Spain: Labor Law: Could Government Changes Increase Employers’ Costs?

Many thanks to our Spanish Partner, SARE, for providing this article.

It has been a very short time since the new socialist government was elected in Spain. Some have been considering the impact on employer costs this change many cause, but it´s not easy to have a clear idea of what exactly any reform would bring.

 

It´s true that the new Labor Minister talks of a complete rethinking specially regarding collective bargaining and the unions’ roles, and Spain’s 2012 labor reforms could be overturned. If that happens, costs for employers could indeed increase. Labor reform and pensions specifically are two key issues for the new government to debate. However, with regards to pensions it is expected they will wait for the outcomes of the upcoming Toledo Pact Commission to avoid unnecessary challenges as long as possible.

 

With regards to the 2012 labor reform, the Prime Minister’s opposition to it was clear. However, the Prime Minister’s party is ruling in minority, and the supporting parties who helped the new Prime Minister get into office, may not clearly support him to modify a norm with good results.

If reform comes, it may look at two important areas: dismissal cost and collective negotiation (with various issues such as priority of Company Agreements over Sector Agreements or dropping out of Sector Agreements). Current dismissal costs of 20, 33 or 45 days per year generates great controversy, but if Trade Unions role under a collective agreement, this issue could become an even hotter topic.

 

In summary, with new government leadership some changes may occur to increase employers’ costs, but the scope is far from clear at this stage.