On August 3, a Law and Royal Decree-Law were published in the Official State Gazette (BOE): (i) Royal Decree 11/2013 of 2 August, which approves regulations on the protection of part-time employees, and a new negotiation process between employers and workers' representatives regarding the regulations on collective redundancy procedures, and the suspension of employment contracts and reduction of working time; and (ii) Law 11/2013, of 26 July, on measures to support entrepreneurs and stimulate growth and job creation.

Royal Decree-Law 11/2013 of 2 August, which approves the regulations for the protection of part-time employees and other urgent economic and social measures

Protection given to part-time employees

As a consequence of a judgment  by the Constitutional Court which declared that criteria used by Social Security to calculate the contribution period of part-time employees to be granted Social Security benefits as unconstitutional, Royal Decree-Law 11/2013 has introduced some amendments to satisfy the principles of equality between part-time employees and full-time employees.

Changes on Employment Law

Changes to the recent regulation on collective redundancy procedures, suspension of contracts, and reduction of working time were approved in Royal Decree 1483/2012. In addition, there are also new amendments regarding negotiation procedures on substantial changes to working conditions and geographic mobility. The most outstanding features of the new regulations are as follows:

  • Negotiation and composition of the workers' representatives in consultation periods

The rules with regards to the composition and the way workers' representatives are designated to negotiate in a consultation period have changed substantially. The main changes are set out below:

  • The new Regulation focuses on a unique negotiation body and removes the possibility to carry out a consultation process per work center. Note that the possibility of several negotiations being carried out in different work centers was forbidden by the National Court. Therefore, the Law has amended the negotiation rules in this regard.
  • The new negotiating body will have a maximum of 13 members (if there are more than 13 workers' representatives taking into account the different workplaces, they will choose the representatives of the negotiating body among themselves, in proportion to the total number of employees which will be represented/affected).

In addition, participation in negotiations may be delegated to the trade unions. However, the trade unions must have the majority of representatives in the Works Council.

  • The negotiating process has also changed. The negotiating body should be created before starting the consultation period. Therefore, if an employer wants to implement a collective measure, it must communicate the intention to start the mentioned collective measure prior to starting the consultation period.
  • Once this is done, the consultation body must be formed during the following 7 days, or 15 days, if there is a work center without workers' representatives. In this regard, if the 7-15 days elapse, and the consultation body has not been determined, the consultation period will start without workers' representatives in the consultation body.

When the consultation period starts, the employer must simultaneously notify the start of the consultation period to the labor authorities. The content of such communication has been adapted to the new amendments.

  • Procedural Labor Law has also been amended

In order to promote legal certainty in collective dismissals, and reduce the number of collective dismissals which have been declared null and void by the labor jurisdiction, changes have occurred in the Procedural Labor Law.

Royal Decree Law 11/2013 has introduced the word "only" in section 124 of the procedural law. Therefore, a collective dismissal can only be declared invalid if the employer does not follow the procedure stated in section 51.7 of the Workers Statute Act (WSA); it does not provide the documents listed in section 51.2 WSA; there is no judicial authorization from an insolvency receiver in an insolvency scenario; or a fundamental right has been infringed.

  •  Social Security benefits

There are several changes affecting unemployment benefits. Beneficiaries are required to request their status as jobseekers. In addition, in some situations, the unemployment benefits will be suspended (the status as jobseeker ceases):

  • if the beneficiary stays abroad for more than 90 days;
  • if the beneficiary changes his/her domicile abroad for less than 12 months in order to search for a job or receive professional training there.

Please note that shifts abroad for no more than 15 calendar days will not be considered long stays abroad, and therefore should not be declared to the Social Security or change the status as jobseeker.

Law 11/2013, of July 26 on measures to support entrepreneurs and stimulate growth and job creation

  • This Law introduces the following changes on Social Security contribution discounts and on young entrepreneurs. In this regard, please note:
    • If beneficiaries of unemployment benefits start a self-employment activity, they may simultaneously draw unemployment benefits for 270 days.
    • Law 11/2013 has extended the possibilities to capitalize unemployment benefits.
    • Unemployment benefits will remain suspended if a beneficiary starts a self-employed activity for less than 24 months or 60, if the applicant is under the age of 30.
  • Tax benefits

Law 11/2013 creates better framework conditions for entrepreneurs from a tax point of view. In this sense:

  • Corporate income tax: a reduced tax rate of 15 percent will be applied to companies which have their first year of profits and have been created as of January 1, 2013.
  • Personal income tax: if a beneficiary requests the capitalization of the unemployment benefits, in some cases, the amount received will not be subject to tax.

·         Incentives to arrange new employment contracts

  • Companies and self-employed employees will be given a 100 percent discount on contributions for common contingencies if they enter into part-time employment contracts linked to training activities with unemployed people who are under the age of 30 (or 35, if they suffer from disability equal to or greater than 33 percent).

As a new precedent, companies will be able to enter into temporary employment contracts with applicants under the age of 30 (or 35, for disabled employees) who have no more than three months of professional experience. The legal regime will be the stated in section 15 WSA.