Bauzá: “More and more companies will opt for a hybrid work model.”

Silvia Bauzá, a partner in Allen & Overy’s employment and benefits practice, discusses the challenges Spanish employers face in the wake of the government’s new labor regulations.

Posted Wednesday, April 20th 2022
Bauzá: “More and more companies will opt for a hybrid work model.”

LL: Has there been any further legislative developments in the past year to protect employees?

Bauza: Yes. In December 2021, a labor reform was carried out. Employment contracts are now presumed to be indefinite as a general rule and the causes, assumptions, and duration of fixed-term and training contracts are limited, giving greater relevance to discontinuous fixed contracts. In addition, fines have been increased for inappropriate hiring contracts.

The priority application of a company's collective bargaining agreement with respect to wages has been eliminated unless the collective bargaining agreement is not concurrent with a sector collective bargaining agreement. Therefore, the wages established in the sector collective bargaining agreements will be considered minimum wages.

In relation to subcontracting, the collective bargaining agreement applicable to contractors and subcontractors will be, in general, that of the sector of the activity carried out in the contracting or subcontracting companies, regardless of its corporate purpose.

With respect to collective bargaining, the automatic application of the higher collective bargaining agreement when the negotiating parties fail to reach an agreement within one year has been eliminated.

A new rule for Record of Temporary Employment Regulation (“ERTEs”) has been established, including new types aimed at preventing the destruction of employment during periods of national or sectorial crisis.

Likewise, in July 2021 a new law on remote working and delivery riders introduced a presumption that workers providing services consisting of the delivery or distribution of consumer products bought through a digital platform are to be considered employees.


What are the challenges companies are facing as a result of the new labor law going into effect in March 2022?

The main challenge that companies based in Spain will face as a result of the labor reform is adapting to the new hiring regulations, due to the limitation on temporary contracts. Companies will have to make a considerable effort to adapt their hiring processes to comply with the new regulations on temporary contracts in order to avoid sanctions or the conversion of such contracts into permanent contracts. This new regulation will not only require adaptation from a human resources point of view, but also from a financial point of view, especially for companies whose business models depend on a large number of temporary contracts.

In addition, companies that took advantage of the 2008-09 economic crisis to reduce wages through collective bargaining agreements will now potentially have to raise wages in order to bring them in line with the collective bargaining agreements for their sectors (in cases where the new regulations strip their corporate collective bargaining agreements of priority over those of the sector).  

Another challenge companies are facing is the application of the new remote working regulation. This law requires companies to bear the costs arising from remote working but does not specify which costs the company must assume nor how they are to be calculated. Under the new law, these issues are to be detailed by the respective collective bargaining agreements and it has not been easy for companies to come to agreements with workers’ representatives on them.

Companies will have to make a considerable effort to adapt their hiring processes to comply with the new regulations on temporary contracts.

How have Spanish companies managed remote working? Is this a practice that will continue into the future?

Spanish companies are beginning to offer their employees the opportunity to work remotely. The majority of companies have opted to implement a model that is more oriented towards flexible working hours than towards "regular" remote working as defined by the Remote Working Law. In short, this means that employees are given the option to work remotely one day per week (or the equivalent for part-time employees) so long as less than 30% of their working hours for full-time employees (or the equivalent for part-time employees) over a period of three months. This framework allows companies to offer their employees the opportunity to enjoy the benefits of working remotely without creating a disproportionate increase in operating costs or having to engage in difficult negotiations with workers’ representatives.

At the same time, the experience during the most difficult moments of the pandemic has made some companies see that remote working is desirable for both parties and gives them the opportunity to reduce the amount of space required in their offices. This has led some companies to move more aggressively toward remote work, with the percentage of remote working ranging from 80% to 100%. Companies that have completely eliminated their office spaces now face uncertainty regarding whether their decisions will be considered legal by the Spanish courts, as it prevents employees who choose to work at the office from doing so.

In any case, remote work has been going for some time. Although it is true that a certain minimum amount of work will continue to be performed at the office, in the future more and more companies will opt for a hybrid work model that combines work on-site at the office and remotely. Spanish labor regulations will likely continue to evolve along these lines.

To date, several collective bargaining agreements (e.g., the State Collective Bargaining Agreement for Financial Credit Establishments) already include specific provisions on remote working, and it is to be expected that in the future the number of collective bargaining agreements that do so will increase.


What are the most common labor disputes your clients are facing now?

In 2021, the number of labor disputes with employees arising from their refusal to return to the office after the end of the Covid-19 healthcare crisis increased. In addition, the number of "normal" legal proceedings that our clients have historically faced (illegal assignment of employees, dismissals, protection of fundamental rights, collective disputes, etc.) have continued on a daily basis.

Our clients have also started to face challenges regarding the development, negotiation, and implementation of equality plans in order to comply with the provisions included in Royal Decree 901/2020 from October 12 and avoid potential sanctions from labor regulators. In the future, we expect the changes introduced by the labor reform will result in an increase in labor disputes and investigations into temporary contracts and wages.