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backEUROtalk February, 2012
Newly Elected Spanish Government Expected to Grant Companies more Power to Opt Out of Industry Collective Bargaining Agreements and to Increase Flexibility in an Attempt to Curb the Staggering Unemployment Rate in Spain
The Spanish political party Partido Popular, known as the "PP" won Spain's national elections last November 20, 2011, by an ample majority. The PP's leader, Rajoy, is expected to be chosen by Parliament as Spain's new President on or about December 19 and have his new government in place a few days later. With a current increasing unemployment rate of over 21% in Spain, and with the OCDE foreseeing an unemployment rate of 23% in 2012, the PP is wasting no time in preparing for its upcoming role in the government and its intended legislative changes.
On November 28, 2011, the presidential candidate met with union leaders and with trade association leaders to encourage them to reach an agreement on the upcoming employment and labor law amendments. The soon to be president Rajoy announced that the union and company leaders have until January 6, 2012, to present the government with any agreements they may have reached on a variety of matters, while warning that even if they ultimately do not reach any agreements, the new government will proceed with its substantial amendments to employment and labor laws.
Although it is not entirely clear exactly what specific measures the new government will implement, the new impending government has announced it intends to facilitate companies' ability to opt out of territorial or industry level collective bargaining agreement. In this respect, the PP has indicated its desire to allow company level collective bargaining agreements to prevail over territorial or industry level collective bargaining, which currently are for the most part mandatory for companies in the applicable sector and territory. Under current law, recently modified by the socialist government in 2011, companies can opt out of CBA provisions regarding work time schedules and job category definitions, but not out of other provisions such as maximum annual work hours, changes to job duties and other significant industry level CBA provisions. The PP is expected to increase the types of matters that company level collective bargaining agreements can regulate locally by opting out of the Industry CBA provisions, particularly provisions on maximum work hours, changes to job duties, part time contracts and other contracts regulated by industry level CBA's.
Although not yet clear, suggestions have also been made that companies which may not have a works council or any employee representatives may in the future be permitted to reach local company level collective bargaining agreements. Consequently, even very small companies with a few employees might be able to opt out of the otherwise generally applicable industry or territorial CBA negotiated by the national or regional trade unions. Suggestions have also been made that the PP may even try to pass legislation that allows companies to opt out of CBA's without an agreement with their employees, with the approval of the National Consulting Commission on CBA's (made up on government labor officials, and union and trade association representatives).
In addition, the PP has expressed its desire to increase the use of mediation and arbitration as a means of resolving labor disputes in Spain and reducing the highly congested court system. The socialist government already modified the law with its reform in 2011, to require that industry level CBA's establish mechanisms to resolve disputes between the parties and to require CBA's to include binding arbitration as an alternative mechanism to resolving conflicts, but the PP is expected to go further in promoting these alternative dispute resolution mechanisms.
Aside from the desire to increase flexibility in labor negotiations and agreements and to find alternative means of dispute resolution, the PP has announced intended measures to simplify contracting in Spain, with a serious indication of a possible reduction in severance costs for new employment contracts that are entered into, increasing flexibility in training contracts and part time contracts, deregulating temporary employment agencies, as well as other measures, including possible further regulation and clarification of the rules applicable to strikes or even a possible new law to replace the current law which is considered to be somewhat deficient.
The specific provisions that the PP will be legislating will depend in part on the outcome of negotiations to be held between the unions and trade associations by early January, but regardless of the outcome of those negotiations, it seems clear that significant changes will be implemented to respond to company needs and interests in an attempt to resolve the dramatic unemployment situation in Spain.
Source: Baker & McKenzie - GAI
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