Yesterday the Spanish government barely approved a labor reform that will go into effect starting tomorrow, although the Decreto Ley that the Cabinet approved will have to go through parliament as the Proyecto de Ley en el Parlamento in order to add amendments.
Deputy Prime Minister Soraya Sáe de Santa María and Minister of Employment Fátima Báñez called the reform "complete and very important" and that it is being supported by two basic themes: reducing the costs associated with layoffs and collective bargaining.
In regard to layoffs, the labor reform aims to generalize 20-day severance packages that correspond to a year of work and do away with a layoff type called "despido exprés," something that companies have used as an alternative to fair firing and has a severance period of 45 days and 42 monthly payments.
From now on, companies could have to first present proof that a layoff results for fair and objective reasons (a method which only provides 20 days of severance and 12 monthly payments) without needing prior administrative authorization. Spokespeople from the Ministry of Labor explained that with this measure the worker will have to appeal to a judge in order to prove whether a layoff is unfair.
The reform also eliminates salarios de tramitación, a form of salary that workers can earn during the dispute period following a dismissal. Fear of this salario was the main reason behind 60% of layoffs in Spain resulting in despido exprés, except in cases where workers are allowed to continue working should they prove unfair dismissal. The reform also abolishes prior authorization "in line with practices upheld in other EU countries."
The Decreto Ley approved yesterday ensures that severance paid for unfair layoffs of full-time workers will be for 33 days with a maximum of 24 monthly payments, replacing the current 45-day severance pay which is administered through 42 monthly payments.
Workers who have normal full-time contracts and get fired for unfair reasons will receive 45-days severance until the new law goes into effect. At that point, 33-day severance will kick in.