Employment News 2019

Written on 17 Jan 2019

Despite its promise, 2018 has left us with few reforms regarding employment and Social Security. The change in Government mid-year and the creation of a divided Congress (including representatives from up to thirteen political parties) has made the implementation of legal modifications difficult. However, 2019 brings important changes in the labour relations sector.

On 1 January a great many of the measures included in the Royal Decree Law 28/2018, of 28 December, came into force. These revaluate public pensions along with other urgent changes in the social, labour and employment sectors. In the following, we will carry out a subject specific analysis of the fundamental aspects of the new regulation. These can be split into three key topics: retirement, social security and recruitment.

1. Retirement

It is no longer prohibited to include employment sunset clauses in collective bargaining agreements; such clauses end the contract upon the employee reaching the legal retirement age specified in Social Security regulations.

To establish a mandatory retirement age the new regulations require that:

  • the employee meet the requirements of the Social Security regulations in order to have the right to 100% of the ordinary retirement pension in its contributory modality; and
  • the sunset clause is linked to coherent company policy objectives included in the collective bargaining agreement, such as increased job security by changing temporary contracts to permanent ones, hiring new staff, generational replacement or other measures aimed to improve job quality.

In this way, collective bargaining agreements can establish a mandatory retirement age if this is linked to objectives contained in company policy.

2. Social Security

Amongst the numerous modifications regarding the matter of Social Security, it is worth highlighting:

  • The establishment of the obligation to register in the Social Security system for persons who carry out training internships in companies, institutions or entities included in the training programmes, regardless of whether these are unpaid.
  • There is a general increase in Social Security contribution bases. By doing so, the maximum base is increased by 7% with respect to the maximum amount of 2018 (reaching 4,070.10€ per month) and the minimum base increases by 22% (set at 1,050€ per month).
  • In the case of temporary contracts whose effective duration is equal to or less than five days, the employer's Social Security contribution for common contingencies is increased by 40%.
  • The benefit system for a low rate of work - related accidents was suspended, which allowed companies to reduce their contributions for professional contingencies if they considerably reduced their accidents at work.
  • In relation to the so-called "false self-employed workers", a new infringement is introduced in the Law Infringements and Sanctions of the Social Order, which consists of reporting the withdrawal from a social security scheme of employed workers (and the consecutive affiliation to the special social security scheme for self – employed workers) despite the fact that they continue the same work activity or maintain the same provision of services.

3. Recruitment

The decrease in the rate of unemployment to below 15%, justifies, according to the legislator, the removal of contractual measures and hiring incentives introduced in 2012 to alleviate unemployment. In particular, this measure implies the repeal of:

  • A permanent contract to support entrepreneurs;
  • The possibility of entering into training and apprenticeship contracts with people aged between 25 and 30 and incentives for part-time employment with training links;
  • The open-term contracting of young people by micro-enterprises and self-employed entrepreneurs;
  • The recruitment incentives in new young entrepreneurship projects.

Likewise, the reform of the current system of subcontracting works or services is envisaged. This proposal aims to require a level playing field between employees of main and service undertakings. In practice, it implies that all the companies that subcontract their principal activity guarantee the employees' the salaries and labour conditions established in the applicable sectoral collective agreement. This could mean that a company agreement no longer has enforcement priority over sectoral agreements on wages and other working conditions. If this reform is approved, a change is foreseen in the outsourcing policies of the companies.

Finally, it is expected that the Government will try to materialize in this legislature several pending issues of the previous legislative course. This includes the repeal of some aspects introduced by the labour reform of 2012 (specifically the possibility of extending the applicability of the collective agreement after the end of its validity), the implementation of a mandatory record of working hours or the project to draft a new Workers' Statute. The significant scope of the issues discussed invites us to remain alert to possible changes in the field of employment.