Labor laws in Spain, News

Labor Contract Incentives in Spain under Royal Decree-Law 1/2023

October 5, 2023

Introduction

Dear client, we want to inform you that as of September 1, 2023, the Royal Decree-Law 1/2023 of January 10, on urgent measures regarding labor contract incentives and the improvement of social protection for artists, has come into effect in Spain.

This decree aims to address the issues identified in the current legal framework by integrating, organizing, and updating incentives aimed at promoting labor contracts, as well as other measures that enhance and maintain employment stability and quality through Social Security contribution discounts.

One of the novelties introduced by the Royal Decree-Law is the inclusion of new requirements that beneficiaries of the provided incentives must meet.

These requirements include being up to date with tax payments and Social Security contributions, not being disqualified from receiving subsidies and public assistance, and having an equality plan in place if required.

Furthermore, the regime for benefit refunds has been modified.

Beneficiaries who do not meet the required criteria and fail to fulfill the obligations outlined in articles 9 and 12 must repay all outstanding amounts with corresponding surcharges and late fees.

While most of the existing bonuses until September 1, 2023, have been repealed, those that remain have undergone changes.

Among the modified incentives, we find those related to individuals employed in domestic service, which entitle the employer to a 45% or 30% reduction in the employer’s contribution to Social Security for common contingencies under the Special System for Domestic Employees, provided that the requirements related to the employer’s assets and/or income of the family or cohabitation unit of the employer are met, as defined by regulations.

Also, incentives have been provided for individuals with disabilities, research personnel, insertion companies, and cases involving the replacement of victims of gender or sexual violence.

Thus, the incentives outlined in the aforementioned Royal Decree-Law are detailed in the table below under the heading “Labor contract incentives according to Royal Decree-Law 1/2023, of January 10, on urgent measures regarding labor contract incentives and the improvement of social protection for artists.”

Contract Type Collective Bonus Duration

Indefinite Contracts

Individuals with intellectual capacity limit €128/month 4 years
Rehiring of workers after ceasing employment due to permanent total or absolute incapacity, or permanent disability (provided rehiring is not a worker’s right) €138/month 2 years
Individuals over 55 with permanent disability rejoining their company in another category
Individuals over 55 who have regained capacity and can be hired by another company
Female victims of gender-based violence, sexual violence, and human trafficking, both for sexual and labor exploitation €128/month 4 years
Workers in situations of social exclusion €128/month 4 years
Workers in situations of social exclusion hired by employers other than insertion companies during the first 12 months after ending a contract with an insertion company, provided they have not worked for another employer for more than 30 days after leaving that company €147/month during the first 12 months, €128/month for the remaining time to complete 4 years 4 years
Unemployed individuals registered with the employment office for at least 12 months in the 18 months prior to hiring €110/month 3 years
Unemployed individuals registered with the employment office for at least 12 months in the 18 months prior to hiring, women, or individuals aged 45 or older €128/month 3 years
Victims of terrorism €128/month 4 years
Workers with disabilities €375/month Entire contract duration
Workers with disabilities who are 45 or older at the time of hiring or women €100/month increase if they are 45 or older, €70.83/month increase if they are women Entire contract duration
Workers with severe disabilities €425/month Entire contract duration
Workers with severe disabilities who are 45 or older at the time of hiring or women €100/month increase if they are 45 or older, €70.83/month increase if they are women Entire contract duration
Workers with disabilities who had a temporary employment contract for job promotion transformed into an indefinite contract €375/month Entire contract duration

Temporary Contracts

Unemployed young people under 30, replacing workers receiving economic benefits for pregnancy or breastfeeding-related risks, childbirth, child or minor care, or responsible care of a breastfeeding child €366/month During the overlap of the replacement contract and the benefit period
Unemployed individuals replacing self-employed workers or worker partners in cooperative societies receiving economic benefits for pregnancy or breastfeeding-related risks, childbirth, child or minor care, or responsible care of a breastfeeding child €366/month During the overlap of the replacement contract and the benefit period
Replacement of workers who are victims of gender-based violence, change of job, or exercising the right to geographic mobility 100% of employer Social Security contributions Worker’s suspension period 6 months in the case of geographic mobility or job change
Unemployed individuals with disabilities replacing workers with disabilities whose employment contracts are temporarily suspended due to illness €366/month During the overlap of the replacement contract and the temporary incapacity period

