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Spain – new measures on working hours, addressing long-term unemployment and welfare payments introduced

Written by
Sagardoy Abogados largest boutique firm focusing on HR law.
A new law (Royal Decree-Law 8/2019 of 8 March 2019) has introduced urgent measures to reinforce welfare protection and combat job insecurity in Spain. This article asks and answers some key questions on the impact of the new measures on employers.

What obligations does the new Royal Decree-Law impose with regard to recording working hours? When does the obligation come into force?

Under the new provisions, companies must ensure that their workers’ working hours are recorded on a daily basis, including the specific start and end times of each worker’s working day.

Against the expectations of the workers’ representatives, there is no rigid recording system. Instead, the recording system is to be established by reference to the agreement reached in the Collective Bargaining Agreement or Collective Company Agreement and, in the absence of such an agreement, the employer may unilaterally decide on a system after consulting the workers’ legal representatives.

Regardless of the recording system, the law requires the company to retain the data recorded for four years, during which time it must remain available to workers, their legal representatives and the Labour and Social Security Inspectorate.

The law classifies the breach of the obligation to record working hours as a serious infringement, with fines ranging from EUR 626 to EUR 6,250 based on whether the degree of infringement is classified as low, medium or high.

The obligation will apply from two months following the entry into force of the law, that is, from 12 May 2019.

Recognition of the right to unemployment subsidy for over-52s. What are the legal requirements, and what are the changes with respect to the previous system?

The unemployment subsidy eligibility age has been lowered to 52 from the current age of 55. In addition, the requirement of reaching this age at the time of having received the full unemployment benefit or of meeting the requirements for subsidy eligibility has been removed. From now on, if you are not yet 52 at the time all the requirements are fulfilled, you can remain registered as a job seeker and obtain the subsidy when you reach that age.

The subsidy is not available if the person left their last job voluntarily.

The maximum length of receipt of the subsidy is not conditional on eligibility for any contribution-based pension scheme; instead, it is based on reaching the ordinary retirement age. In addition, household income is no longer taken into account to establish eligibility, thus making the right to it individual. However the applicant may not have income of any kind amounting to more than 75% of the minimum interprofessional salary. At the same time, the amount of Social Security contributions for retirement while receiving the subsidy is increased from 100% to 125% of the minimum contribution limit. And, finally, the percentages applicable to the amount of the subsidy when the subsidy arises from part-time work have been removed; in this case the amount of the subsidy will be pro rata to the hours previously worked.

In general, the amount of the subsidy is equal to 80% of the monthly Public Multiplier Effect Income Indicator (Indicador Público de Renta de Efectos Múltiples) in force from time to time.

While a person is in receipt of this subsidy, the managing entity will pay contributions for retirement. Such contributions will be taken into account when calculating the pension calculation basis and the percentage applicable to it, as well as for the purpose of establishing the amount of time needed to qualify for retirement.

However, in no case will such contributions be valid or effective for the purpose of proving the minimum period of fifteen years of contributions required to qualify for a contribution-based pension. This minimum period must be proven at the time of applying for unemployment subsidy for over-52s.

The changes to the subsidy for over-52s contained in Royal Decree-Law 8/2019 will apply to benefit rights arising or resuming from 13 March 2019, as well as those being received on that date.


New reductions to contributions for companies that hire long-term unemployed individuals, but what are the conditions and requirements?

Long-term unemployed individuals are those who have been unemployed and registered in job centres for at least 12 months in the 18 months immediately preceding the hiring in question. In the fourth quarter of 2018, they accounted for 6.1% of the total unemployment rate.

When a company hires these workers, the law provides for a monthly reduction in the employer’s social security contributions, provided that the employment contract is entered into for a minimum actual term of three years from the start of the employment relationship. The beneficiary company must also maintain the level of employment reached in the contract giving rise to the reduction for at least two years following its conclusion. This requirement is clearly intended to prevent pre-existing contracts providing no reduction in social security contributions being replaced by a chain of contracts covered by the social security reduction scheme. However, the employment maintenance obligations are not deemed to have been breached if an employment contract is terminated on objective or disciplinary grounds if they are held to be fair.

Neither shall the company’s obligation to maintain the employment level be deemed to have been breached in the case of terminations resulting from the worker’s resignation, death, retirement or total, absolute or severe permanent disability or on expiry of the time agreed in fixed-term contracts or as a result of abandonment of the contract during the probationary period.

The amount of the discount per contracted worker will be EUR 108.33 per month, which is equivalent to EUR 1,300 per year.

For female workers, the discount increases to EUR 125 per month, which is equivalent to EUR 1,500 per year.

If the contract is part time, the discounts will be calculated pro rata to the working hours agreed in the contract, provided that they are the hours actually worked by the worker.

Establishment of new family benefits under the Social Security system. Who is affected and to what extent?

Under the non-contribution-based scheme, the amount of family benefits and the income limit for eligibility are set out below.

The financial allowance for each child under eighteen and for each dependent child over that age with a disability of 65% or more, regardless of the legal nature of the family connection, or for dependent minors either in foster care or in guardianship for the purposes of adoption is now set at EUR 341 per year.

The income limit for qualifying for the financial allowance per dependent child or minor is set at EUR 12,313.00 per year. In the case of large families, the income limit is increased to EUR 18,532.00, plus EUR 3,002 for each dependent child from (and including) the fourth.

By way of exception to the foregoing, the financial allowance will be EUR 588 per year where household income is below the above limits. For this purpose, a scale based on the criteria of the ages of the members of the household (older or younger than 14) as well as the range of income (between EUR 4.679.99 or less and EUR 10,439.99 or less) will be applied for the purpose of establishing the specific amount of the allowance, which will in any event be EUR 588 multiplied by the number of dependent children under 18.

Establishment of a minimum benefit for total permanent disability

Under the Social Security system’s contribution-based scheme, the minimum benefits for total permanent disability arising from common illness for people under 60,are established at the following amounts for 2019:

  • For people with or without a dependent spouse (that, is, forming a single economic unit): EUR 6,991.60 per year.
  • For people with a non-dependent spouse: EUR 6,930.00 per year.
Iñigo Sagardoy
Chairman - Spain
Sagardoy Abogados
Ana Godino
Partner - Spain
Sagardoy Abogados