Employment issues for 2023 and things to keep on the radar

The agenda for 2023 is full of new developments in labour and social security matters, which have been published in different regulations, amongst others: General State Budget Law for 2023; Law 28/2022, of 21 December, on the promotion of the start-up ecosystem; Royal Decree-Law 1/2023, of 10 January, on urgent measures in the area of incentives for labour recruitment; Organic Law 14/2022, of 22 December, on the transposition of European directives and other provisions for the adaptation of criminal legislation to the European Union regulations.

Therefore, given this legislative decentralisation, we have summarised the main issues to be taken into account in this newsletter:

1. INCREASE IN SOCIAL SECURITY CONTRIBUTION BASES

The General State Budget Law for 2023 has set a rise in the Social Security contribution bases and, as of 1 January:

• the maximum contribution base is 4,495.50 euros per month (an increase of 8.6% with respect to 2022); and
• the minimum contribution base is the amount of the Minimum Interprofessional Wage (SMI) in force at any given time. The amount for 2023 is pending of approval, so the SMI for 2022, 1,166.66 euros, is currently applied.

2. DIGITAL NOMADS VISA

Law 28/2022 of 21 December, known as the "Startups" law, has introduced a new category of visa and residence permit that allows workers from non-EU countries to provide teleworking services as either salaried or self-employed workers in Spain.

This residence authorisation will be initially granted for a period of one year, and after that, workers who fulfil the required conditions will be able to extend their visa for a period of 3 years, renewable for an additional period of 2 years (so that the maximum duration will be 5 years).

It is important to emphasise that this new legislation only affects matters such as immigration (in terms of the processing of authorisations and visas) and taxation (as it recognises the right of digital nomads to apply the advantageous special tax regime for posted workers known as the "Beckham Law").

However, issues as relevant as the social security regime or the application of labour regulations to staff working remotely in Spain remain undetermined by our laws.

3. END OF THE OBLIGATION FOR WORKERS TO SUBMIT SICK LEAVE REPORTS

Royal Decree 1060/2022, of 27 December, has introduced a modification under which, as of 1 April 2023, workers will no longer be required to provide their employers with medical reports of sick leave, confirmation or termination of illness.

The aim of this change is to put an end to the problems caused by the late submission of sick leave reports by workers and to achieve more effective and efficient management of situations of temporary work incapacity.

4. THE INTERGENERATIONAL EQUITY MECHANISM

The General State Budget Law for 2023 introduced the so-called intergenerational equity mechanism (MEI), which aims to strengthen the financial sustainability of the public pension system.

From 1 January 2023, an additional 0.6% contribution is paid for common contingencies, shared between the company (0.5%) and the worker (0.1%).

5. MODIFICATION OF THE CRIMINAL CODE

• Organic Law 13/2022 of 20 December, amends Article 177 bis of the Criminal Code to increase the penalties applicable to the crime of trafficking of human beings when the victims are displaced by armed conflict or humanitarian catastrophe; and
• Organic Law 14/2022 of 22 December adds a new section to Article 311 of the Criminal Code criminalising practices consisting of imposing illegal conditions on workers by hiring them under formulas other than an employment contract, or by maintaining them against a warning or administrative fine.

The aim of this amendment is to punish employers who systematically hire fake self-employees or other types of unlawful hiring (e.g. for digital platforms providing home delivery services) and to ensure compliance with the "Rider Law". However, we will need to keep an eye on the practical implementation of this amendment as it is foreseeable that other cases such as fake trainees or volunteers will be included, or if it will only be applied as a last resort.

6. REFUND OF SOCIAL SECURITY REDUCTIONS FOR COMPANIES RELOCATING OUTSIDE THE EU

Royal Decree-Law 1/2023, of 10 January, requires companies that relocate their activity to a third country outside the European Union and the European Economic Area to return:

• Unpaid social security contributions due to the social benefits in respect of employment contracts carried out during the four years immediately prior to the relocation, together with surcharges and interest on late payment; and
• public funds provided for in State legislation obtained in the area of recruitment and employment.

