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The Labour Reform


ROYAL DECREE-LAW 3/2012 OF 10 FEBRURARY ON URGENT MEASURES TO REFORM THE LABOUR MARKET


Royal Decree Law 3/2012 on Urgent Measures to Reform the Labour Market (“RDL 3/2012”) was published on the Spanish Official Gazette on 11 February 2012. Below we summarise the key aspects of the developments introduced by RDL 3/2012. For more details, please refer to the Information  and the Labours Supplement of the Derecho & Sociedad (Law & Society) issued in May (nº3), in September (nº4), in January (nº5) and in June (nº6).

 

I. CONTRACTS OF EMPLOYMENT
 
§ Permanente Contracts in Support of Entrepreneurs:Companies with less than 50 employees may enter into so-called “contracts in support of entrepreneurs”. These are permanent contracts subject to a one-year trial period.
§ Training Contracts: These may be arranged with employees under 30 years of age, until Spain’s unemployment rate falls below 15%.
§ Part-time Contracts: Overtime is now available for part-time contracts, subject to the statutory limitations commensurate with the employee’s working hours.
 
II. TERMS OF EMPLOYMENT
 
§ RDL 3/2012 replaces professional categories with professional groups, which may encompass a series of different duties and responsibilities.
§ RDL 3/2012 creates a number of employee rights, including the right to benefit from leaves for training or professional development purposes or attend exams.
§ Employees with at least one year’s seniority may request 20 hours’ paid leave per annum for job training purposes.
§ RDL 3/2012 opens the possibility of spreading irregularly up to 5% of the employee’s annual working time.
§ Where an employee’s annual leave has coincided with a period of temporary inability to work due to reasons other than pregnancy, delivery or breastfeeding, the employee in question may still take his/her annual leave within 18 months from the end of the year in which his/her annual leave entitlement was generated.
 
III. MATERIAL ALTERATIONS OF TERMS OF EMPLOYMENT
 
§ RDL 3/2012 introduces a new cause of material alteration of the terms of employment, namely: variations in the amount of the employee’s pay. Employers may now reduce the salary paid to their employees on financial, technical, organisational and/or production grounds.
§ Functional mobility now refers to tasks both above and below the appropriate professional group. Functional mobility decisions must be substantiated on technical and/or organisational reasons and may be in place during such time as is strictly necessary to address the situation.
§ Collective geographical mobility: decisions to relocate a group of employees may not be stopped by the labour authority. Priority to be excluded from relocation decisions may be given by contract or collective agreement to employees with family responsibilities, mature employees or disabled employees.
 
IV. SUSPENSION OF CONTRACTS OF EMPLOYMENT; REDUCTION OF WORKING HOURS BASED ON OBJECTIVE GROUNDS
 
Employers may temporarily suspend a contract of employment or reduce an employee working hours based and technical, organisational, or production grounds and without the Labour Authority’s prior approval.
 
V. TERMINATION OF CONTRACTS OF EMPLOYMENT
 
A.      Reduced compensation for unfair dismissal
 
§ This is now equivalent to 33 days’ pay per year of service up to a maximum of 24 months’ pay.
§ Dismissals related to contracts of employment in force before 12 February 2012: Compensations will be calculated at the rate of 45 days’ pay per year of service before 12 February 2012 and, thereafter, at the rate of 33 days’ pay per year of service. The total amount of compensation may not exceed 720 days’ pay, unless the excess results from time worked prior to 12 February 2012, in which case that will be the maximum compensatory amount. In any event, compensations are capped at 42 months’ pay.
§ Back pay is no longer payable if the employer chooses to readmit the employee. An exception is made in favour of workers’ representatives and trade union delegates, who will be entitled to back pay in any event.
 
B.      Individual terminations based on objective grounds.
 
RDL 3/2012 changes the set of economic and organisational grounds that substantiate objective dismissals (articles 51 and 52 of the Spanish Statute of Workers), as follows:
  • Financial. These arise where the company is in a bad financial position as a result, for example, of existing or threatened losses, or a persistent drop in earnings or sales. Drops will be regarded as “persistent” if they occur over a period of three consecutive quarters.
  • Organisational. These arise where changes occur in matters related to staff work systems and methods or production organisation methods.
 
C.      Collective lay-offs based on objective grounds.
 
The changes introduced are:
-         Collective lay-offs need no longer be approved by the Labour Authority, except in those cases where the redundancy scheme is based on a cause of force majeure. The Labour Authority’s role is restricted to ensure the proper development of the consultations period. If the consultation period ends unsuccessfully, the employer must notify the dismissal individually to each employee affected.
-         If the collective lay-off involves more than 50 employees, the employer must provide an outplacement plan, designed for a minimum period of six months. The plan must include professional training and guidance, assistance and active job-searching.
-         Companies with more than 500 employees that obtained profits in the two previous financial years before the year of implementation of a redundancy scheme involving employees aged 50 or more, must make a financial contribution to the Treasury.
 
VI. COLLECTIVE AGREEMENTS
 
§ Where economic, technical, organisational or production circumstances occur, RDL 3/2012 opens up the possibility of not enforcing any terms of employment included in industry or company-level collective agreements related to working time, distribution of working hours, shifts, remuneration systems and amount of wages, work system and performance, duties –where these exceed the limitations on functional mobility– and additional Social Security benefits.
§ Company-level collective agreements take priority over industry, state, or lower level agreements in all matters aforesaid except working hours.
§ The applicability of collective agreements beyond their expiry date is limited: a collective agreement will no longer be enforceable (resulting in the application of a higher-level agreement) if two years after its expiry no other agreement has been concluded or no arbitration award has been entered. As for collective agreements expired before the implementation of the reform, the two-year extension period will commence on the date in which RDL 3/2012 came into force.


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