The main keys to the Spanish labour reform

1. Temporary nature of fixed-term employment contracts

Firstly, and regarding fixed-term employment contracts, the reform has modified article 15 of the WS, establishing that there can only be two reasons that justify the temporary contracts:

a) Due to production circumstances. 

It is understood that they concur:

• When the increase in production is occasional and unforeseeable, and even in case of the company´s normal activity, the fluctuations generate a temporary mismatch between stable and available employment. These fluctuations will include those resulting from annual leave. The main change is that the contract may not exceed 6 months, unless the maximum duration is extended to 1 year by means of a collective bargaining agreement (hereinafter "CBA") at sectoral level.
• When the increase in production is occasional and foreseeable and of short duration. In this case it may be use for a maximum of 90 days per calendar year, which may not be used continuously.

b) Due to replacement of a worker who is entitled to the right to a retained post.

• One of the main changes in this modality is that the services of the person who replaces may begin to be provided before the absence of the person being replaced occurs (up to 15 days prior to the absence of the person to be replaced).
• This modality may also be used to complete the reduced working hours of a worker and to cover a post during the selection process or promotion. In the latter case, the duration may not exceed 3 months.

Therefore, the fixed-term employment contract for an specific work or services disappears, although those concluded before 31 December 2021 may have the duration in accordance with the labour regulations in force at that time, as well as temporary contracts due to market circumstances.

In this regard, the reform also amends article 151 of the Royal Legislative Decree 8/2017, of 30 October, approving the revised text of the General Law on Social Security (hereinafter "GLSS"), which establishes that temporary contracts of less than 30 days will have an additional contribution to be paid by the employer when they end. It also amends article 7.2 of the Royal Legislative Decree 5/2000, of 4 of August, which approves the revised text of the Law on Offences and Penalties in the Social Order (hereinafter "LOPSO"), which establishes that the breach of the regulations on temporality and contractual modalities will be considered a serious offence for each of the workers affected, and not a single serious offence in general.

Finally, another relevant modification in relation to temporary employment is that the existence of a subcontracting or administrative concession that constitutes a company´s usual and ordinary activity, cannot be used as a reason for the temporary contract, in line with the case law of the Supreme Court has already pointed out, specifically in Ruling 1137/2020 of 29 December.

2. Training contracts

Article 11 of WS is amended in relation to training contracts, which also entails that they will have a shorter duration, and which will also come into force 3 months after the publication of the reform. Firstly, internship and apprenticeship contracts will disappear, and will be renamed as training contract in alternation and training contract in order to obtain professional practice. Regarding the training contract in alternation, the purpose of this type of contract is to combine paid employment with training, and it may be concluded with people who do not have recognised professional qualifications. This contract must have a minimum duration of 3 months and a maximum of 2 years. in addition, the training contract in order to obtain professional practice is intended for university graduates or graduates of intermediate, higher, specialist master's degree or vocational training or equivalent. This contract must have a minimum duration of 6 months and a maximum of 1 year.

Despite the duration indicated above, in accordance with the first transitional provision of the reform, internship and apprenticeship contracts based on the previous regulations will be applicable to the maximum duration of such regulations.

It is important to bear in mind that, in addition to other matters that are common to both contracts, the Social Security protects the persons who sign these contracts against all protectable contingencies and benefits, including unemployment and the coverage of the Wage Guarantee Fund.

3. Discontinuous permanent contracts

Article 16 of the WS is amended to increase the grounds for an indefinite-term permanent-discontinuous contract, which will be arranged for the performance of seasonal productive activities, or for the performance of work which is not for a seasonal nature but which, being of an intermittent nature, has certain, determined o indeterminate periods of performance. It also includes the option of concluding this contract for the provision of services within the framework of the execution of commercial or administrative contracts which are part of the company's ordinary activity.

In addition, there are changes in the way in which recruits are called up, which in all cases must be made in writing or by any other means that records the notification to the interested party. Likewise, the company must send the workers' legal representatives, sufficiently in advance and at the beginning of each calendar year, a schedule with the annual or, where appropriate, half-yearly call-up forecasts.

This reform, which will also enter into force 3 months after its publication, establishes, as a new requirement, that CBA or, if none exist, company agreements, establish the objective and formal criteria that should govern the call-up of permanent-discontinuous workers.

4. Applicable collective bargaining agreement

In relation to Article 42 of the Workers' Statute, which regulates the subcontracting of construction work and services, section 6 is added, which states that the CBA applicable to contractors and subcontractors shall be that of the sector of the activity carried out in the contract or subcontract, regardless of its corporate purpose or legal form, unless there is another applicable sectoral agreement in accordance with the generic regulations set out in Title III of the Workers' Statute.

On the other hand, Article 84.2 of the WS is also modified, whereby the conditions relating to the amount of the basic salary and all salary supplements established in a company CBA will no longer have priority of application with respect to the state, regional or higher sectoral CBA, unless the company CBA  improves it; but it will be maintained with respect to the rest of the matters.

In relation to this issue, Article 86 of the WS is also amended, which establishes that if one year has passed since the termination of the CBA and the negotiating parties do not reach an agreement for the approval of another one, the previous CBA will remain in force.

In short, these are some of the key aspects of the labour reform, but there are other important provisions that have not been developed in this article. In any case, and given the technical difficulty of the reform, specialised legal advice will be essential for all those companies and workers who have to apply these regulatory changes to the usual practice of their labour relations