Parliament passes the new Employment Act

The plenary of the Congress of Deputies gave final approval on Thursday 16 February 2023 to the new Employment Act, after accepting the five amendments introduced in the Senate. The law, awaiting publication in the Official State Gazette, replaces the consolidated text in force, organises the National Employment System and transforms the State Public Employment Service, until now an autonomous body, into a state agency named the Spanish Employment Agency.

It is not a law to be read only in terms of employment policy. It contains decisions that affect companies’ daily work: how collective dismissals are processed, how much of a salary can be seized, or what services they can claim from public employment services. The law is part of the reforms committed to the European Union in the Recovery Plan. Its passage has therefore been tied to the commitments of that plan.

An agency and a system

The Spanish Employment Agency replaces the SEPE with a legal regime that is more flexible in organisation and management. The National Employment System comprises the state agency and the regional employment services, supported by partner bodies: town councils, social partners, placement agencies and training centres. The change from autonomous body to state agency aims to give the entity more management flexibility.

The law sets out a catalogue of guaranteed services for job seekers and also for companies and other employers, and plans to modernise the Single Employment Portal with tools such as artificial intelligence. It also identifies priority groups, including victims of gender violence, people with disabilities and trans people. The text also provides for continuous, external and independent evaluation of employment policy.

Collective dismissals and the minimum wage

The law amends article 51 of the Workers’ Statute: the Labour Inspectorate’s report in a collective dismissal, which must be issued within fifteen days, in addition to checking the notification and the consultations, will pronounce on whether the causes specified by the company exist and will verify that the documentation submitted matches what is required. For companies, it means taking the greatest care over the explanatory report and financial documentation in the file. The law does not change the grounds for collective dismissal, which remain economic, technical, organisational or production-related.

Another change affects payroll: the national minimum wage, in both annual and monthly amount, is unseizable. If an extra payment is received alongside the monthly salary, the unseizable limit will be twice the monthly minimum wage. Payroll departments will need to adapt deductions for court and administrative attachments to this rule. It is worth checking how the attachable amount is calculated when extra payments are spread across the year and when they are not.

What to review

In companies undergoing restructuring, it is worth reviewing how collective-dismissal files are prepared and the quality of the accounting and technical documentation behind them, since the Inspectorate will analyse the causes. In those that apply payroll attachments, calculation programs and internal procedures should be checked.

It is also useful to find out about the services the law guarantees to companies and the priority groups for employment policy, in case they match hiring needs. Until it is published, the text may be corrected; this note is informational and your employment adviser can pin down the effects in your case. The law also regulates labour intermediation and the role of placement agencies, which selection and outplacement firms should bear in mind.

An employment law that seems institutional ends up affecting each company’s payroll and dismissals.

This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.