Latest employment law changes

During the first four months of 2023, a number of regulations have been issued with implications fort the labour and social security law. In particular:

• Law 3/2023 of 28 February on employment, which entered into force on 2 March (Employment Law).
• Royal Decree 99/2023, of 14 February, which sets the minimum wage (SMI) for 2023 (RD SMI).
• Royal Decree-Law 2/2023 of 16 March on urgent measures to extend pensioners' rights, reduce the gender gap and lay down a new framework for the sustainability of the public pension system (RD on the sustainability of the public pension system).
• Law 4/2023 of 28 February, for the real and effective equality of trans persons and for the guarantee of the rights of LGTBI persons (Trans Law).
• Organic Law 1/2023 of 28 February amending Organic Law 2/2010 of 3 March on sexual and reproductive health and the voluntary interruption of pregnancy (Sexual Health Law).

The legislator has made use of these regulations to introduce changes to the labour law which present a series of relevant changes in the field of labour relations and which may have gone somewhat unnoticed.

In this newsletter we consider the various regulations and the relevant new developments:

1. Competence of the contentious-administrative jurisdiction in respect of the Labour Inspectorate's reports on the employment nature of a contractual relationship

Pursuant to Article 148 d) of Law 36/2011, regulating the Social Jurisdiction, the social jurisdiction was competent to resolve any disputes about the existence of employment relationships declared by the labour authority in its infringement or settlement reports (and the social jurisdiction determined any sanctions imposed as a result of a labour inspection).

The Employment Law abolished the aforementioned provision, so that, as of 2 March 2023, the Labour Inspectorate's (Inspección de Trabajo) reports declaring the existence of an employment relationship are enforceable, and can be challenged directly before the contentious-administrative jurisdiction.

This means that it will no longer be necessary for the Inspectorate to commence ex officio proceedings before the social jurisdiction and this type of process will be speeded up (although at the expense of the reduced specialisation of the contentious-administrative jurisdiction to decide on labour matters).

2. The role of the Labour Inspectorate in collective dismissal proceedings is strengthened

Prior to the Employment Law, in collective dismissal proceedings the Labour Inspectorate was required to issue a report limited to analysing the development of the consultation period, the company's communications and verifying that the documentation provided complied with the law.

However, as of 2 March 2023, the Labour Inspectorate's report must assess the existence of those causes specified by companies as justifying terminations within the framework of collective dismissals.

This regulatory change is relevant given that, previously, the social jurisdiction was the only body competent to assess the concurrence of causes. Despite this, and regardless of the content of the report, nothing will prevent the employer from executing the collective dismissal (with or without the agreement of the workers' representatives). However, in the event that the dismissal is challenged, it is always preferable to have a report from the Inspectorate declaring that there are grounds for the dismissal.

3. New developments in relation to the minimum wage (SMI)

The RD SMI has set the SMI for 2023 at €1,080 per month. In practice, this increase will not affect the salaries of workers which, when taken as a whole and on an annual basis, exceed the SMI.

On the other hand, the RD SMI also sets out a series of rules on the impossibility of freezing the amount of the SMI:

(i) if, in addition to the monthly salary, an extraordinary bonus is paid, the limit of what can be freezed will be the double of the amount of monthly SMI; and

(ii) if the monthly salary includes the proportional part of the extraordinary payments or bonuses, the limit of what can be freezed will be the amount of the annual SMI prorated over 12 months.

4. Interns will be included in the Social Security System

By virtue of the RD on the sustainability of the public pension system, from 1 October 2023, interns who are on placement in companies, institutions or entities, and are included in training programmes or external academic internships, will become part of the Social Security system.

(a) In the case of paid internships:

(i) protection will exclude unemployment benefit, Wage Guarantee Fund (Fondo de Garantía Salarial) coverage and Professional Training (Formación Profesional);

(ii) the contribution rates will be the fixed amounts provided for work-linked training contracts: for 2023, €56.71 for common contingencies, of which €47.28 will be paid by the employer and €9.43 by the worker, and €6.51 for occupational contingencies, paid by the employer; and

(iii) for benefit purposes, the applicable contribution base is the minimum contribution base for contribution group 7, being €1,260 for 2023.

(b) In the case of unpaid internships:

(i) in addition to the exclusions for paid internships, protection for temporary incapacity arising from common contingencies will also be excluded;

(ii) the monthly contribution base will be the minimum base in force for contribution group 8, which for 2023 is €42 per day, for the number of days of internship carried out in the relevant month, with a limit of €1,260; and

(iii) the contribution will consist of a daily employer's contribution for common and professional contingencies, excluding temporary incapacity for common contingencies.

In both cases, no contributions will be paid for the Intergenerational Equity Mechanism and a reduction of 95% will be applied to the contributions for common contingencies.

5. Changes in the calculation of the regulatory base for pensions

The RD on the sustainability of the public pension system provides that, for the calculation of the regulatory base of the retirement pension, the 29 years prior to retirement will be taken as the reference period. However, only the highest bases for the entire period corresponding to a total of 27 years will be taken into account.

