01/03/2022.- On 31 December 2021, Royal Decree-Law 32/2021, of 28 December, on urgent measures for labour reform, the guarantee of employment stability and the transformation of the labour market, came into force.

This legal text –ratified last week by the Spanish Parliament-, wich restricts temporary employment and provides internal flexibility, entails the amendment of some of the sections of the Workers’ Statute. The modifications can be broken down into four points: temporary contracts, outsourcing, internal flexibility mechanisms (ERTEs), and the collective bargaining system.

• Temporary contracts

The labour reform mainly targets temporary contracts, with the aim of reducing the high rate of temporary employment in the Spanish labour market and, consequently, strengthening permanent contracts.

For this reason, there is a new express mention to the rebuttable presumption of the indefinite nature of the employment contract, which is included in the first section of Article 15 of the Workers’ Statute.

Specifically, the labour reform covers training contracts (Article 11 of the Workers’ Statute), short-term contracts (Article 15 of the Workers’ Statute) and permanent-discontinuous contracts (Article 16 of the Workers’ Statute).

i) Training contracts

The first thing one notices upon reading the new article 11 of the Worker’s Statute is that the two pre-established training contract categories are named differently. Therefore, the apprenticeship contract will from now on be known as combined training contract (Contrato formativo por alternancia) and the traineeship contract, as professional training contract (Contrato para la obtención de la práctica professional).

As for the combined training contract, while the previous regulation set its minimum duration at 6 months and its maximum at 3 years, the current one establishes its minimum duration at 3 months and its maximum at 2 years.

The subjective scope of this contract covers both employees lacking professional qualifications and university or superior courses’ students, provided that there is an agreement with the respective educational bodies.

This contract does not allow the application of a trial period.

The effective working time of the person hired under this type of contract may not exceed 65% of the ordinary working day during the first year of the contract, and 85% during the second year. Likewise, their remuneration may not be less than 60% and 75%, respectively, of that established by the applicable Collective Bargaining Agreement.

Regarding the professional training the contract, while the previous regulation established it maximum duration at 2 years, the current one establishes it at 1 year. Its minimum duration remains at 6 months.

The subjective scope of this contract covers persons who are hired within three years since they completed their studies (the previous regulation set a maximum period of 5 years).

This contract allows for a trial period of one month, unless otherwise stipulated by the relevant Collective Bargaining Agreement.

Lastly, remuneration under this contract may not be less than 60% of that established by the applicable Collective Bargaining Agreement, and in no case may it be less than the minimum inter-professional wage, proportional to effective time worked.

ii) Short-term contracts

One of the main changes of the labour reform is the suppression of the provision of services contract (Contrato de obra y servicio), regulated until now in Article 15.1.a) of the Workers’ Statute.

Additionally, the contract based on circumstances of production (Contrato eventual) and the interim contract (Contrato de interinidad) while maintained, are both subject to modifications.

The contract based on circumstances of production will have a maximum duration of six months, which may be extended by the relevant Collective Bargaining Agreement up to 12 months.

While the old regulation only allowed this kind of contract when the increase of production was unforeseeable, the new regulation also allows it on occasional, foreseeable circumstances. However, this new option is only allowed for a maximum of 90 non-consecutive days per natural year and per employer.

This contract may be used to cover the holiday periods of other employees.

In relation to the substitution contract (former interim contract), it may be used to cover temporarily vacant positions or reductions in working hours due to legally established causes, as well as to cover a position while the corresponding selection process is carried out. In the latter case, the duration of the contract shall not exceed three months.

The new regulation provides the possibility of starting the contract during the 15 days prior to the absence of the person to be replaced, so that they can acquire the knowledge required for the performance of their duties.

Overall, new limits will apply to all kind of temporary contracts. Until now, any person hired under two or more temporary contracts, for 24 months in a period of 30 months, was (automatically) considered a permanent employee of the company (former Article 15.5 of the Workers’ Statute).

