Are employment law changes aiding economic recovery in Spain? A range of important legislative changes came into force last year, continuing the trend of the Spanish labour market reform of 2012. In particular, part-time employment and internal flexibility played a special role. The support of entrepreneurship was also a priority, leading to two specific laws. These and other significant legislative changes are summarised in the Spanish Employment Law Review 2013/2014. Originally posted on the Ius Laboris Knowledge Base: www.globalhrlaw.com With thanks to our Spanish member firm Sagardoy Abogados.

1. Employment Law Review 2013/2014:
Spain
Publication Date: 13 March 2014 Member Firm(s): Sagardoy Abogados
Country: Spain
A range of important legislative changes came into force last year,
continuing the trend of the Spanish labour market reform of 2012. In
particular, part-time employment and internal flexibility played a special
role. The support of entrepreneurship was also a priority, leading to two
specific laws.
On the social security side, 2013 saw the completion of the pension reform
initiated in 2011. Measures were adopted to ensure the financial viability
of the social security system and promote active ageing. All these actions
aim to put Spain on the road to recovery and the unemployment data is
hopefully heading in that direction. In fact, the Government predicts the
unemployment rate will go down slightly from 26.6% to 25.9% in
2014. The most significant legislative changes are summarised below.
Urgent measures for employment and social protection of
unemployed people
Royal Decree-Law 1/2013, of 25 January, established an automatic
mechanism to extend the enforcement of the so-called “Professional
Requalification program for people no longer entitled to unemployment
benefits”, until the unemployment rate falls to 15%. This program was
created in order to avoid the social vulnerability of long-term
unemployed. The latest change removes the legal uncertainty that
previously surrounded the extension of the program.
In addition, Royal Decree-Law 1/2013 contains other types of measures
related to employment and social protection policies. The most important
of these is the extension of the so-called “replacement right”. This permits
workers who use their unemployment benefits in the context of the
suspension of the employment relationship or the reduction of working
time (as a policy of internal flexibility) to have full subsidy in case they
become unemployed completely.
Measures to encourage continuity of working life for older workers
and promote active ageing

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Royal Decree-Law 5/2013, of 15 March, makes retirement benefits
compatible with either paid employment or self-employment (in which case
the benefit is reduced to the 50%). It also tightens up the requirements to
qualify for early retirement and partial retirement. These changes are
designed to improve the financial situation of the Spanish social security
system, following on from the reform of 2011 (which increased the age of
retirement to 67). A similar trend is apparent in other European countries.
Measures to support entrepreneurs and stimulate growth and job
creation
Two laws on entrepreneurship were passed by the Spanish Parliament in
2013 - Law 11/2013, of 26 July, and Law 14/2013, of 27 September.
Law 11/2013 established a significant package of incentives to promote
job creation and entrepreneurship. In particular, it:
• creates incentives for self-employment of young people and the creation
of new companies;
• encourages the recruitment of young workers through part-time
contracts and practical training contracts - or by micro-companies, social
economy enterprises or self-employed people;
• provides incentives for the recruitment of long-term unemployed who are
more than 45 years old by young self-employed entrepreneurs;
• creates a new type of fixed-term contract: the so-called “first job
contract”; and
• permits temporary employment agencies to use the so-called
“apprenticeship contract”.
Law 14/2013 reformed several areas, including fiscal law, business law
and administrative law. In relation to social law, it included the following
changes:
• reform of social security contributions in case of “pluriactivity”, i.e. mainly
for those who work on both an employed and self-employed basis;
• a new package of incentives to entrepreneurs; and
• measures in the field of occupational risk-prevention, such as allowing
owners of small businesses (fewer than 25 employees) personally to
manage risk-prevention activities, providing technical support for such
companies and creating an electronic risk-prevention book.

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Protection of part-time workers and other urgent economic and
social measures
Royal Decree-Law 11/2013, of 2 August, contains numerous economic
and social measures. These include:
• various changes to the protection of part-time workers, in particular the
contribution periods for entitlement to social security benefits in order to
bring Spanish law into line with the with recent European Court of Justice
and Constitutional Court judgments;
• creating greater legal certainty for recipients of unemployment benefits,
by regulating benefit suspension and modifying the regime for infractions
and sanctions under new obligations; and
• reform of various sections in the Workers’ Statute related to action of the
negotiating committee during the mandatory consultation period before the
adoption of collective measures.
Measures to foster hiring and improve employability
Royal Decree-Law 16/2013, of 20 December, has three main targets:
• promoting part-time contracts by reforming the regulation of the so-
called “complementary hours” (a type of voluntary extension of working
time), reducing social security contributions in order to make such
contracts more attractive for employers, and allowing part-time hiring
through entrepreneur support contracts;
• promoting the use of the practical training contracts, especially by
temporary employment agencies with public incentives; and
• increasing social security contributions by introducing traditionally
excluded concepts into the bases of contributions.
Changes to social security pensions system
Law 23/2013, of 23 December, allows the creation of a sustainability factor
and redefinition of the revaluation index for pensions, in order to improve
the economic and financial balance of the social security system.
Conclusion
The effects of the 2012 labour reforms and the more recent changes
outlined above are clearly having a positive impact on recovery of
employment in Spain, which is picking up quicker than expected. The
policies being undertaken are not only helping to control the destruction of
jobs but also encourage the creation of new ones.
Notwithstanding this, with the worst part of the crisis having passed, we

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consider that further strategic reforms should be implemented, focusing on
boosting and reinforcing employment. This could be achieved through
four different but complementary channels:
• reducing cost of employment contracts;
• establishing a system of permanent hiring that is more attractive than
the temporary one;
• simplifying the law regulating the various types of contract for entering
into an employment relationship; and
• increasing, through flexibility, the use of part-time contracts - a major
driving force for job-creation
Originally posted on the Ius Laboris Knowledge Base:
www.globalhrlaw.com
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