Likewise, for those who apply for a retirement pension on or after 1 January 2026 and before 1 January 2041, the calculation of the regulatory base is carried out by applying either the legislation in force on 1 January 2023 or the relevant subsequent legislation in force in the year of retirement, whichever is more favourable.

On the other hand, for the purposes of defining which regulatory base is more favourable to the worker, between 2041 and 2044 there will be a transition period to increase the number of contribution bases that can be taken into account when calculating the regulatory base in accordance with the wording in force on 1 January 2023, at a rate of six months per year.

6. Increase in the maximum contribution bases

As a way of increasing the revenue of the public pension system, the RD on the sustainability of the public pension system provides a measure whereby, from 2024 to 2050, the maximum contribution base limits will be progressively increased and revalued by a percentage equivalent to CPI plus 1.2 points.

7. Additional solidarity contribution

The amount of the maximum contribution base for employees will be subject to this additional contribution, by applying:

(i) 5.5 per cent to the first 10 per cent of this amount

(ii) 6 per cent to the tranche between 10% and 50% of this amount; and

(iii) 7% from 50% onwards.

8. Action protocol to counter harassment or violence against LGTBI people

In accordance with the Trans Law, by 2 March 2024 all companies with more than fifty employees must have a set of measures and resources in place to achieve real and effective equality for LGTBI people.

These companies must have a protocol for action to counter harassment or violence against LGTBI people. The measures will be determined by collective bargaining and agreed with workers´ legal representatives.

The Trans Law is pending regulatory development, which will determine the scope and content of the aforementioned measures, so we await this development before assessing its practical implications.

9. Recognition of new grounds for illegal discrimination

Sexual identity, gender expression and sexual characteristics are included as illegal grounds for discrimination against workers. Likewise, the Trans Law introduces into the Law on Offences and Penalties in the Social Order (Ley de Infracciones y Sanciones en el Orden Social) a series of administrative offences in relation to equal treatment and non-discrimination on the above grounds, with penalties ranging from €200 to €150,000.

10. Abolition of the obligation to provide medical certificates

From 1 April 2023, employees are no longer required to provide their employers with a medical certificate of sick leave, confirmation or discharge in the context of temporary incapacity.

11. New common temporary incapacity contingencies

As a result of the Sexual Health Law, as of 1 June 2023, new special situations of temporary incapacity due to common contingencies will come into force. It should be noted that these will not be paid leave, but new circumstances that will require the necessary reports and sick leave certificates from Social Security.

(a) Leave due to menstruation

Secondary disabling menstruation (menstruación discapacitante secundaria) is recognised as a cause of temporary incapacity for women who suffer from it. It will last for 3 days, which may be extended to 5. The Social Security will pay the benefit from day one of the sick leave.

(b) Sick leave due to termination of pregnancy

A situation of temporary incapacity is also recognised for a woman who interrupts her pregnancy, while she receives medical care from the Public Health Service and is unable to work. The Social Security will pay the benefit from the day following day one of the sick leave, with the employer being responsible for the full salary for the first day of the sick leave.

(c) New sick leave for pregnant women

A special situation of temporary incapacity is established for pregnant women from the first day of the 39th week of gestation. The Social Security will pay the benefit from the day following day one of the sick leave, and the employer will pay the full salary corresponding to day one of the sick leave.

TO KEEP ON THE RADAR...

Negotiation of equality plans in the absence of workers' legal representatives and lack of response from the principal trade unions.

Royal Decree 901/2020 of 13 October, which regulates equality plans, requires the setting up of a negotiating committee consisting of employer's representatives and workers' representatives for the purposes of negotiating the plan. In this context, the trade unions have a period of 10 days from the company's communication to appoint their representatives to the committee.

The recent ruling of the High Court of Justice of Andalusia of 25 January 2023 has determined that the fact that the trade unions do not reply to the company's communication within 10 days and the company sets up an ad hoc committee with workers does invalidate the equality plan, provided that the company can prove that it has requested the unions to participate in the negotiating committee.

We believe that this ruling is a big step towards providing a little more legal certainty in the regulation and negotiation of these plans.

Drafting of the Families Law

The draft of the Law on Families is currently with the Social Rights Commission of the Congress of Deputies, awaiting presentation of amendments.

Although it is difficult to predict the final text and the date of approval of the Law, it is expected that the procedure for approving the Law will be completed before the Congress is dissolved as a result of the election year, that is, before 16 October 2023.

Among the measures foreseen in the Law, the following stand out:

(i) paid leave increased from 2 to 5 days to attend to a spouse, civil partner or relatives up to the second degree (by blood or affinity) in the event of hospitalisation, accident, serious illness or surgery;

(ii) 4 days of paid leave for urgent family reasons relating to family members or persons living with the worker, in the event of illness or accident which makes their immediate presence indispensable. This leave may be taken by the day or by the hour; and

(iii) 8 weeks´ unpaid leave for parents of children up to 8 years of age, which may be taken continuously or intermittently.