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1. INTRODUCTION
Royal Decree-Law 5/2013 of 15 March on measures to extend the working
life of older workers and to promote active ageing (“RDL 5/2013”)
was enacted on 16 March 2013. RDL 5/2013 is intended to continue the
reforms and proposals initiated in 2011 concerning the adaptation of the
retirement system to demographic changes in life expectancy. To that end,
RDL 5/2013 is designed to encourage active ageing and counter age-based
discrimination.
RDL 5/2013 incorporates recommendation twelve of the report on the
Toledo Agreement (Pacto de Toledo) adopted by the plenary
session of the Spanish parliament convened on 25 January 2011.
Recommendation twelve: (i) places greater emphasis on workers’ social
security contribution periods in order to narrow the gap between actual
retirement ages and the statutory retirement age; (ii) restricts early
retirement eligibility to workers with long social security contribution
periods; and (iii) makes it easier to earn a salary at the same time as
claiming retirement benefits.
In order to manage active ageing more effectively, RDL 5/2013
introduces measures to combat age-based discrimination in the labour
market. To that end, RDL 5/2013 makes extensive changes to the
contributions that must be made by profitable companies that make
workers aged 50 or over redundant.
In addition, RDL 5/2013 establishes important provisions regarding
the non-application of collective bargaining agreements in autonomous
regions, and collective redundancies in public-sector companies and
credit institutions receiving aid from the Spanish Fund for Orderly Bank
Restructuring (Fondo de Reestructuración Ordenada Bancaria, or
FROB).
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2. MAIN ASPECTS OF THE REFORM
2.1. Compatibility of retirement benefits and work-related income
Chapter I (articles 1 to 4) of RDL 5/2013 regulates the compatibility
of working while receiving retirement benefits. According to the
preamble, these provisions are intended “to promote the lengthening of
the active working life, to strengthen the social security system’s
sustainability and to take better advantage of workers’ knowledge and
experience.”
These provisions apply to all the social security schemes with the
exception of the civil service pensioners scheme, but do not affect
other provisions on the compatibility of working while receiving
retirement benefits.
Specifically, RDL 5/2013 establishes the possibility of being
considered an “active pensioner” (making it compatible to work at the
same time as receiving state retirement benefits), provided that the
following conditions are met: (i) the worker’s right to retirement
benefits vested when the worker had reached the statutory retirement age;
and (ii) the worker has accrued 100% of the regulatory base of the
retirement benefits.
An individual may work as an employee or a self-employed worker, on a
full or part-time basis, and at the same time receive 50% of his or her
retirement benefits, during this time he or she would be considered a
pensioner for all purposes. Once the pensioner ss working, his or her
full retirement benefits will be restored.
Companies and the active pensioners they employ will only pay social
security contributions for temporary incapacity and professional
contingencies. RDL 5/2013 introduces a special “solidarity” contribution
of 8% that will not count towards determining the active pensioner’s
entitlement to benefits (6% will be paid by the company and 2% by the
employee).
Finally, the First Additional Provision of RDL 5/2013 establishes
that companies cannot have dismissed anyone unfairly in the six months
prior to employing an active pensioner if the dismissals were carried
out following the entry into force of RDL 5/2013 and the active
pensioner is taken on to fill a post in the same professional category
as that of the employees who were dismissed. Furthermore, RDL 5/2013
provides that the company must maintain certain levels of employment
during the term of the active pensioner’s contract.
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2.2. Early retirement
RDL 5/2013 maintains the classification of early retirement
established in Law 27/2011 (mandatory when it is not attributable to the
worker and voluntary when it is at the worker’s request) and gradually
increases the minimum age for early retirement in line with the current
legal framework.
Specifically, the mandatory early retirement age will be increased
gradually from the current age of 61 to 63 by 2027. The voluntary early
retirement age will increase from the current age of 63 to 65 by 2027.
|
Requirements |
Mandatory early
retirement |
Voluntary early
retirement |
| Minimum age limit |
Progressively until 63 years
old |
Progressively until 65 years
old |
| Minimum contribution period |
33 years |
35 years |
The reduction coefficients are increased as follows.
A. Mandatory early retirement
Retirement benefits will be reduced by applying the following
coefficients for each quarter or fraction of the same that, upon early
retirement, remain for the worker to reach the statutory retirement age:
|
Contribution periods |
Reduction coefficients (%) |
| Less than 38 years
and six months |
1.875 |
| Between 38 years
and six months and 41 years and six months |
1.75 |
| Between 41 years
and six months and 44 years and six months |
1.625 |
| More than 44 years
and six months |
1.5 |
B. Voluntary early retirement
Retirement benefits will be reduced by applying the following
coefficients for each quarter or fraction of the same that, upon early
retirement, remain for the worker to reach the statutory retirement age:
|
Contribution
periods |
Reduction
coefficients (%) |
| Less than 38 years and six
months |
2 |
| Between 38 years and six
months and 41 years and six months |
1.875 |
| Between 41 years and six
months and 44 years and six months |
1.75 |
| More than 44 years and six
months |
1.625 |
For both mandatory and voluntary early retirement, the worker’s
statutory retirement age will take into account the age at which the
worker could have retired had he or she not taken early retirement. The
contribution periods will be calculated based on complete periods,
excluding any fraction of the same.
