Labour market
Business 23/12/2021

Employers give their approval to the labour reform

Union leaders are still deciding on the final proposal

5 min
The second vice-president of the Spanish government, Yolanda Díaz, in an archive image.

MADRID"Tomorrow I would like to have dinner at my home in Galicia, but I will be wherever the negotiation sends me". This is how the Minister of Labour, Yolanda Díaz, summed up the state of the negotiations between the unions, business associations and the Spanish government on labour reform on Wednesday at midday. With the final text yet to be revealed, everything suggests that employers and unions will finally allow Díaz to head back to her homeland and do so with an agreement under her arm. Thus, the reform would come into force before December 31, as agreed with Brussels in exchange for the arrival of European funds.

This Thursday the last obstacle was overcome: outsourcing. The executive committee of the CEOE has given the general lines of the proposal the go-ahead, sources have told ARA. As for the unions, sources close to UGT are optimistic about a yes, despite the fact that the union leaders are still discussing it, as are CCOO leaders.

After months of negotiation and a week of marathon meetings – this Tuesday's lasted 13 hours – the main unions (CCOO and UGT), employer associations and the government are closer to closing a new regulatory framework on labour. The negotiation has been "complicated", all parties admit, due to the technicality of the document that is to be published in the BOE, which will amend some of the articles of the Workers' Statute. These are the main lines of the draft of the new reform, to which the ARA has had access:

Company vs. sectoral agreement

This was one of the most thorny elements. Finally, the sector agreement will prevail over the company agreement. However, the latter will still be able to regulate the choice between paying or compensating overtime, the schedule and distribution of working time, the adaptation of professional classification and family reconciliation measures, but not the length of the working day or the basic salary, which will be fixed by the sectoral agreements.

In addition, the sector agreement will be applied in the case of work outsourced to contractors or subcontractors. The measure aims to avoid situations repeatedly denounced by hotel maids. This point has been a headache in the latest negotiations and, in fact, the final wording of article 42, "subcontracting of works and services", remains to be seen.


If a collective agreement expires, it will be automatically extended until it can be replaced by a new, collectively bargained one. The 2012 PP reform limited this extension to one year. After this time, if the unions and the company could not reach an agreement, the agreement expired.

Limited temporality

Díaz, in line with the unions, proposed limiting temporary contracts to put an end to abuse of temporary workers, but the initial approach did not convince employers. In fact, this has been one of the elements that the executive has watered down to get employers' support (they left behind measures such as stipulating a 15% limit on the number of temporary workers in a company). In general terms, it has been agreed to simplify the types of contracts, generalise the permanent contracts and link temporary contracts to causality, as well as making them simpler.

"Structural" temporary contracts

Two reasons will allow temporary hiring: either for "production circumstances" or for "substitution of a worker". In the first case, i.e. the "circumstance of production" contract, it will be linked to "occasional unforeseeable increases in production or fluctuations in demand". The company will be able to use it if it can demonstrate an occasional but "foreseeable" situation: for example, a Christmas campaign or work related to festivals or fairs that take place once a year. Finally, they will be limited to a maximum period of 90 non-consecutive days a year, that is, three months, although employers have pushed until the last moment to make it four.

As for the contracts for "worker replacement", they can only be used to replace of employees off work, provided that it is made clear who is the person who is being replaced. Moreover, if a person works a total of 18 months for a company in two years, regardless of on how many contracts, they will be considered a permanent worker (previously it was 24 months in a period of 30 months).

Temporary "training" contract

Training contracts are also temporary. In this case, the reform presents a much more "reinforced" definition of the training contract, as well as its causes. With the new regulations, the possibilities for being eligible for a training contract will be reduced to two, a simplification demanded by the unions

On the one hand, there will be a "training contract in alternation" in which work and training will be combined. This contract will be limited to the under 30; the accompaniment of a tutor will be mandatory, as requested by employers, and may last a minimum of 3 months and a maximum of 2 years.

On the other hand, students will be able to take advantage of a "contract to obtain professional experience", appropriate to their level of studies. They will last a minimum of six months and a maximum of one year. In addition, the probationary period is also unified to one month.

Discontinuous permanent employees

Finally, one of the other obstacles in the last few days has been the figure of the discontinuous permanent employees. The main novelty is that seniority will be recognised for the entire period since the worker started their job at the company and not only for the periods actually worked. These contracts will be designed for seasonal or seasonal work and administrative or commercial companies will also be able to take advantage of them.


In the event that the company fails to comply with the rules governing temporary contracts, the worker will be considered a permanent employee. In addition, trade unions, employers and the Spanish government have also agreed to reinforce the number of labour inspectors and to increase sanctions for the fraudulent use of contracts, although the fines will be lower than the figures that the unions had hoped for. In this case, the company will no longer be sanctioned only once, but there will be as many fines as fraudulent situations can be identified.

Structural furloughs

Social agents and the Spanish government do not want to leave behind an experiment that has worked during the pandemic: the temporary lay-offs. From now on, these will be promoted to the detriment of collective dismissals. Thus, furlough due to limitation or impediment that have been used during the pandemic will be incorporated into ordinary legislation. The characteristics of these are maintained, although it remains to be determined what the exemptions are and which companies may avail themselves depending on the training of employees, ARA has learnt.

Finally, the new RED mechanism will be incorporated into the Workers' Statute, whose main objective is to avoid mass layoffs. This tool has been described as "complex" by employers and trade unions and that is why the government has reduced its requirements. It can be activated in two cases: for a "cyclical" issue, with a maximum duration of one year; companies could take advantage of it in the face of an unfavourable macroeconomic scenario. Or for a "sectoral" reason: they could be applied to a specific sector when it undergoes structural changes that require a re-qualification and a "professional transition" of the workforce. They would also last for one year, but could be extended for six months and up to two extensions (12 months), i.e. two years in total.

As for the authorisation of this mechanism, it will be activated by agreement in the Council of Ministers, following information and consultation with trade unions and employers' organisations, which may then apply to join. Those that receive authorisation to join will be able to access benefits in terms of contributions linked to the maintenance of jobs. In addition, companies that hire people affected by this mechanism in "sectoral" cases will also be entitled to rebates of up to 50% in social security contributions for six months. In the same way as furlough during the pandemic, as long as a company has workers in furlough no overtime or new hirings will be allowed.

A tug of war

The reform, however, does not repeal all of the PP's labour reform. Instead, it only affects the "most harmful elements", while others, such as the reduction in severance pay, have not been affected. The agreement comes after long negotiations and also after months of tension between the central government and employers. In recent months, the employers had not backed increases to minimum wage and changes to the mechanism used to calculate pensions.

Despite these disagreements, employers have always remained at the negotiating table of labour reform. Two days ago, the president of the CEOE, Antonio Garamendi, assured that "progress" was being made. His support alongside the unions' would turn the labour reform into the second consensual labour reform of the 21st century.