Work in progress

13 February 2012 By Fiona Maharg-Bravo

The government has changed Spain’s stultifying labour laws. Companies will have more flexibility on wages and severance costs, which might destroy jobs in the short term. But a big split will remain between the labour markets’ protected insiders and the army of the unemployed.

This content is for Subscribers only

Context News

The Spanish government on Feb. 10 announced changes to its labour legislation, with the aim of cutting severance pays and handing more power to employers to set working conditions.
The centre-right government said it would abolish the future use of contracts allowing severance packages of 45 days’ pay for every year worked, up to 42 months, to employees deemed to have been unfairly dismissed. Instead, new contracts will offer 33 days per year, up to 24 months, or 20 days for those that have businesses that can show decreasing revenues over a nine-month period. These compensation rules will apply to new contracts. On existing contracts, a mixed rule will apply, with the previous regime applying to work done up until the new legislation.
The legislation would allow employers to opt out of wage deals negotiated across sectors in times of crisis, and no longer have to seek local administrative authorisation for collective redundancies.
The government will also create a new permanent contract for companies with less than 50 employees, with 3,000 euros in tax breaks for new employees under the age of 30. The government will also allow these workers to receive 25 percent of their unemployment benefit for a year, while the employer can deduct 50 percent of the employee’s unemployment benefit. The contact will have a one-year trial period.

Email a friend

Please complete the form below.

Required fields *