Tuesday, July 5

The keys to the labor reform that Yolanda Díaz is preparing and that she wants to approve before the end of the year

Labor has already laid out its plans for the labor reform that it will approve this year. These are the intentions of the Ministry headed by Yolanda Díaz, but they are subject to social dialogue and, therefore, may change during the negotiation. The latest draft proposed by Labor, which was advanced by elDiario.es, specifies promised changes to dismantle elements of the 2012 PP labor legislation and addresses other challenges considered urgent in Brussels, such as reducing temporary employment and providing internal flexibility to avoid layoffs .

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The social dialogue with the unions and employers on the “modernization” of the labor market has already been going on for several months, although the social agents had other more urgent matters for discussion, such as the extension of the ERTEs and the pension reform. Now, and facing the coming months, the labor reform takes center stage.

The changes in the legislation are many and touch very delicate aspects for the labor market in Spain. Above all, the limitation of temporary hiring –very widespread and entrenched for years–, but also subcontracting and tackling outstanding challenges, such as trying to get training contracts off the ground and creating a new internal flexibility tool in companies, which has been been summing up as a “permanent ERTE”, to prevent dismissal from being the most frequent response in many companies to crises.

As negotiations accelerate in recent weeks, businessmen are reiterating a message of “frontal opposition” to the Labor proposal, which they call “ideological” and “harmful” for employment. The unions, for their part, welcome the proposed changes, which insist that there is still a long way to go for debate to fine-tune the measures.

Despite their “frontal” rejection, the businessmen are going to negotiate the reform. They are interested in doing so because the Government is going to carry out the measures yes or yes: the changes are promised in Brussels within the Recovery and Resilience Plan, on which the funds that Spain will receive depend. The key is how the legal text that ends in the BOE will be, the content of the reform. Social dialogue still has a few months to go, but the legislation has to be approved before December 31st.

Some of the most relevant changes of the reform proposed by Trabajo are summarized below:

1) Limits to temporality

It is a reform “of draft”, as recognized by Vice President Yolanda Díaz herself, which greatly modifies the current hiring scheme. A set of changes is proposed that reduce both the types of temporary contracts possible (goodbye to the work and service contract and the ‘fixed work contract’, for example), but also limit the very causes that allow temporary hiring today . Seasonal campaigns, such as sales sales or Christmas sales, would not justify temporary contracts at this specific time of the year – as is the case now – but instead, permanent-discontinuous contracts should be used.

The consequences of hiring temporarily in an irregular manner are also aggravated: all those linked to unjustified or abusive temporary employment are established as void dismissal, even those motivated by disciplinary reasons. Here you can consult a more detailed summary of this reform.

2) Reduce working hours instead of firing: this is the MSE

The promised internal flexibility mechanism in companies is regulated as an alternative to layoffs. They call it the “Employment Sustainability Mechanism” (MSE), which is committed to reducing the working hours of workers in the event of unforeseen events that limit or impede activity in companies and which, very importantly, is considered “preferential” over layoffs.

This MSE is what had been announced as a mechanism of “permanent ERTE”, to try that companies can resort to this new formula in crises instead of destroying jobs, something that characterizes our labor market compared to neighboring countries. The workers affected by the reduction in working hours would have priority in the formation of the public employment services, the companies would have a clause for maintaining employment and would not be able to do overtime, or new hires, as has happened with the ERTE. Here you can consult a detailed analysis of the new tool proposed by Trabajo.

3) More use of the fixed-discontinuous contract

The regulation of the fixed-discontinuous contract is modified, a contract that uses the same person although in an interrupted way, for seasons. Today it is used mainly in tourism in very seasonal areas, such as the Balearic Islands. The intention is that it be used more and for more causes. For example, in the mentioned campaigns that always cause peaks of activity in commerce, as well as for construction, where workers tend to chain many temporary contracts from work to work, for many years in the same company in some cases, as reflected by a recent case that failed the European justice.

The specific proposal is that this type of contract be signed “for the performance of seasonal work or related to campaigns”, as well as “for the development of those that do not have this nature but with certain but undetermined call dates, as well as for the development of work consisting of the provision of services within the framework of the execution of commercial or administrative contracts that, being foreseeable, are part of the ordinary activity of the company “, includes the draft.

4) Limit unilateral modifications of the employer

This was one of the promises to dismantle the labor reform of the PP, which opened the hand more to unilateral changes in working conditions that employers can apply. The job proposal limits these options in several aspects, such as the causes that allow it, which are limited to those of collective dismissal. It also reinforces the documentation with which the company must justify the reasons for applying the measure, whether it affects a person individually or collectively. The items that may be subject to these changes remain, including salaries.

The negotiation period is extended, with the possibility of extending the current 15 days, and the representation of workers for the consultation period is modified in case of not having a works council, which will be chosen from the most representative unions in the sector. In other words, the current ‘ad hoc’ commissions are being put to an end, those made up of workers in the workplace and that the unions tend to criticize as more susceptible to control and pressure from the companies. In the event that this representation is not formed in time with the most representative unions, the proposal is open to these ‘ad hoc’ commissions.

It also adds the precision that the substantial modification must determine exactly the new conditions and their duration, which “may not be extended beyond the period that is justified.”

5) Review of training contracts

The regulation of training contracts is reviewed, which today are very little used. Three reasons are defined for signing these contracts: for internships once the regulated training has finished, for example university or professional training; for the dual training of students in employment-training programs, such as workshop schools and trade houses; and for dual training during university studies and vocational training. The particularities of each of these types of training contracts are expected to be developed by regulation.

But in general, some changes are pointed out. The aim is to ensure that the activity carried out by the hired person is “directly related to the training activity” that justifies the hiring, as well as to limit the extension and the possibility of linking these types of contracts. In the case of internship contracts after finishing the studies, it is proposed that the contracts can only last one year (compared to the current two) and that they are only signed “if there has not been an employment relationship or other type of professional experience greater than three months in the same activity “.

The remuneration will be that of the workers in the sector “in proportion to the actual working time” and never below the minimum wage. Currently, those hired in internships are allowed to receive 70 and 75% of the salary set in the agreement.

6) Combat precariousness in outsourcing

New minimums are added to the working conditions of outsourced personnel, a group that is often the victim of precarious working conditions once outsourced. As a practical example, the case of kellys, the maids who clean rooms in hotels.

The draft of Work establishes that the collective agreement of application for contractors and subcontractors will be “that of the sector of the activity carried out in the contract or subcontract”, whether this is the main activity of the company or a different one. If the contractor or subcontractor company has its own collective agreement, it will apply as long as it improves the rights recognized in the sectoral agreement, but not if it lowers them.

7) Salaries are set by the sector, not the company

Another of the so-called “most damaging” elements of the PP labor reform that the coalition Executive promised to eliminate. The Labor proposal consists of recovering the prevalence of the sector agreement over that of the company in the salary conditions (base salary, supplements and compensation for overtime), as well as on the duration of the day and the measures to favor conciliation, which are now embodied as “measures to promote joint responsibility and reconciliation between work, family and personal life” and which must respect the provisions of the reference sectoral agreements.

8) Maintain the agreements when they expire without a new agreement

In the so-called “ultra-activity” of collective agreements, their validity once their effectiveness ends without a new one being agreed, would end with the one-year limit agreed by the Government of Rajoy for this period.

The proposal of the Ministry is that, once the year has elapsed since the denunciation of the collective agreement without a new agreement, instead of its validity declining, a mediation procedure would be opened to “resolve the differences”. In the absence of an agreement, “when the negotiation process has elapsed without reaching an agreement, the validity of the collective agreement will be maintained,” the draft states.