Urgent measures. Employment. Royal Decree-Law 3/2014, of February 28, on urgent measures to promote employment and permanent contracts (“RDL 3/2014”). (BOE 52, March 1, 2014)

RDL 3/2014 approves a significant reduction in social security contributions (reduced flat rate) for new permanent contracts, applicable to companies that maintain net employment during at least three years.

This flat rate will range between €50 and €100 per month, depending  on whether contracts are full- or part-time. The reduction can be applied for two years, providing the contracts have been formalized in writing between January 25 and December 31, 2014.

To be eligible to apply this measure, companies must:

  • be up to date with their tax and social security obligations;
  • not have terminated employment contracts based on objective reasons or disciplinary dismissals in the six months before entering into the contracts entitling them to the reduction; and
  • maintain the number of permanent contracts and total employment figures reached during 36 months.

This flat rate cannot be applied to:

  • workers that provided services in the same company or entity under a permanent contract in the six months before the date of the contract; or
  • workers employed by other companies of the group to which the company belongs and whose contracts were terminated based on objective reasons or disciplinary dismissals.

The reduction is incompatible with any other benefits concerning social security contributions for the same contract, regardless of the items to which those benefits apply.