The rising labour costs that may have for companies silently due to the application of the latest regulations published throughout the year 2022 and 2023.
These measures may lead to an increase in unit wage costs and the company as a whole.
Let’s try to summarize them.
Rising labour costs silent
Let’s take a look at these measures, starting with the most recent ones, and trying to anticipate what may come in the light of the advanced announcements.
Bearing in mind that the situation of political uncertainty only allows us to guess at a few things.
Possible rising labour costs in the near future
Regardless of the proposed laws in the parliamentary process, which in the current political situation with a government in office and the uncertainty regarding the formation of a new cabinet, it is difficult to foresee which regulations will be ratified in the near future.
If we can move forward with regard to severance payments. And this, it is likely that in the coming year we will see a rising in costs arising from dismissal due to adjustments to the current legal framework. This potential adjustment arises from complaints filed by Spanish trade unions before the European Committee on Human Rights.
It is anticipated that the Committee’s opinion will be favorable to the unions, based on previous rulings against similar claims in countries such as Finland, France and Italy.
If so, we could see a transformation of the current legal framework for severance pay. Evolving from the current system of a taxed system:
- 20 days’ salary per year of service for objective dismissal.
- 33 days’ salary per year of service for disciplinary dismissal.
… towards a more flexible system and/or higher amounts. This change could result in a general increase in the costs associated with dismissal processes.
What are the legal developments that could have the greatest impact on rising labour costs?
Let’s take a look at the legal developments that have the greatest impact on rising labour costs. Starting with the most recent ones.
Royal Decree Law 5/2023
RDL 5/2023, dated June 28, has introduced numerous amendments that have a direct impact on the rising labour costs of companies. Both in personnel management and in expenses.
The main changes in this regard are as follows:
- 5 days for serious accident or illness. Going from 2 days or 4 days in case of displacement. For hospitalization or surgery without hospitalization requiring home rest of the spouse, domestic partner or relatives up to the 2nd degree of consanguinity or affinity. Including the blood relative of the domestic partner. As well as any other person other than the aforementioned, who lives with the employee in the same home and requires the effective care of the employee.
- The number of days of leave due to death is not modified. It remains at 2 or 4, depending on whether there must be a commute. However, it is extended to domestic partners or relatives up to the 2nd degree of consanguinity or affinity.
- New leave of up to 4 days. This entitles the employee to be absent due to force majeure when necessary for urgent and unforeseeable family reasons, in the event of illness or accident that make the immediate presence of the employee indispensable.
- 15 calendar days in the event of registration of a domestic partnership. Until now, this leave was only contemplated in the Workers’ Statute for marriages.
- The right to adapt the working day (à la carte working day) for workers who have care needs with respect to children over 12 years of age has been extended. Until now it was for children under 12 years of age. Applicable to the spouse or domestic partner, relatives by consanguinity up to the 2nd degree. As well as other persons dependent due to age, illness or accident when they live in the same household.
- It should be noted that the procedure for requesting an adjustment to the working day has also changed, with great impact for the company. Previously the negotiation period was 30 days and now it has been reduced to 15 days. If at the end of this 15-day period there is no reasoned opposition from the company, the leave will be presumed to have been granted.
- New unpaid parental leave. In fact, for practical purposes, it would be a “short-term leave of absence”. This “parental leave” for the care of a child or foster child for a period of more than one year, which can be taken until the child reaches the age of 8. This leave, of a duration not exceeding 8 weeks, continuous or discontinuous, is non-transferable and may be taken on a full-time or part-time basis. Although it is unpaid and non-contributory, it means the absence of the worker for a maximum of 8 weeks.
- The protection against dismissal, for objective or disciplinary reasons, derived from the enjoyment of reconciliation leave is extended. Including those introduced by this RDL and configures it as a cause of nullity.
- Scholarship holders and contribution. They are included within the Social Security system and, therefore, the obligation to pay contributions for students who carry out training internships or external academic internships included in training programs arises. This obligation will enter into force on January 1, 2024.
RDL 2/2023. Maximum contribution base and intergenerational equity mechanism
Capping and progressive rising of the maximum contribution bases. Establishing a staggered increase of the maximum contribution bases. This adjustment will take place from 2024 to 2050, taking the CPI as a reference and adding a fixed increase of 1.2% per year.
Take into consideration that this modification will come into effect on January 1, 2024, and also affects the rising labour costs.
This reduction will affect those companies with high-salaried employees. Specifically, the maximum contribution base for 2023 is €4,495.50 per month, or its equivalent in twelve payments of €53,946 per year.
It should be taken into account that the increase in costs would take place every year, from 2024 to 2050. Considering that the increase will vary according to the annual CPI.
Solidarity contribution for high incomes
The Social Security will implement a “solidarity contribution” for those incomes that, having exceeded the contribution limit, do not contribute the full amount of their salary.
In 2025, this contribution will be 1% of the portion of the salary in excess of the contribution limit. It will grow by 0.25 points annually, reaching 6% in 2045.
Although it is true that this cost is borne solely by the worker, it should be taken into account that it represents a reduction in the net remuneration to be received by the worker.
