company’s activity
• Rebates on social security contributions and exemptions.

RED mechanism for flexibility and stabilization of employment

To be activate by the Council of Ministers, companies can avail themselves of two new types of ERTE justified on the following grounds:

• Structural causes: or restructuring ERTE, motivated by structural organizational, technical or productive changes or new work and production methods are introduced that generate losses of competitiveness associated with the maintenance of the workforce. They must therefore be cause by a specific external business situation
• Cyclical causes: caused by cyclical situations of general economic impact that motivate special stabilization aid, such as a coronavirus pandemic, for companies that cannot maintain their workforce.

It will be necessary to await the publication of the Royal Decree, as well as the small print of the Decree, to see all the regulations.

Inmaculada Pessini