7. EQUALITY PLANS

Companies that do not have an equality plan and are required to do so:

• may not be awarded contracts with the Administration (General State Budget Law for 2023); and
• will not be eligible for social security bonuses (Royal Decree 1/2023 of 10 March).

8. EXTENSION OF THE VALIDITY OF THE SUPPORT MEASURES TO DEAL WITH THE CRISIS ARISING FROM THE INVASION OF UKRAINE

Royal Decree-Law 20/2022 of 27 December has extended the public support measures until 30 June 2023, so that:

• companies receiving the public aids regulated in the same Royal Decree-Law will not be able to invoke energy costs as a cause for lawful dismissal of workers for objective grounds; and
• companies that carry out reductions in working time or suspension of employment proceedings (furloughs or so-called "ERTEs") on grounds related to the invasion of Ukraine and that are beneficiaries of public support will continue to be unable to invoke these grounds for the dismissal of workers on objective reasons.

Additionally, the suspension of employment proceedings (ERTEs) linked to the situation of temporary force majeure for companies and workers in the Canary Islands affected by the volcanic eruption in the area of Cumbre Vieja, La Palma, are extended.

9. KEEP ON THE RADAR...

9.1 Draft Law amending the Law on Sexual and Reproductive Health and Voluntary Interruption of Pregnancy includes:

• a "pre-pregnancy work leave" from the 39th week of gestation that will not consume any days of maternity leave; and.
• the special situation of temporary disability for common contingencies including that of the woman in case of very painful menstruation.

9.2 Draft Law of the Family Law, which will provide for:

• a leave of five days a year, with pay, to take care of a relative up to the second degree or of a cohabitant, with or without a family relationship, in case of serious accident or illness, hospitalisation or surgery without hospitalisation requiring rest;
• eight weeks unpaid parental leave for the purpose of work-life balance and childcare, which may be taken continuously or discontinuously and on a full or part-time basis; and
• force majeure leave of 4 paid days per year, which may be taken on an hourly basis.

9.3 Draft Law of the Sustainable Mobility Law

It provides that companies with more than 500 employees per workplace must develop sustainable mobility plans, which must promote clean and low-polluting modes of commuting, such as public transport, electric vehicles or bicycles.

9.4 Compensation for unfair dismissal

In 2022 we have witnessed numerous court resolutions that have recognised the right of unfairly dismissed workers to receive supplementary compensation, on the grounds that the compensation of 33 days salary per year of service with a maximum of two years' salary, including the transitional rules for staff with seniority prior to 12 February 2012, is not sufficiently compensatory and proportional to the damage caused, as required by Article 24 of the European Social Charter and Convention 158 of the International Labour Organisation.

This issue; of undoubted relevance for, among other reasons, the legal uncertainty it generates; is currently being debated in the Council of Europe.

Following the lawsuit filed by UGT in March 2022 against the Government, the CEOE (Spanish Confederation of Business Organisations) has intervened in the proceeding by presenting allegations with the intention of avoiding a possible amendment to the employment regulations that would raise the current cost of dismissal. The Government has until 31 January 2023 to present its allegations. Although in practice the Council of Europe's resolution is not binding, the sign of its ruling will undoubtedly be of relevance.

9.5 Future Employment Law

It is expected to recognise the right of the Labour Inspection to declare the concurrence of the causes justifying employment redundancy proceedings (ERE). The Labour Inspection will issue a report in which it will deliver an opinion on the existence of such causes and on whether all the requirements regarding the documentation submitted by the company with the application have been complied with.

In addition to the above mentioned recent amendments, we cannot forget to mention other key points that we carry over from 2022, such as: (i) regulatory compliance with remote work; (ii) the correct recording of the working day; (iii) digital disconnection; (iv) the adoption of protocols for non-discrimination and the prevention of harassment and sexual harassment; (v) the hiring of temporary and permanent-discontinuous workers; and (vi) the qualification of illness as a cause of discrimination and consequently, the risk of nullity of dismissals if it is not justified that the termination is not due to illness.

All these changes and projects make up a labour agenda for 2023 full of challenges that employers, HR managers and lawyers will have to deal with.