Government moves to facilitate labor force reduction plans

New decree aims to speed up the process and afford more “legal securities”

The government has made amendments to the legislation governing collective labor force reduction plans (EREs) in order to speed them up and guarantee more "legal security" in the process.

According to a decree approved Friday by the Cabinet and published over the weekend in the BOE official gazette, the amendments limit the size of works committees formed to negotiate EREs and stipulate that in the case of companies with different centers of work there should be only one negotiating committee for the whole firm.

The labor reform introduced by the conservative Popular Party government of Prime Minister Mariano Rajoy made it easier and cheaper to sack workers and sparked a national strike. The overhaul of the legislation governing the labor market allows companies to slim down their workforce by alleging economic reasons such as a fall in sales or for technological and operative motives.

Workers dismissed under an ERE are entitled to 20 days' wages for every year worked up to a maximum of one year's salary. In the case of unfair dismissal, severance pay was reduced to 33 days' wages for every year of service up to a maximum of two years' salary, down from 45 days and a maximum of 42 months previously in place.

Companies have taken advantage of the reforms to reduce their workforces, swelling the ranks of the unemployed by about a million in the midst of the country's second recession in four years.

According to the National Statistics Institute's Active Population Survey (EPA), the number of people out of work fell below record levels of over six million in the second quarter of the year, although most of the jobs created were temporary and related to increased hiring to cover the peak tourist season. The jobless rate fell from just over 27 percent to 26.3 percent.

The decree insists that the modifications to the law are "crucial both for companies and workers" to enhance "legal security" in EREs, reduce litigation in their execution and in order to speed up their implementation.

Committees drawn up to negotiate EREs will have a maximum of 13 members. The decree also stipulates that although such committees should be formed before negotiations on an ERE begin, the absence of such a committee should not constitute an impediment to the start of talks between company management and workers.

Once the company has announced its intention to present an ERE, workers will have seven days to organize a negotiating committee, increasable to 15 days in certain circumstances.

The decree also states that multinational companies will no longer have to present consolidated accounts to justify an ERE in units they have in Spain except in the case that the parent company is headquartered in the country.

The decree also limits the right of individual workers to appeal decisions made in EREs to specific demands that have not been covered by the collective negotiations between works committees and management.

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