Increase in the Intergenerational Equity Mechanism (MEI)
The MEI in force since January 2023, by virtue of Law 21/2021 of December 28, will also experience a gradual increase of one tenth of a percentage point per year.
Unlike the current rate of 0.6% (0.5% paid by the company and 0.1% by the employee), this rate will double. It will reach 1.2% in 2029 and will remain at this rate until 2050.
RDL 1/2023: Employment hiring bonuses
This RDL 1/2023 has introduced a new system of labour hiring incentives. However, it is a real “slashing” of the bonuses for hiring. For example, a relatively frequent case in companies is the hiring of an interim employee to replace paternity/maternity leave. Until now, the bonus on the contributions of the interim and the worker on leave was 100%. However, now, the bonus is fixed at €366/month. Provided that the interim worker is under 30 years of age. Previously, there was no such age limit for the interim.
The following bonuses came into force on September 1, 2023:
- The indefinite-term hiring of persons with limited intellectual capacity will entitle them to a contribution rebate of €128/month for 4 years.
- Indefinite-term contracts involving the reinstatement of workers who have left the company due to total or absolute permanent disability. This will entitle the worker to a contribution rebate of €138/month for a period of 2 years.
- The indefinite-term hiring of women who have accredited the condition of victims of gender violence, sexual violence or human trafficking, sexual exploitation or labor exploitation, and women in contexts of prostitution. They will be entitled to a contribution bonus of €128/month for 4 years.
- 366/month for fixed-term contracts entered into to replace the worker in the following cases:
- With unemployed young people under 30 years of age. For substitution of the worker who is receiving economic benefits for risk during pregnancy or risk during breastfeeding.
- Fixed-term contracts entered into with unemployed young people, under 30 years of age, to replace workers who are receiving economic benefits for childbirth and child care. Or co-responsible exercise of the care of the worker’s breastfeeding child.
- Fixed-term contracts entered into with unemployed disabled workers to replace disabled workers whose employment contract has been suspended due to temporary disability.
- Contribution of the substituted employee during the receipt of the economic benefits for birth and care of minor, co-responsible exercise of the care of the minor or of the breastfeeding minor, risk during the pregnancy or risk during the natural breastfeeding, by means of the substitution contracts. A contribution rebate of €366/month will be applicable.
- Due to risk during pregnancy or risk during breastfeeding. The worker who is assigned to a different job or function that is compatible with her condition, will be applied, with respect to the contributions accrued during the period of permanence in the new job or function, a bonus in the contribution of €138/month.
- The indefinite-term hiring of workers in a situation of social exclusion will entitle them to a contribution rebate of €128/month for 4 years.
- Indefinite-term hiring of unemployed persons registered in the employment office for at least 12 months in the 18 months prior to the hiring. It will entitle to a contribution rebate of €110/month for 3 years. 128/month for 3 years, when these contracts are made with women or with people of 45 years of age or older.
- The training contract in alternation. It will give right, during its validity, including its extensions, to a bonus of 91 €/month. It will also entitle the employee to a bonus of €28/month on the employee’s social security contributions.
- The transformation of training contracts into indefinite-term contracts at the end of their initial or extended duration. Whatever the date of its conclusion, it will give right to a bonus in the contribution of €128/month for 3 years. In the case of women, this bonus will be €147/month.
- The transformation of relief contracts into indefinite-term contracts. Regardless of the date on which they are entered into. It will give right to a bonus in the contribution of €55/month during the following three years. In the case of women, this bonus will be €73/month.
- The transformation of temporary contracts into a fixed-discontinuous indefinite-term contract will entitle, during the following 3 years, to a contribution bonus of €55/month, or €73/month in the case of women.
Protocols at the company level
A series of more or less recent laws have established new obligations in terms of protocols for companies. These new compliance obligations entail a cost, both in terms of money and working time.
In money, since the drafting of these protocols in companies is usually carried out by other companies, firms or specialized consultants.
In time, since the implementation of these protocols is usually accompanied by training actions for employees.
Sexual and moral harassment protocol
Following the publication and entry into force of Organic Law 12/2022, of September 6, companies must promote working conditions that prevent the commission of crimes and other conduct against sexual freedom and moral integrity at work. And they must arbitrate specific procedures for their prevention and to channel complaints or claims. This must be negotiated with the legal representatives of the workers.
In addition, companies shall promote awareness and offer training for comprehensive protection against sexual violence to all personnel in their service.
LGTBI harassment and violence protocol
Following the publication and entry into force of Law 4/2023, of February 28 (Trans Law) companies with more than 50 workers must have from March 2, 2024, a planned set of measures and resources to achieve real and effective equality of LGTBI people, including an action protocol for the attention of harassment or violence against LGTBI people.
Following the publication and entry into force of Law 2/2023, of February 20, regulating the protection of persons who report regulatory infringements and the fight against corruption. It establishes the obligation to set up an Internal Information System and an internal information channel in companies with 50 or more employees. To enable the submission of information regarding serious or very serious criminal or administrative infringements or infringements of European Union Law.