Earlier this year we reported on the radical labour law reforms in Spain designed to revive the economy and promote employment. These came into force in February 2012. The Government has now introduced a number of amendments to the original regulations and these changes came into force on 8 July 2012. The key changes are these:
- Collective redundancies: In February 2012 the Spanish Government introduced a requirement on companies with 500+ employees to pay financial contributions to the Spanish Treasury if they made collective redundancies involving employees aged 50 or over. This threshold has now been reduced to cover companies with 100+ employees, thus increasing the costs for more employers making large-scale redundancies. A collective redundancy situation will exist if the employer proposes to make the following number of redundancies in a period of 90 days: 10 workers in a company employing less than 100 workers; 10% of the total workforce in a company employing between 100 and 300 workers; and 30 workers in a company employing more than 300 workers. There will also be a collective dismissal if a company ceases its business operations and dismisses all of its employees (assuming there are more than 5). The amount of money to be contributed to the Treasury will depend on a number of factors, including the total number of employees at the company, the percentage of affected employees who are over 50, the company’s profits over income and the level of unemployment benefits paid by the State to the affected employees.
- Clarification on definition of “economic” grounds for redundancy purposes: In Spain a dismissal will be treated as by reason of redundancy if it is based on “economic, technical, organisational or production” reasons. It has always been difficult for Spanish employers to determine with the necessary certainty whether a redundancy situation exists. In an attempt to clarify the position, the Government has now made it clear that if a business has suffered a reduction in sales for three consecutive quarters compared with the same period in the previous year then this will constitute an “economic” reason for redundancy purposes.
- Retirement clauses in collective agreements: Any clause in a collective agreement which provides for a mandatory retirement age of 65 is now void.
- Collective bargaining: Historically if an employer was unable to reach agreement on the terms of a new collective agreement, the provisions of the old agreement would remain in force indefinitely even if it were otherwise due to expire. The February reforms changed this position and said that if the parties are unable to reach agreement then the old collective agreement will remain in force for not more than 2 years after its expiration date. This period has now been further reduced to one year. There will then be no binding collective agreement in place, increasing the pressure on staff representatives to agree 3 something else instead. This change will be welcomed by employers.
- Leave for study purposes: Spanish employees are entitled to 20 hours’ paid annual leave for educational purposes associated with their employment. They are currently allowed to carry this leave over for up to 3 years. This has now been extended to 5 years, which means that if an employee chooses to roll over his study leave, he could take all 100 hours in year 5.