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2.3. Partial retirement
The new partial retirement regulations seek to encourage generational
change and reduce the use of partial retirement as a mere avenue to
early retirement.
Workers who reach retirement age and are eligible for retirement may
take partial retirement without the employer having to take on a new
employee under a hand-over contract. In contrast to the previous
regulations, which allowed the worker taking partial retirement to
reduce his or her working hours by up to 75%, RDL 5/2013 establishes a
maximum reduction of 50%.
As under the previous system, workers who are not yet eligible for
full retirement may also take partial retirement if the employer takes
on a new employee with a hand-over contract. Nevertheless, RDL 5/2013
makes some important modifications to the current system, including the
following:
(i) It introduces a progressive scale of eligibility for partial
retirement (replacing the prior requirement of “having reached 61 years
of age”). Under the new scale, the age for eligibility ranges from 61 in
2013 (if the worker has made contributions for at least 33 years and
three months) to 63 in 2027 (if the worker has made contributions for at
least 36 years and six months).
(ii) The employee wishing to take partial retirement must have made social
security contributions for at least 33 years, an increase of three years
on the previous threshold.
(iii) Hand-over contracts must be full time and permanent with a minimum
term of at least two years after the full retirement date of the
employee taking partial retirement. The failure to satisfy these
conditions will mean the employer must repay the retirement pension that
the partially-retired worker has received.
(iv) The maximum reduction in working hours is decreased by 10%, from 85
to 75%.
As would be expected, RDL 5/2013 also modifies provisions relating to
hand-over contracts (paragraphs 6 and 7 of article 12 of the Statute of
Workers (“SW”)) in order to make them consistent with
the new partial retirement regulations.
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2.4. Contributions to the Treasury by profitable companies that make
workers aged 50 or over redundant.
Chapter IV of RDL 5/2013 provides measures to prevent discrimination
of older workers in collective redundancies (article 10 RDL 5/2013)
carried out from 1 January 2013 onwards. As a consequence, amendments
have been made to the sixteenth additional provision of Law 27/2011 and
to Royal Decree 1484/2012 of 29 October on the financial contributions
to be made by profitable companies that carry out collective
redundancies affecting workers aged 50 or over (“RD 1484/2012”)
The main changes are as follows: (i) a condition has been established
whereby the degree to which workers aged 50 or over are affected by the
redundancy measure is greater than that of workers under that age, and (ii)
the company or group of companies must have made profits over a period
of four years.
Neither RD 1484/2012 nor Law 27/2011 established a condition that a
higher number of workers aged 50 or over must be affected. In the
legislation applicable until now, the collective redundancy must have
affected workers aged 50 or over and the company must have made a profit
in the two previous financial years for it to be obliged to make
contributions to the Treasury.
The new rule establishes that the number of workers aged 50 or over
who are made redundant as a percentage of all the workers made redundant
must be higher than the percentage of the total workforce that workers
aged 50 or over represent at the time the redundancy procedure is
initiated.
Furthermore, RDL 5/2013 states that workers aged 50 or over whose
employment contracts were terminated for reasons not inherent to the
workers themselves (on grounds other than those provided under 49.1.c of
the SW) during the three years prior to the collective redundancy and
the twelve months following it, must be included in the calculation.
The term during which profits must be made to be obliged to make
contributions to the Treasury has also been modified. The condition that
the company or group of companies must make a profit is met in the
following situations:
a) The company or the group of companies has made profits in the two
financial years immediately before the year in which the collective
dismissal takes place; or
b) The company or the group of companies has made profits during two
consecutive financial years over the period ranging from the year before
the initiation of the collective redundancy procedure and the four years
after the procedure is initiated.
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RDL 5/2013 uses the definition of profits in article 2 RD 1484/2012.
A company makes a profit when the result of the financial year (according
to the profit and loss account templates provided in Royal Decree
1541/2007 of 16 November, which approves the Spanish General Accounting
Plan) is positive.
The basis for calculating contributions to the Treasury is the same
as that set out in article 3.1 RD 1484/2012, except as regards amounts
paid by the Public State Employment Service for workers aged 50 or over
whose employment contracts were terminated for reasons not inherent to
the workers themselves (on grounds other than those provided under
article 49.1.c of the SW) during the three years before the collective
redundancy, the year after the collective redundancy under the amended
legislation.
The coefficient that will determine the total amount to be
contributed depends on the number of workers aged 50 or over who are
affected, the percentage that the company’s profits represent of its
income, and on the total number of workers in the company.