Training Contracts

Alternating training contract (no bonus for contracts under public mixed employment-training programs) €91/month Entire contract duration, including extensions
Alternating training contract, in Social Security contributions and joint collection concepts (no bonus for contracts under public mixed employment-training programs) €28/month Entire contract duration, including extensions
Training linked to the alternating training contract, conducted within the business environment, maximum amount obtained by multiplying the regulatory economic module by a number of hours equivalent to 35% of the working time during the first year and 15% of the working time during the second year. If the hired individual is a beneficiary of the National Youth Guarantee System, the maximum amount obtained by multiplying the corresponding economic module by a number of hours equivalent to 50% of the working time during the first year and 25% of the working time during the second year
Tutoring linked to alternating training contracts, maximum amount of €1.5 per student per tutoring hour, 40 hours per month per student
Tutoring linked to alternating training contracts in companies with fewer than five workers, maximum amount of €2 per student per tutoring hour, 40 hours per month per student
Training contracts transformed into indefinite contracts at the end €128/month 3 years
Training contracts transformed into indefinite contracts at the end, women workers €147/month 3 years
Training contracts provided to user companies, when these companies enter into an indefinite employment contract with the worker €128/month 3 years
Training contracts provided to user companies, when these companies enter into an indefinite employment contract with the worker, provided the worker is a woman €147/month 3 years
Replacement contract transformed into an indefinite contract €55/month 3 years
Replacement contract transformed into an indefinite contract, women workers €73/month 3 years
Hiring of individuals for domestic service, when they meet the requirements related to the employer’s assets and/or income of the family or cohabitation unit of the employer as defined by regulations 45% or 30% reduction in the employer’s contribution to Social Security for common contingencies Entire contract duration

Work-Life Balance

Workers replaced by unemployed young people under 30 during the receipt of economic benefits for childbirth and child or minor care, responsible care of the child, or breastfeeding-related risks €366/month During the overlap of the replacement contract and the benefit period
Worker members of cooperative societies covered by their own Social Security regime, replaced by unemployed individuals during periods of rest due to childbirth and child or minor care, responsible care of the child, or breastfeeding-related risks €366/month During the overlap of the replacement contract and the rest periods
Job change due to pregnancy-related risks or breastfeeding-related risks, as well as in cases of job change within the same company or performing a job compatible with the worker’s condition due to occupational illness €138/month Duration of the worker’s stay in the new job or position

Special Cases

Pre-doctoral research personnel €115/month Entire contract duration, including extensions
Incorporation of unemployed workers as worker members or worker partners in cooperatives and labor societies, provided that the Social Security regime corresponds to that of employed workers €73/month 3 years
Incorporation of unemployed workers, young people under 30 or individuals under 35 with a recognized disability of 33% or higher, as worker members or worker partners in cooperatives and labor societies, provided that the Social Security regime corresponds to that of employed workers €147/month for the first year and €73/month for the remaining two years 3 years
Temporary contracts transformed into fixed-discontinuous contracts with employed agricultural workers included in the Special System for Employed Agricultural Workers €55/month 3 years
Temporary contracts transformed into fixed-discontinuous contracts with employed agricultural workers included in the Special System for Employed Agricultural Workers, in the case of women workers €73/month 3 years
Companies not belonging to the public sector engaged in the tourism, commerce, and hospitality sectors linked to it and generating productive activity during the months of February, March, and November of each year, as long as they keep workers with fixed-discontinuous contracts on their payroll €262/month During February, March, and November
Companies in Ceuta and Melilla engaged in agriculture, fishing, industry (excluding energy and water), commerce, tourism, hospitality, and other services (excluding fixed-wing air transport), construction, finance, insurance, and real estate with employed workers with indefinite contracts performing activities in these cities, provided that the company provides training related to business activities for a minimum of 20 hours per year (except for cases of shorter bonus periods within the year) €262/month Entire contract duration
Hiring of domestic service workers, when they meet the requirements related to the employer’s assets and/or income of the family or cohabitation unit of the employer as defined by regulations 45% or 30% reduction in the employer’s contribution to Social Security for common contingencies Entire contract duration