European Trade Union Institute, ETUI.

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Labour market reforms in Spain: background summary

Important labour market reforms touching on employment protection legislation, collective bargaining and labour flexibility were passed in 2010, 2011 and 2012. An additional reform of part-time work was passed in 2013. The 2010 and 2011 reforms were introduced by a left-wing government (Socialist Party). The 2012 and 2013 reforms were introduced by a right-wing government (Popular Party). None of these main reforms had the support of the social partners. Indeed, there was a one-day general strike in 2010 and another similar strike in 2012 (March), protesting against the reforms.

Background info

Employment protection

  •  As of 12 February 2012, the minimum compensation for unjustified dismissal was reduced to 33 days of gross salary per year worked with a maximum of 24 months of gross salary. Previously, the minimum amount was 45 days of gross salary per year worked with a maximum of 42 months of gross salary.
  • As of 1 August 2014, severance compensation at the legally mandated amount is tax free up to €180,000.
  • Following the 2012 reform, redundancies based on economic grounds will be prima facie justified when the company has current or foreseen losses or when it can prove a persistent decrease (at least three consecutive quarters) in ordinary revenue or sales, even if it has posted a profit. Labour courts, however, resist the merely mechanical application of these rules.
  • Following the 2012 reform, collective redundancies may be carried out after the consultation period without any administrative authorisation by the labour authority.
  • The statutory redundancy compensation remains at 20 days of gross salary per year worked with a maximum of 12 months of gross salary.
  • The failure to reach an agreement with the employee representatives in collective redundancies procedures no longer prevents the employer from making the redundancies. However, the employer's decision may be challenged by the employee representatives and by the employees themselves before the labour courts, which have full jurisdiction to review the employer’s decision.
  • From 1 January 2015, termination of fixed-term employment contracts for a specific, limited job or service, either because of market circumstances or excessive workload, entails severance compensation of 12 days of gross salary per year worked.
  • Following the 2010 reform, the fixed-term contract for a specific, limited job or service has a maximum duration of three years (a sectoral collective agreement may extend it to a maximum of four years).
  • A new type of employment contract introduced in February, 2012 allows small companies employing fewer than 50 employees to establish a probationary period of 12 months.

Collective bargaining

  • The amendments approved in 2012 touched three important aspects of the collective bargaining system.
  • First, priority is given to company level collective agreements over sectoral collective agreements on a number of matters, such as salary, hours, time schedules, shift work, etc. In practice, however, there has been no significant increase in collective agreements at company level.
  • Second, for objective reasons, a company may opt out of the applicable collective agreement as long as it reaches an agreement with the employee representatives.In the absence of such an agreement, the dispute may ultimately be resolved by compulsory arbitration.
  • Third, the automatic extension of collective agreements beyond their expiry date – also known as "ultraactividad" – is restricted to only one year, in the absence of an agreement to the contrary. According to the Supreme Court, after that year of extension, if no agreement is reached, the working conditions set by the expired collective agreement become a part of the individual contracts of the employees affected, and can be modified following the procedure of substantial modification of working conditions.

Internal flexibility

  • The amendments approved in 2010 and 2012 had the intention of making internal flexibility measures more attractive than dismissals and termination of temporary contracts. On paper, substantial modification of working conditions are now easier to negotiate with employees and the reasons justifying an eventual unilateral decision made by the employer are probably broader than they used to be.
  • One of the main aspects in which organisational flexibility has been enhanced is working hours. On the one hand, since 2012 a firm may impose irregular distribution of hours over the year, as long they keep within the limit of 10% of total working hours. Firms may go beyond this limit if they reach an agreement with the employee representatives or if the collective agreement so authorises.
  • On the other hand, an important reform of part-time work in December 2013 has dramatically increased the flexibility of this type of employment. As in any other employment contract, the normal or regular hours must be established in the contract, obliging the employer to pay salary for those hours. The special flexibility provided by part-time contracts with at least 10 regular hours per week lies in the possibility of employer and employee individually agreeing on “supplementary hours”: these hours entail worker’s availability on a three-day notice, and the company pays only for the hours actually worked. The maximum number of supplementary hours is a limit of 30% of the regular hours (collective agreements may raise it up to 60%).
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