With the reform, this threshold is lowered, and employment relationships established through two or more temporary contracts for 18 months within a period of 24 months are automatically considered indefinite.

iii) Permanent-discontinuous contracts

One of the biggest difficulties this type of contract presented under the old regulation was its distinction from the indefinite part-time contract (applicable when the working seasons were certain and stable).

Last December’s reform puts an end to this confusion, making permanent-discontinuous contracts possible not only for activities on dates that are not foreseeable, but also for seasonal and planned activities.

Furthermore, this type of contract will be available to cover positions related to commercial or administrative contracts.

• Outsourcing

Regarding outsourcing of services, the Royal Decree-Law provides a new sixth paragraph to 42^nd article of the Workers’ Statute. This new piece of legislation establishes that the Collective Bargaining Agreement applicable to subcontracted workers is the one applicable to the activity carried out in accordance to the framework of the contract.

It seems that this new paragraph provides a response to the problem found in multiservice companies, as the activity carried out by the relevant employees in accordance to the framework of the contract sometimes may not coincide with the Collective Bargaining Agreement applied to their employer (i.e. the provider).

It is relevant to mention that this provision will apply, provided that the employer does not have its own Collective Bargaining Agreement approved, in which case the latter will prevail.

That said, it is not clear from the labour reform whether the new paragraph refers to the outsourcing of company’s own-activity or also includes those that are not. As a result, we will have to wait for the case law to interpret the scope of application of this paragraph.

• Internal flexibility (ERTE’s)

Following the massive use of internal flexibility mechanisms (ERTE’s) as a palliative measure for the impact of the health crisis generated by COVID-19, the reform has included various amendments to Article 47 of the Workers’ Statute, which regulates ERTE’s based on Economic, Technical, Organisation or Productive (ETOP) and force majeure causes, as well as introduced a new article, 47 bis (referred to below).

With regard to ERTE’s based on force majeure and ETOP causes, the main changes introduced by the labour reform are to be found in the time limits for both their processing and their validity. In that sense, the ERTE negotiating committee will now have a period of 7 days to set up, instead of 5. In those cases in which the company does not have employee representation, this period will be 10 days (previously 15 days).

Similarly, the consultation period in companies with fewer than 50 employees may not exceed 7 days.

In addition, there is a new provision that allows extending the ERTE’s application, by means of a new and limited consultation period.

On the other hand, the new article, 47 bis, creates a new type of ERTE, called the “RED mechanism”.  This mechanism will allow the suspension of contracts and the reduction of working hours, provided such mechanism is previously authorised by the Council of Ministers, in response to emerging circumstances.

This new internal flexibility mechanism is developed in two sub-modalities:

– Cyclical ERTE: designed to palliate the consequences of global economic crises.

– Sectoral ERTE: aimed at sectors of activity that are affected by permanent changes on the market which generate a professional transition.

Both Article 47 and 47 bis regulate the possibility for the company to apply bonuses in Social Security contributions. This possibility is conditional on the provision of professional training aimed at adapting affected employees to new market circumstances, as well as the commitment to maintain the level of employment during the six months following the application of the measure.

• Collective bargaining

In the area of collective bargaining, two articles of the Workers’ Statute have been amended by the labour reform. On one hand, article 84.2, which regulates the priority of application of the company’s own Collective Agreement over the sector Collective Agreement. On the other hand, Article 86.4, regarding the extension of revoked Collective Agreements.

In relation to the first of the amended articles, minimum wages are removed from the list of categories which the company’s own Collective Agreement has priority of application over the sector Collective Agreement.

With regard to the extension of revoked Collective Agreements, they will remain in force, even if one year has passed since they were revoked, provided that the parties submit to available mediation or arbitration mechanisms.

• Enforceability

All of these different measures enter into force as of 31 December 2021, except in the case of the new regulation on temporary contracts, which is subject to a transitional period.

Temporary contracts signed before 31 December 2021 will remain in force under the previous legislation.

Contracts signed between 1 January 2022 and 30 March 2022 may be governed by the previous legislation (ie. not affected by the labour reform), but will be terminated after six months.

From 31 March 2022, the new regime for temporary contracts will be fully applicable.