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The companies will have three months to adapt their temporary contracts and ERTE

The Minister of Labor, Yolanda Díaz, and the Minister of Inclusion, Social Security and Migration, José Luis Escrivá / Efe/Video: EP

The labor reform comes into effect this Wednesday, but allows the current contracts for work and service to be maintained for six more months

Lucia Palacios

Companies and workers will be governed from this Wednesday by a new labor reform that “will change the lives of the people in our country.” This was stated on Tuesday by the second vice president of the Government, Yolanda Díaz, in the press conference after the Council of Ministers that approved the Royal Decree law that will allow “turning the page to precariousness in Spain,” as he pointed out. And it does so on time with the commitment agreed with Brussels and with the support of unions and employers. “It is not an agreement of the Government of Spain, it is an agreement of the country,” said Díaz, who stressed that “today is one of the most important days of the Government and of this legislature.”

The desire of the Executive to launch its star measure of the legislature is such that it has not waited for January to come into force, but it will be today, once it is published in the Official State Gazette (BOE). However, a transitional period (‘vacatio legis’) of three months is established so that companies can adapt the temporary contracts they now have (more than four million) and the ERTEs to the new standard, a period that is extended to six months in the case of work and service contracts, they disappear. In other words, the maximum duration of the work and service contracts that are in force today will be six months. The rest of the measures, such as the priority of the sector agreement on salary matters, ultra-activity or the limits to subcontracting, will already be mandatory.

Thus, from this Wednesday the ordinary contract will be indefinite, which is presumed for an unlimited time. At the same time, the regulations are oriented towards a single temporary contract, in which causality is recovered, which “has to be deeply motivated and is very restricted,” as the minister pointed out. For this reason, only two causes can be adduced to sign a temporary contract: due to substitution of another worker with a job reservation and due to production circumstances. In this way, the eventual contract is renamed ‘contract for production circumstances’, which will have a maximum duration of 6 months, extendable to 12 by sectoral collective agreement (compared to the four years that work and service contracts could last which are now deleted). Likewise, a subtype of the same is created to use a maximum of 90 days a year linked to occasional and foreseeable situations of reduced duration.

However, to further limit the temporality and put a stop to the high turnover that occurs especially on weekends and vacation periods, the penalty for very short-term contracts is toughened. Specifically, temporary contracts of less than 30 days will have an additional Social Security contribution of 26 euros when they are canceled, a penalty that will also be increasing (with a short contract of 10 days the penalty would be 26 euros; if the same working time was covered with two five-day contracts, of 52 euros). This rate will not apply to the special regimes for agricultural workers, domestic workers, coal mining, and neither to substitution contracts.

Higher fines

In turn, to put a stop to irregular hiring, a new scheme of sanctions is established, which are individualized (to be paid by each worker and not by company, as now) and rise to 10,000 euros, compared to the current 8,000 euros . In addition, non-compliance with the rules that regulate temporary hiring will lead to the worker being considered indefinite.

The new standard transforms the current temporary construction contract into an indefinite one, emulating the French model. Of course, when the project is completed, the company will have to relocate it to another or, failing that, re-qualify it with training. If this contract is terminated, the worker will receive compensation equivalent to 7% of the salary amounts earned during the term of the contract.

At the same time, the discontinuous fixed contract is redefined, which stands as an alternative to the limits imposed on temporary contracts. Thus, it must be arranged for work of a seasonal nature or seasonal productive activities, as well as those that do not have this nature but that, being intermittent provision, have certain, determined or indeterminate periods of execution. It may also be arranged for the development of services within the framework of commercial or administrative contracts and additionally between temporary work companies and the personnel hired to make them available. Collective bargaining will play a very relevant role in the development of this contract.

Internal flexibility

On the other hand, the regulation of ERTE is reformulated for economic, technical, organizational or production reasons or derived from force majeure to incorporate some of the elements and obligations that were established in the covid ERTE. For example, the prohibition of working overtime, establishing new outsourcing of activity or arranging new hires in the center affected by the ERTE, except for reasons of training, training and other objective and justified reasons, or the possibility of enjoying greater benefits if Training actions are carried out with respect to the affected group.

Likewise, the RED mechanism for Flexibility and Stabilization of Employment is created that will allow companies, once activated by the Council of Ministers, to request temporary measures to reduce working hours and suspension of employment contracts.

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