Labor reform: contracts, dismissals and collective agreements change

Automatic summary, not yet reviewed

1. Temporary staffing agencies will be able to operate as job placement agencies by submitting a responsible declaration, and placement agencies will need authorization from the public employment service.
2. Training is recognized as an individual right: workers with at least one year at the company will get 20 paid hours of training per year, which can be accumulated for up to three years, and a training account linked to their Social Security number will be created.
3. A new permanent contract to support entrepreneurs is created, only for companies with fewer than 50 workers, with a one-year trial period and tax deductions and rebates when hiring young people or the long-term unemployed.
4. Part-time workers will be able to work overtime, which will count toward Social Security contributions, and remote work is regulated with the same rights as on-site work.
5. Companies will be able to suspend contracts or reduce working hours by between 10 and 70 percent for economic, technical, organizational or production reasons without prior administrative authorization, with a consultation period with worker representatives.
6. It becomes easier to opt out of a collective agreement, that is, to stop applying its terms in the company, and the company-level agreement takes priority over the sectoral one on matters such as wages, schedules or working hours. The extended validity of agreements is limited to two years.
7. Severance pay for unfair dismissal becomes 33 days of salary per year of service, capped at 24 months, for new contracts. Earlier contracts keep 45 days for the time worked before the reform and 33 days for the time after.
8. Collective dismissals no longer need administrative authorization: the consultation period remains, seniority priorities are reinforced, and companies with more than 50 affected workers must offer an external job placement plan.

Who it affects

• Workers, especially young and temporary ones: Their contracts, training, severance pay and the conditions the company can change all shift.
• Companies with fewer than 50 workers: They gain access to a new permanent contract with rebates and tax deductions.
• Companies in crisis: They can suspend contracts or reduce hours without administrative authorization and carry out collective dismissals without prior approval.
• Unions and worker representatives: They take part in consultation periods and can challenge collective dismissals in court.
• Directors and executives of bailed-out credit institutions: Their severance pay is capped and they can be dismissed without compensation if sanctioned.

Words worth knowing

Descuelgue

Opting out: a company stops applying the conditions agreed in the collective agreement, such as wages or schedules.

Ultractividad

Extended validity: a collective agreement remains in force after its agreed term ends, until a new one is signed.

Salarios de tramitación

Wages the employer must pay the worker from dismissal until the court ruling when the worker is reinstated.

Despido colectivo

Collective dismissal for economic, technical, organizational or production reasons affecting a minimum number of workers depending on company size.

Fondo de Garantía Salarial

Wage Guarantee Fund: a public body that pays part of the severance when the company cannot.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries