Pérez-Llorca analyses the recent Spanish labour reform at its ‘Labour Law Update’ event

This seminar was attended by Daniel Cifuentes and Isabel Moya, partners of the Employment Law practice area, and Marta Iranzo, Of Counsel of this practice area, who addressed the main amendments introduced by Royal Decree-law 32/2021, on urgent measures for labour reform, the guarantee of job stability and the transformation of the labour market.

The session was opened by Daniel Cifuentes, who explained that the entry into force of this reform aims to correct the excessively temporary nature of our labour market and to reduce job insecurity. The Pérez-Llorca partner handed over to Isabel Moya and Marta Iranzo, who explained the main amendments the reform introduced to training contracts. Firstly, Moya indicated that sandwich training contracts are compatible with curricular or extracurricular internships that are part of official studies. Next, Iranzo explained the main differences between internship contracts and training contracts for obtaining professional practice, where she emphasised that the duration of the latter cannot exceed a year and must conclude within three years of completing the corresponding studies.

The three speakers then analysed the main changes to fixed-term contracts contained in this Royal Decree-law. In this context, Cifuentes pointed out that with the application of this type of contract, the contract for works or services disappears, which significantly reduces the possibility of companies using temporary contracts. Likewise, Isabel Moya indicated that production circumstances contracts can be applied when there is an occasional and unforeseeable increase in the production of work or a foreseeable increase for a maximum of 90 days. Marta Iranzo added that it will be possible to hire a worker using a production circumstances contract to replace one or more people during holidays or to make up for the reduced working day of another worker, among other situations.

Discontinuous fixed-term contracts: what are they and what do they consist of?

Subsequently, Daniel Cifuentes explained what the discontinuous fixed-term contract consists of and its differences with respect to production circumstances contracts. The Pérez-Llorca partner pointed out that following the recent labour reform, any company’s hiring needs that are not occasional and that exceed 90 days must be articulated through a permanent contract. In addition, he pointed out that the new regulation sets out the possibility of discontinuous permanent workers receiving an exit payment, if this has been previously agreed in the collective bargaining agreement. In relation to the calculation of seniority for compensation purposes, Moya highlighted the lack of clarity in the regulation as to whether seniority or actual length of service should be taken into consideration.

To conclude the event, Isabel Moya commented on the modifications included in the reform regarding temporary workforce restructuring plans (“ERTEs”) and listed the types that currently exist. Firstly, the Pérez-Llorca partner pointed out that this Royal Decree-Law introduces reforms to ERTEs due to force majeure and ERTEs for economic, technical, organisational and productive causes (ETOP) with the aim of reducing deadlines and incorporating measures to maintain employment. Moya also highlighted that the reform includes a new type of ERTE (RED Mechanism for Employment Flexibility and Stabilisation), which will allow companies to request measures to reduce working hours and suspend employment contracts in situations of cyclical and sectoral crisis, following prior activation by the Government.