The Government Approves a Significant Labour Reform In Royal Decree 10/2010 of June 16th Which Does Not Convince the Spanish Employers And Union

18 June 2010

The text will be put to a vote for ratification in Congress so it is still subject to changes and thus it could be improved.

The key points of the new regulation which, in general terms, take effect on June 18th, are the following: the temporary employment contracts will be limited to 3 years or even 4 years by means of the collective bargaining agreements. The severance pay in case of termination of such contracts is increased to 12 days pay per year of service but it will apply gradually after 2012; workers who have had temporary contracts even for different jobs for 24 months within a 2.5 years will become permanent employees; companies with justified significant losses can lay off employees with 20 days severance pay per year of service (in these cases the period of prior notice to the employee is reduced to 15 days); no employer shall bear the cost of 8 days of severance pay in case of economic dismissals of employees that have worked a minimum period of 1 year (this measure is subsidized by a private fund paid by employers and is temporary) ; the use of permanent contracts with 33 days severance pay per year worked in case of economic dismissal are promoted as it can be used for a wider group of unemployed workers; employers will have more flexibility to implement changes in the employment conditions or transfer of their workers; employers who hire permanently young people up to 30 years old and long-term unemployed workers will receive new public allowances to reduce their social security costs but will have to guarantee a certain level of permanent jobs.


For further information please contact Ana Gómez: