Labour reform 2021

The labour reform approved by the government was published today and will come into force tomorrow, the 31st of December, with a few exceptions, but like all Royal Decree Laws, it must be submitted to debate and vote in the Congress of Deputies within 30 days of its enactment, and may be validated or repealed. The keys to these urgent labour reform measures have been the guarantee of job stability and the transformation of the labour market.

Conten Table

labour reform 2021

The labour reform approved by the Government has been published today and will come into force tomorrow, the 31st of December, with a few exceptions. As with all Royal Decree Laws, it must be submitted for debate and a vote in the Congress of Deputies within 30 days of its enactment, and may be validated or repealed.

The keys to these urgent labour reform measures have been the guarantee of employment stability and the transformation of the labour market.

In relation to temporary contracts, and with a period of three months to adapt existing contracts to the new regulations, the modification tends towards stable contracts as the norm:

  • The possibility of contracts for work or services disappears.
  • Fixed-term contracts are limited to cases of circumstances of production and substitution of a worker. In cases of production circumstances, three possibilities are foreseen: unforeseeable increase, six plus six months, occasional and foreseeable situations, 90 days, and substitution of a worker during a contract suspension with job reservation.
  • They will have a duration of 6 months, extendable for a further 6 months, and the chaining of temporary contracts disappears.
  • The discontinuous fixed-term contract is strengthened.
  • Penalties are increased and an additional contribution is set for fixed-term contracts, discouraging very short-term contracts.

Other changes in the Labour Reform

Collective bargaining recovers indefinite ultra-activity, i.e. the conditions established in a collective agreement will remain in force even after its express term has expired.

The prevalence of the company agreement in terms of wages is abolished, thus avoiding agreements that lower wages and break the wage floor of sectoral agreements and, therefore, the wage devaluation made possible by the model that has been in force until now.

Training contracts will have two modalities:

  1. Training contract in alternation in which the limits, both in terms of pay and time, are redefined with a single objective: to acquire the appropriate professional competence corresponding to a certain level of studies.
  2. Contract for obtaining professional practice

In relation to subcontracting, the aim has been to avoid legal loopholes by understanding that there will always be a sectoral collective agreement applicable, which may be that of the activity carried out in the main company or another one if so determined by sectoral collective bargaining within its general rules. The company agreement will only be applicable if it determines better wage conditions.

In order to promote internal flexibility in companies and encourage the continuity of stable labour relations, the existing ERTE model is revised and the RED mechanism is created.

New ERTE model in the 2021 labour reform

With the amendment of Art. 47 of the TE, a new model of ERTE is established, similar to the ERTE COVID of force majeure due to limitations and impediments. Exonerations are set for ERTE of force majeure, 90%, and ETOP, 20%, linked to training, counted at zero unemployment benefit and a commitment to maintain employment. In the event of non-compliance, the total amount of the exonerations enjoyed must be returned to you.
The new art. 47 bis of the ET, the RED Mechanism, allows new ERTEs to be activated by the Council of Ministers and companies will be able to take advantage of them. Two modalities are foreseen:

  1. Cyclical. This will provide companies with a stable framework in the event of a temporary or cyclical fall in demand due to macroeconomic causes, in which they will be able to suspend part of their workers for a period of one year instead of dismissing them.
  2. Sectoral. The most representative trade union and employer organisations may request the convening of the Tripartite Commission of the RED Mechanism. It is foreseen for cases in which permanent changes are observed in a certain sector or sectors of activity that generate the need for retraining and professional transition processes for workers, with an initial maximum duration of one year and the possibility of two extensions of six months each.

Now more than ever having the support of an expert employment advisor is critical, do not hesitate, contact us and we will help you.

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