Law 3/2012 on urgent measures to reform the labour market (“Law
3/2012”) was enacted on 7 July 2012. Law 3/2012 replaces Royal
Decree-Law 3/2012 of 10 February, on urgent measures to reform the
labour market (“RDL 3/2012”).
The contents of Law 3/2012 are substantially similar to those of RDL
3/2012, although significant novelties have been introduced. Below is a
summary of these novelties.
MAIN ASPECTS OF THE REFORM
2.1. Paid leave for vocational training
The paid leave for vocational training of twenty hours per year,
introduced by RDL 3/2012, has been amended. The period during which paid
leave may accrue is increased from three to five years.
2.2. Distribution of working day
The number of hours that a company may distribute throughout the year
must not exceed 10% of the working day instead of the current 5%,
provided that no reference is made to this distribution in either the
collective agreement or the agreement between the employer and the
2.3. Definition of economic, technical,
organisational or production reasons
The definition of economic reasons in the context of the suspension
of a contract or the reduction of working hours (article 47 of the
Statute of Workers (“SW”)), the non-application of the conditions stated
in the collective agreement (article 82.3 of the SW) and collective
redundancies (article 51 of the SW) is amended stating that the constant
decline in income refers to “ordinary income".
In the same way, the constant decline of “ordinary income” or
“turnover” for two (in the case of employment contract suspension or
reduced working day and non-application of the conditions of the
collective agreement) or three consecutive quarters (in the case of
collective redundancies) must be proven in connection with the same
quarters of the preceding year.
Furthermore, a definition of the reasons for suspending a contract or
reducing working days is provided. Such definition was absent in RDL
3/2012 and is incorporated to article 47 of the SW, governing the
suspension of employment contracts or reduced working days for economic,
technical, organisational or production reasons or arising from force
Thus, there are “economic reasons” when the performance of the
company shows a negative economic trend, such as when there are current
or anticipated losses, or if there is a consistent decline in “ordinary
income” or “turnover”.
In any case, a decrease is considered to be consistent if “ordinary
income” or “turnover” figures show a decline in two consecutive
quarters, in comparison with the preceding year.
Likewise, for the purposes of the suspension of the employment
contract, or the reduced working day, technical reasons arise when there
are changes, among others, within the production systems and methods;
organisational reasons include, among others, changes in the IT systems
and the staff’s working methodology, or in the way in which production
is organised, and production reasons apply when there are changes, among
others, in the demand for products or services that the company intends
to place in the market.
2.4. Rule on linking temporary contracts
As regards the suspension until 31 December 2012 of the application
of the rule that makes temporary workers permanent, when they have been
employed for more than 24 months, in a period of 30 months, by means of
two or more temporary contracts, as provided in article 15.5 of the SW.
The period of time between 31 August 2011 and 31 December 2012 is
excluded from the computation of the 24 and 30-month terms, regardless
of whether the worker has provided services in that period. The terms
before and after the mentioned dates will be taken into account for
2.5. “Ultra-activity” of collective agreements
Law 3/2012 has reduced the applicable term of collective agreements
that have been extended under the “ultra-activity” principle (indefinite
extension of a collective agreement until a new agreement is signed)
from two years to one.
2.6. Collective redundancies
Law 3/2012 introduces numerous amendments to the regulation of
collective redundancies and to the procedure to challenge redundancies.
Firstly, it refers to a future regulation that will set out the
documentation to be included in communications to employee
representatives and labour authorities to start the consultation period,
in order to evidence the dismissal reasons, including a report and other
information referred to in article 51 of the SW.
Secondly, the company and employee representatives may agree to
substitute the consultation period with mediation or arbitration at any
time. During the consultation period, the labour authority may carry out
any mediation proceedings that might be advisable upon a joint request
by the parties.
Thirdly, the employer may bring an action in order to have its
decision declared in conformity with the law if it has not been
challenged by the employee representatives.
2.7. Individual dismissals due to objective
Law 3/2012 amends paragraph d) of article 52 of the SW, governing the
termination of employment contracts due to absenteeism. This includes
those that are justified even if they are intermittent, amounting to 20%
of the working days in two consecutive months or 25% in four
non-consecutive months within a period of twelve months. In the first
case, the total absences in the previous twelve months must be
equivalent to 5% of the working days.
In this regard, non-attendances to receive medical treatment for
cancer or due to a serious illness are not considered absences.
2.8. Tax regulation of unfair dismissal
compensation between the entry into force of Royal Decree 3/2012 and Law
Any compensation awarded in dismissals that took place between the
entry into force of Royal Decree 3/2012 and Law 3/2012, are exempt from
taxation if the compensation does not exceed the amount that the
employee would have received had the dismissal been declared fair, when
the employer recognises it at the time when the dismissal is
communicated or at any other time before the settlement act, and
provided they are not mutually agreed terminations under collective
redundancy schemes or plans.
Compensation for dismissals resulting from collective redundancy
agreements that are underway or applicable as at 12 February 2012 that
would have been approved by the competent authority after 8 March 2009,
will be exempt in an amount not exceeding 45 days of salary per year of
service, prorated monthly for periods of under a year, up to a maximum
of forty-two months.
2.9. Nullity of compulsory retirement clauses in
The tenth temporary provision of the Statute of Workers has been
amended to render void clauses in collective agreements stating that a
contract is terminated once the worker has reached the retirement age
established by the social security regulations, regardless of the extent
and scope of such clauses.
ENTRY INTO FORCE
Law 3/2012 of 6 July, on urgent measures to reform the labour market,
entered into force on 8 July 2012.