Date: 6 March, 2014

Categories: English Labor Law

Royal Decree-Law 3/2014, of 28 February, on urgent measures to promote employment and indefinite employment contracts

The Royal Decree-Law 3/2014, of 28 February, published last March 1, provides a wide range of urgent measures to promote employment and indefinite employment contracts.

The most important measure is without doubt the reduction of social contributions in order to promote the net creation of stable employment.

All companies will benefit from the aforesaid measure, regardless of their size and whether the recruitment is full or part time, with respect to contracts executed between  February 25, 2014 and December 31, 2014, provided that it involves net job creation.

The company’s contribution for common contingencies will amount Euro 100 per month, in case of full-time contracts, and Euro 50 or 75 per month on part time contracts depending on the days of work performed.These reductions will apply generally for a period of 24 months, and during the following 12 months, companies with less than 10 employees will also be entitled to obtain a reduction of 50 % of contributions for common contingencies corresponding to the employees indefinitely hired.

The requirements to be met by the companies are the following: 

  • To be up to date regarding their tax and social security obligations.
  • Not having been excluded from access to the benefits of employment programs by the commitment of certain serious or very serious offenses. 
  • To maintain the total and indefinite employment achieved with such employment. 
  • Not having terminated employment contracts for objective reasons, for disciplinary dismissals which have been declared inadmissible in court or for collective dismissals. (This requirement will only affect extinctions carried out as of February 25, 2014). 

Some particular cases will be excluded of the application of the measure, namely: 

  • Special employment relationships. 
  • Hiring workers whose activity determines their inclusion in any of the special systems established in the General Social Security Plan. 
  • Recruitment of certain relatives of the employer (however in order to encourage the hiring of younger workers, the reduction will be applied in the event that the person hired is a child of a self-employed worker, under 30, or over that age if they have particular difficulties in their employment . 
  • Hiring workers who have been employed in other companies within the same group of companies and whose contracts have been terminated for objective reasons, for disciplinary dismissals which have been declared as inadmissible in court or for collective dismissals, within the six months immediately preceding to the date of execution of the contracts which allow the reduction (this will not be applicable to extinctions that occurred prior to February 25, 2014). 
  • Recruitment of workers who in the six months immediately preceding to the date of execution of the contract have been employed in the same company or entity by means of an indefinite contract. 

Finally it is important to bear in mind that if the employer fails to meet the requirements for the application of these reductions, he will be obliged to reimburse the corresponding amounts that were not duly paid.

 

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