Employment Flash 2021: Measures for the new year

1. Compulsory to have an equality plan in companies with more than 100 employees.

March 2021 is the deadline for companies with between 100 and 150 employees (companies that were not previously obliged) to have an Equality Plan.
Failure to comply with this obligation could result in a serious offence, punishable with a fine of between 626 and 6,250 euros.

2. Increase of paternity leave to 16 weeks.

From 1 January 2021, paternity leave has been extended to a maximum of 16 weeks, of which 6 weeks are compulsory. This measure harmonizes the maternity and paternity leave in Spain.

3. The State of alarm situation continues.

The State of alarm declared by Royal Decree 926/2020 ended at 00:00 hours on 9 November 2020. On 3 November the Spanish Government approved an extension of the state of alarm for a period of six months from 00:00 on 9 November 2020 to 00:00 on 9 May 2021.

4. Legal developments approved together with the General State Budget Act.

Among the novelties of an employment nature that we find in the General State Budget 2021 Act, we highlight the following:

• The revaluation of pensions: The contributory pensions paid by the Social Security will experience an increase of 0.9% in 2021 (they may not exceed the maximum limit of 2,707 euros per month or 37,904.86 euros per year). On the other hand, the amount of non-contributory retirement and disability pensions will increase by 1.8% with respect to the amount established for 2020, remaining at an annual amount of 5,639.20 euros.

• The Public Indicator of Multiple Effects Income (IPREM) is increased by 5%, standing at 564.90 euros per month, 6,778.80 euros for the annual of 12 payments and 7,908.60 euros for the annual of 14 payments.

• New wording is given to Article 11 of the Worker’s Statute Law (training contracts), introducing a new Section 3 that contemplates the contract for university dual training, which will aim at the professional qualification of university students through a regime of alternating paid work.

• Article 33.2 of the Workers' Statute (Wage Guarantee Fund or FOGASA according to the Spanish acronym) is amended so that this body will pay compensation recognised as a result of a judgment, order, judicial settlement or administrative decision in favour of employees due to dismissal or termination of contracts in accordance with Articles 50, 51, 52, 40. 1 and 41.3 of the Workers' Statute, and of the termination of contracts in accordance with Articles 181 and 182 of Royal Legislative Decree 1/2020, of 5 May, which approves the consolidated text of the Bankruptcy Law, as well as compensation for the termination of temporary or fixed-term contracts in the cases that legally proceed. In all cases with the maximum limit of one year's salary, except in the case of Article 41.3 (substantial modifications of employment contracts), which would be 9 monthly payments, with a the daily salary, the basis of the calculation, capped at the double the minimum interprofessional salary, including the proportional part of extraordinary payments.

• The total maximum annual employee and employer contributions to pension schemes may not exceed 2,000 euros. This limit will be increased by 8,000 euros, provided that such increase comes from employer contributions.

• As a measure to support the extension of the period of activity of employees with permanent discontinuous contracts in the tourism and commerce and hotel and catering sectors linked to tourist activity, with effect from 1 January, those companies that generate productive activity in the months of February, March and November of each year and that start and/or maintain in employment during those months employees with permanent discontinuous contracts, may apply a bonus of 50 per cent of the company's social security contributions.

• Companies and self-employed workers who are up to date with their Social Security obligations and who have no other deferral in force may request a moratorium on the payment of Social Security contributions and jointly collected items that are due between December 2020 and February 2021 in the case of companies, and between January and March 2021 in the case of self-employed workers.

5. Possible new regulations pending approval.

• Possible increase in the Minimum Interprofessional Salary to 1,000 euros: The Minimum Interprofessional Salary (SMI) currently stands at 950 euros per month in fourteen payments. However, the government's agenda includes an increase for this year. In this regard, the government is preparing a Decree to raise the SMI to 1,000 euros per month, although it intends to negotiate the terms of the increase with social agents in the coming weeks and that it will have retroactive effects, so that it will start to be calculated as of January 2021.

• Possible extension of Temporary Furloughs (ERTE): currently, force majeure ERTE by COVID-19 are in force until 31 January 2021. The government, trade unions and employers are preparing to start new negotiations in the coming weeks to extend the temporary furloughs beyond January 2021. According to data from the end of December, almost 750,000 employees are currently affected by temporary furloughs.

6. New jurisprudential developments left to us by 2020:

• The STS 29 December 2020 (rec. 240/2018) has modified the jurisprudential doctrine that allowed the formalisation of temporary works contracts linked to the duration of an outsourcing contract. The Supreme Court considers the legality of resorting to work or service contracts when the company's activity is none other than providing services for third parties and, therefore, develops its commercial relations with the recipients of such services through the appropriate contracts in each case. The plenary session of the Supreme Court concludes that it is necessary to rectify the doctrine that has been maintained that the temporary duration of the service was projected on the employment contract, considering that in such cases the temporary cause is not valid.

• The STS 22 October 2020 (rec. 285/2018) establishes that a worker is not entitled to receive the proportional part of the bonus for having presented his or her voluntary departure before the end of the accrual period. Specifically, the Supreme Court considers that the worker's resignation prevents the accrual of the variable pay in accordance with the agreement reached by the company and the trade union sections, which is fully legal.