In relation to the profits taken into account to determine the
coefficient, RDL 5/2013 establishes a system that depends on whether the
profits arose over the two financial years before the collective
dismissal, or over two consecutive years during the year before the
collective redundancy procedure started and the four subsequent years.
With regard to the obligation to inform the labour authorities, RDL
5/2013 introduces a specific provision for cases where profits are made
in the year before the collective redundancy starts and the four years
after the collective redundancy. The labour authorities must be informed
before the end of the financial year subsequent to the year in which the
profit requirement is met.
In this regard, RDL 5/2013 establishes a new serious labour
infringement under article 8.18 of the Law on employment-related
infringements and penalties, approved by Royal Legislative Decree
5/2000, of failing to inform the labour authorities in due form that a
company meets the requirements to make contributions to the Treasury.
Presenting inaccurate or false information is also a serious
infringement.
The duty to make contributions to the Treasury continues in the event
that, before the collective redundancy or dismissals (not based on
grounds provided under article 49.1.c of the SW), the employer had
temporarily suspended employment contracts in accordance with article 47
of the SW, and provided that no more than a year passes between the end
of the temporary suspension of contracts and the termination of each
employee’s employment contract. In this case, workers will be considered
aged 50 or over if they were that age when the temporary measures were
adopted.
Public sector bodies, authorities and entities not classed as public
authorities are considered companies subject to the obligation to make
contributions to the Treasury.
The procedure to calculate and pay contributions is pending
regulatory development.
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2.5. Application of the retirement rules in force before 1 January 2013 to
workers whose employment contract was terminated in a collective
redundancy, or who joined partial retirement plans before that date.
The fifth final provision of RDL 5/2013 modifies the retirement
pension system in force before 1 January 2013 for workers whose
employment relationship was suspended or terminated as a consequence of
temporary employment contract suspensions, collective redundancies,
collective agreements or insolvency proceedings agreed before that date.
Until the entry into force of RDL 5/2013, article 4 of Royal Decree
1716/2013 of 28 December, which develops the provisions on benefits set
out in Law 87/2011 regulating the retirement system in force before 1
January 2013, was only applicable to (i) collective redundancies carried
out before 2 August 2011 and (ii) partial retirements granted before 2
August 2011.
After the entry into force of RDL 5/2013, the system in force until 1
January 2013 will continue to apply to suspensions and terminations
approved before 1 April 2013, regardless of whether they take place
before or after that date. For this provision to apply, one condition
needs to be fulfilled: the affected workers, the employee or union
representatives, or the companies must inform the National Social
Security Institute (“NSSI”)of the terminations and
provide it with a copy of documents evidencing the grounds for the
terminations before 15 April 2013.
RDL 5/2013 also allows the previous retirement system to be applied
to persons who opted for partial retirement before 1 January 2013 and
persons who joined partial retirement plans approved before that date
through collective agreements. The NSSI must be provided with a copy of
these partial retirement plans before 1 April 2013, although this does
not prevent employees covered by these plans from taking partial
retirement after this date. The documentation submitted must include a
statement from the company confirming the identity of the workers who
have joined the retirement plan before 1 April 2013.
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2.6. Entitlement of members of worker cooperatives covered by the General
Social Security Regime to take partial retirement under the same
conditions as employees.
As from the entry into force of RDL 5/2013, the members of worker
cooperatives will be able to take partial retirement under article 166.2
of the General Social Security Law (“GSSL”). They must
meet three conditions: (i) they must be registered with the Social
Security system in a special regime as “assimilated” to employees; (ii)
they must reduce their working hours and economic rights in accordance
with article 12.6 of the SW; and (iii) they must meet the requirements
established in article 166.2 of the GSSL.
The provisions on hand-over contracts will be applied when a fixed
term member or an unemployed person is contracted to cover the hours not
worked by the member who opted for partial retirement.
2.7. National Consultative Commission for Collective Agreements’
jurisdiction to resolve disputes on the non-application of conditions
established in collective agreements which scope of application is
restricted to one autonomous region.
The sixth additional provision of RDL 5/2013 establishes that the
National Consultative Commission for Collective Agreements (“NCCCA”)
is competent to hear requests made by companies and employee
representatives to resolve disputes arising in the absence of an
agreement, on the non-application of working conditions established in a
collective agreement, if (i) such non-application only affects
workplaces located in one autonomous region, and (ii) in the three-month
period since the entry into force of RDL 5/2013 the autonomous region
where the workplaces are located has not created a tripartite body
equivalent to the NCCCA. In these cases, the NCCCA will have
jurisdiction until the autonomous region establishes its own tripartite
body equivalent to the NCCCA.
3. Entry into force.
RDL 5/2013 entered into force on the day after its publication, that
is, 17 March 2013. However, it is important to check its transitory
provisions and, specifically, those related to retirement pensions
brought about by the modification of section 2 of the twelfth final
provision of Law 27/2011.
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1. INTRODUCTION