Synthesis of the spanish labour law reform


The measures taken include:

Objective causes dismissal 

The existence of objective causes to extinguish the employment relationship will be considered in case of concurrence of a persistent decline in the level of income or sales of the company for at least 3 consecutive months.

This fact will give right to an indemnity of 20 days of wages per year of service with a maximum of 12 monthly payments.

Absence to labour with valid excuse, as cause to justify the dismissal, is no longer linked to the rate of workplace absenteeism in the company.

So only the employee’s absenteeism will be considered to proceed with the dismissal.

Indemnity for unfair dismissal 

If the dismissal is declared unfair, the employer may choose between readmit the worker, or pay the indemnity amount of 33 days per year of service, with the limit of 24 monthly payments.

If the employer opts for indemnity, he has not to pay back pays, from the moment of the filing of the demand until an award is obtained, being such obligation only in the event that the employer chooses the readmission.

This indemnity is not applied retroactively, but after the entry into force of the reform.

From then on, the indemnity shall be of 33 days. The limit stays on the 42 monthly payments, provided that prior to the entry into force of the standard, an indemnity exceeding the 24 monthly payments had been reached.

Back pays 

The duty to pay back pays is not to apply when the dismissal is declared unfair and the employer opts for the indemnity.

Fogasa (Wage Guarantee Fund) 

In the cases of termination by objective causes and in mass redundancies, companies with less than 25 employees may recover of the guarantee fund (FOGASA) the amount of 8 day’s salary per year of service as part of the indemnity corresponding to the employee, provided that the extinct contracts had been indefinite contracts and that they would have not been declared unfair.


Indefinite employment contracts as support for entrepreneurs Companies of less than 50 employees can use them. 

The contract’s duration is indefinite and it is full-time.

The trial period will be of ONE YEAR, so if the trial is not passed, the contract can be terminated using that argument.

It has tax incentives in case of concurrence of a series of circumstances, but for its application the employer must maintain the employee hired at least for three years, incentives having to be reimbursed in case the fulfilment of this obligation had failed.

Part-time contract 

The realization of overtime is permitted now; this was not possible so far.


From now on, it will be considered as telework, the work which is done in the place mainly chosen by the employee, without prejudice to its alternative presence in the company.

Working time 

The irregular distribution of the working hours that so far should be done through collective agreement or agreement between company and employees’ representatives may be determined unilaterally by the company in default of agreement, to 5 % of the day work.

Labour and geographical mobility and the substantial modification of the working conditions.

It makes more flexible the possibility to justify both labour and geographical mobility, as well as substantial changes of working conditions, by expanding the framework for action in which they can coincide for the time necessary if there are proven economic, technical and organizational or production reasons, reasons of competitiveness, productivity, technical organization or of work in the company.

Substantial modification of the working conditions: 

To request that modification, there have to coincide causes relating to competitiveness, productivity or technical organization in the company. The indemnity will be of 20 days per year, the limit lies at 9 monthly payments.

For the substantial modifications of collective nature, if an agreement with the employees’ representatives is not reached after the consultation period, the employer shall notify such circumstance to the employees and the measure’s application will begin 7 days after.

If working conditions, established by collective agreement, want to be modified, this must be done in accordance with the procedure laid down in article 82.3 of the statue of workers’ rights.

Suspension of the work contract and reduction in working time because of economic, technical, organizational or production causes or those coming from force majeure.

The suspension of the contract of employment and the reduction in working time can be agreed by the employer, and does not require the prior authorization of the labour authority.

From the day on the notice was transmitted, the suspension of contracts will be effective.

Collective Dismissal 

The prior official authorization by the labour authorities is not necessary any more.

The minimum contents of the letter to the employees’ representatives is fixed and must be sent to the labour authorities; once completed the consultation period, they will obtain the report by the Labour Inspection and Social Security and forward it to the parties.

Once the consultation period has finished, the result of it must be reported to the labour authorities. If there is an agreement, it will get a complete copy of it. Otherwise, the final decision about the mass dismissal and its conditions are to be sent.

Once the decision has been communicated to the employees’ representatives, the employer notifies the dismissals individually to the workers concerned, in writing and by granting a 15 days period of notice, in accordance with the provisions of article 53.1 of the statute of workers rights.

The regulation of procedures for collective dismissals and suspension of contracts and reduction in working time are currently pending to be approved.

If the extinction affects more than 50 employees, the company is obliged to offer them an external relocation plan, through authorized relocation companies.

The breach of this obligation is considered as administrative offence.

The indemnifications for managers of credit institutions have been reduced.