• Insights

Spain – changes to the minimum wage and social security system

Written by
Sagardoy Abogados largest boutique firm focusing on HR law.
New legal provisions in Spain have increased the minimum wage, changed social security requirements and reintroduced the scope for forced retirement clauses in collective bargaining agreements. This article sets out the detail of these and other new employment law measures.

Royal Decree 1462/2018 established the minimum interprofessional salary for 2019, and Royal Decree 28/2018 introduced a revaluation of pensions and other urgent welfare, labour and employment measures.

Royal Decree 1462/2018 has introduced a substantial increase to the minimum inter-professional salary (MIS) to EUR 900. How does the new minimum salary affect current collective bargaining agreements and ongoing negotiations?

The new minimum inter-professional salary of EUR 30 per day, EUR 900 per month and EUR 12,600 per year affects Collective Bargaining Agreements both directly and indirectly. No Collective Bargaining Agreement may establish a salary under these amounts for any category of workers working full time. The indirect effect is because this salary is the new basis for the establishment of all salary supplements.

In order to mitigate the significant impact of the increase, Royal Decree-Law 28/2018 introduces specific rules affecting those collective bargaining agreements that use it to establish the amount of, or increase in, the basic salary or salary supplements. In addition, it authorises legal provisions that allow the increase not to be taken into consideration with respect to non-statewide provisions and private legal transactions in force at the time the increase entered into force.

Indefinite contracts for the support of entrepreneurs have been abolished. What is the effect and significance of this?

The moderate success of this type of contract suggests that it will not have a very significant impact on employment. The abolishment of this type of contract will mean the end of probationary periods of up to one year envisaged in this type of contract.

Establishment of social insurance contribution surcharge percentages for very short-term temporary contracts

The new legislation increases the amount of employers’ contributions under these contracts by up to 40%. The aim of this legal measure is threefold: to increase the amount of social security payments collected, to discourage employers from entering into contracts of this type and, where applicable, to increase affected workers’ welfare protection.

With regard to this last aim, the new Article 249 bis of the General Social Security Law (Ley General de Seguridad Social) establishes the application of a temporary coefficient to days actually worked and for which contributions have been paid. This coefficient corresponds to the increase in the above-mentioned contribution and will allow workers to accumulate more days of registration in the system in order to be eligible for benefits.

Established of a new obligation to register people taking part in training programmes, in placements without an employment contract and in external academic placements with the social security system. Who is affected?

There is a legal obligation to include activities that involve taking part in training programmes, placements in companies without an employment contract and external academic placements in the social security system. From now on, it will be compulsory to include these activities in the system. They must be included in the general scheme, as equivalent to employees, and generally excluded from unemployment protection. The new obligation applies even if the subject is not receiving remuneration of any kind. The contribution rules for training and apprenticeship contracts will apply, and there will be no obligation to pay contributions for unemployment contingency, to the Wage Guarantee Fund (Fondo de Garantía Salarial) or for professional training.


Higher contribution bases for the general social security scheme and the special scheme for self-employed workers

The General Scheme establishes a dual increase in social security contributions: on the one hand, a 7% increase to the maximum contribution; and, on the other, an increase of around 22% in its statutory minimum basis, which is the percentage by which the Minimum Interprofessional Salary changed in 2019.

In the special scheme for self-employed workers, an increase of 1.2% in the current minimum bases has been established as a transitional measure until an in-depth reform of the contributions under this scheme is carried out.

The possibility for Collective Bargaining Agreements to stipulate forced retirement clauses has been revived. What are the requirements for these clauses to be vaild and what effects can be expected?

This is undoubtedly one of the most innovative measures, following the full prohibition on forced retirement contained in the most recent wording of the 2015 Workers’ Statute (Estatuto de los Trabajadores de 2015). The new law authorises collective bargaining agreements to include clauses making it possible to terminate the employment contracts of workers who, in addition to having reached the legal retirement age set out in the social security legislation, meet the requirements to receive 100% of their ordinary contribution-based pension.

In addition, the collective bargaining agreement must link forced retirement clauses to coherent employment policy goals, such as the transformation of temporary contracts into permanent ones, the recruitment of new workers, generational renewal or any other measures aimed at promoting the quality of employment. Any disputes regarding whether this requirement has been adhered to will have to be settled by the courts.

Measures supporting recruitment, linked to unemployment rates over 15%, have been phased out. What impact does this have?

With regard to contracts of this type entered into before Royal Decree-Law 28/2018, the rules established in its provisions are maintained, and the resulting contracts and incentives are considered valid provided that they were entered into after 15 October 2018 (the date of publication of the Active Population Survey for the third quarter of the year) and until 29 December of the same year. Consequently, they will not apply from 1 January 2019.

Iñigo Sagardoy
Chairman - Spain
Sagardoy Abogados
Ana Godino
Partner - Spain
Sagardoy Abogados