Following an agreement among Spain’s government, labor unions and employers' associations on labor reforms, Royal Decree Law 32/2021 has been published in the official Gazette. Among other things, the law amends the Workers’ Statute to limit the use of temporary contracts and establishes new measures for Spain’s short-time work scheme (ERTE – Expedientes de Regulación Temporal de Empleo).
The new measures, effective March 30, 2022, include:
The Spanish labor market is characterized by high levels of temporary work; 24% of workers age 25 to 54 were employed on temporary or fixed-term contracts in 2020, more than double the average across Organization for Economic Cooperation and Development (OECD) countries (OECD data). Over the past decade, various attempts to reduce temporary employment have been ineffective. The latest reforms aim to sharply curtail the use of temporary contracts, offset by changes to the ERTE regime that provide greater government support for business during economic difficulties. The reform package, built in part around this trade-off, is substantial. Employers may want to review the changes in consultation with their legal counsel to get a fuller picture of the reforms.