Last month, Spain’s progressive government (Socialist Party and radical left Unidas Podemos) passed a comprehensive labour law that is in complete contrast to what neoliberal orthodoxy wishes to impose on labour market interventions. Spanish Professor of Labour Law Antonio Baylos gives an overview.
The night before Christmas Eve, unions, employers’ associations, and the government reached an agreement on labour reform. The agreement changes the way labour relations are addressed through the commoditisation of work. Subsequently, it opens up a path towards developing transformation commitments from EU member state economies that are not burdened by the obligations of labour rights restrictions and reinforced corporate unilateralism based on the irrefutable demand for flexible work not negotiated by the administration and labour organisations.
The Agreement cannot be separated from a strategy set in motion more than a year ago to rebuild horizontal relations between national governments in the interest of a progressive exit from the post-COVID19 period. After being passed by the Council of Ministers in Royal Decree-Law 32/2021 dated 28 December, the Agreement enshrined urgent measures for labour reform, job security guarantees, and labour market transformation. The reform has a particular impact on the Worker’s Statute, and is reflected in a series of regulatory blocks that are mentioned here:
A new training contract regulation, which eliminates the internship contract (mid- to high-level professional training or university degree), the training and apprenticeship contract, and the dual university training contract, replaced by a new training contract with two modalities: rotating training with third-party compensated work; or carrying out work aimed at acquiring adequate professional experience. This regulatory change intends to preserve the training component of labour insertion and guarantee the rights of young people when carrying out their work. Likewise, article 12 of the Worker’s Statute is amended to allow for part-time training contracts. In an Additional Provision, governments agree to produce an Intern’s Statute within a period of six months, the aim of which being “mentored internship training at equivalent entities or companies, as well as training activity carried out within the framework of curricular and extracurricular practices stipulated by official studies”.
The second major block involves amending temporary contracts by combining actions to profoundly rework articles 15 and 16 of the Worker’s Statute. The core concept of the reform in this area is based on four key principles:
a) The assumption that labour contracts are signed for an indefinite period of time, reinstating the formula that was amended by the 1994 reform so that permanent, stable company activities must be covered by permanent contracts.
b) Considering a temporary contract must be connected to a cause justifying its temporary nature, exceptions are limited to two possibilities: due to production circumstances or to replace a worker, which involves the elimination of contracts for specific services or projects.
c) Temporary contracts without sufficient cause, not meeting social security obligations, or after a succession of contracts “for the same or different position with the same company or company group” for more than eighteen months in a twenty-four-month period are made permanent.
d) Shifting the centre of gravity of the response to legal infractions against the principle of temporary contract causality to the department of administrative sanctions by considering infractions for each of the individual workers affected.
A series of provisions taking these into consideration are included. First, the orientation of measures that can be established by collective agreement regarding temporary contract reduction plans, as well as setting general criteria concerning appropriate ratios between temporary contracting and the company’s total workforce, criteria for converting fixed-term or temporary contracts into permanent ones, or setting maximum temporary contract percentages and the consequences of non-compliance therewith. Likewise, public authorities are committed to evaluating the results of these measures within a period of three years to check whether temporary contract rates have indeed improved and, if not, so that they can propose additional measures aimed at this goal within the framework of social dialogue. The project or service concluding is not cause for terminating the contract, and a special situation is created for terminating permanent contracts in the construction sector, thereby transforming the concept of project-based permanent contracts that have been a staple of this line of business since the 1970 Labour Ordinance.
The next point addresses the “modernisation” of project or service subcontracting in article 42 of the Worker’s Statute, which essentially seeks to avoid the use of production subcontracting as a formula for reducing company costs based on degraded working conditions for subcontracted workers, which is also connected to an anti-discrimination principle as is the case in predominately female-dominated sectors such as cleaning services. This is explained by the regulation that applies to the contractor’s workers, where the services provided are governed by the sectoral agreement of the main company’s line of business.
The fourth block of regulations undertakes the task of incorporating the experience gained through State of Emergency legislation regarding temporary lay-off schemes (ERTE, in Spanish) as a way of maintaining employment into normal production scenarios. As such, article 47 of the Worker’s Statute is reformed and the new article 47 bis of said regulation is created. Temporary labour adjustments through suspension or reduced workdays for economic reasons and the creation of the so-called RED mechanism are introduced as a primary phase interjected into the company’s decision to collectively terminate employment contracts to the point where these individuals are not counted as unemployed in view of the new Additional Disposition 39 of the GLSS that publishes the aforementioned regulation.
The fifth block focuses on collective bargaining reform in articles 84 and 86 of the Worker’s Statute. The solution found to the problem of addressing which company collective agreement to apply was a regulation that successive structural reforms of the 2010-2013 cycle of crisis saw included in Greek, Italian, French, and Portuguese ordinances, which was to remove its basic component, prohibiting its enforcement on salaries and salary supplements so that “a devaluating effect with unjustified disadvantages or compensation costs between companies is not caused”, which was nonetheless the central pillar of this regulation’s course of action. Recovering the “ultra activity” principle of collective agreements, eliminating the rule where the collective agreement claim becomes invalid after a year if no new agreement has been reached, is the next point to be addressed.
In addition, the reform repeals the Worker’s Statute’s provision on the peculiarities of service and project-based contracts with Public Administrations (Additional Disposition 14, paragraphs 1 and 2 of the Worker’s Statute), and the extremely important provision regarding dismissal for economic, technical, organisational, or public sector production reasons, which involves eliminating Public Administrations’ ability to lay off their employees for budgetary reasons.
The 2021 reform intervenes by thoroughly amending temporary contracts, which is connected to strict causes derived from exceptional circumstances because labour contracts are assumed to be arranged for an indefinite period of time for a company’s normal, permanent activities, with major development of the permanent seasonal contract modality and recovery of a training component according to the dual training contract’s purpose. It quite clearly acts against the Spanish legal system’s long-standing trend that started with the 1977 temporary contract to promote employment that was timidly counteracted in 1997. This tendency favours job insecurity as an ordinary way to manage labour, which the Agreement intends to challenge with its reformulation of the sanctioning system as well.
In contrast with the 2010-2012 cycle’s legislation that focused on termination and collective dismissal, not only does this Agreement focus its efforts on job security through temporary labour restrictions, it also incorporates a series of precepts that aim to restrict and limit a company’s collective dismissal options, particularly based on projections about “ordinary” labour legislation from experience gained with the ERTEs during the state of emergency. As an instrument that can be used as a formula to safeguard employment in times of crisis, the RED mechanism responds to this by limiting recourse to subcontracted labour. However, there are also important repeals regarding dismissals, specifically the ability to lay off workers for economic, technical, organisational, or public sector production reasons. In turn, it reinstates the system’s management by sectoral collective agreements, particularly in terms of salaries and “ultra activity” of the agreement. As for subcontractors and contractor companies, the collective agreement applicable to the contractor or subcontractor’s sector will take precedence, regardless of their business purpose or legal structure.
In essence, this is an example of a new legal labour policy that points in a direction contrary to the reforms made in Spain to date since the Constitution and the enactment of the Worker’s Statute. Indeed, neither the extremely important 1994 labour reform nor the 2002 labour reform, and certainly not those made during the 2010-2012 cycle of financial crisis and sovereign debt, had any policy path to defend workers’ interests, instead conveying a pattern of labour flexibility, strengthened corporate unilateralism, and inequitable power relationships with companies. As a result, the period in Spain starting in 2020 stands as a major inflection point in the democratic and political orientation of institutional framework structures concerning labour relations, with RDL 32/2021 marking a new milestone in this process.