Royal Decree-Law 3/2014, of February 28, on urgent measures to promote employment and indefinite contracting has just been published (BOE March 1, 2014)

This RDL approves an important reduction in social contributions (reduced flat rate) for new permanent hires and in companies that maintain net employment for at least three years. The rule’s stated purpose is to accelerate the process of reducing unemployment and creating jobs.

1) The measure consists of the reduction of the business contribution to the Social Security contribution by common contingencies of the new indefinite contracts formalized in writing.

It is important to comment that the reductions planned will not affect the determination of the amount of financial benefits to which the affected workers may be entitled, which will be calculated by applying the full amount of the contribution base that corresponds to them.

2) The aforementioned reduction is applicable to indefinite contracts celebrated and formalized in writing from February 25, 2014 until February 31 December 2014.

3) > If the contract is full-time, the quotation for common contingencies will be 100 euros per month.

> If the contract is part-time when the work day is at least equivalent to 75% of the day of a comparable full-time worker, the contribution For common contingencies it will be 75 euros monthly.

> If the contract is part-time when the working day is at least equivalent to 50% of the working day of a comparable full-time worker, the contribution For common contingencies it will be 50 euros monthly.

4) The duration of the reduction will be 24 months, computed from the date of effect of the contract, which must be formalized in writing, and concerning those held between February 25, 2014 and December 31, 2014.

In companies with less than ten workers at the time of entering into the contract to which the reduction applies: after the 24-month period has ended, and during the following 12 months, these companies will have the right to a reduction equivalent to 50% of the business contribution to the contribution for common contingencies corresponding to the worker hired on an indefinite basis.

5) Requirements to access the reduction:

> Tax and Social Security obligations: be up to date. Both on the effective date of the workers’ registration and during the application for the reduced business contribution.

What happens if, during the period of application of the reduction, there is a lack of payment, total or partial, of the obligations within the regulatory period?
The automatic loss of the reduction will occur from the month of non-compliance.

  • Not having terminated, in the six months prior to the conclusion of the contracts that give the right to reduction, employment contracts in the following circumstances:
  • For objective causes or for disciplinary dismissals that have been declared by one or the other judicially inadmissible.
  • For collective dismissals.
  • In any case, extinctions that occurred before February 25 will not be taken into account. 2014.

Net increase in employment and maintenance of employment:

Net increase in employment in the company: indefinite contracts that represent an increase in both the level of indefinite employment as well as the company’s total employment level. To calculate this increase, the average daily number of workers who have provided services in the company in the thirty days before the conclusion of the contract will be taken as a reference.

Keep maintenance of employment: Maintain for a period of 36 months, counting from the effective date of the indefinite contract with the application of the reduction, both the level of indefinite employment and the level of total employment achieved, at least, with said hiring.

The maintenance of the level of indefinite employment and the level of total employment will be examined every twelve months. To do this, the average number of permanent and total workers for the month in which compliance with this requirement will be examined.

To examine the level of employment and its maintenance in the company, terminations of employment contracts for objective or objective reasons will not be taken into account. for disciplinary dismissals that have not been declared unfair.

The company cannot have been excluded from access to the benefits derived from the application of the employment programs by the commission of serious infraction or severe infractions provided for in the Law on Infractions and Sanctions in the Social Order.

6) Exclusions for the application of the reduction:

Workers who in the six months prior to the date of the contract had provided services in the same company or are excluded. entity through an indefinite contract.

Also excluded are workers who have been hired in other companies of the group of companies of which they are part and whose contracts have been extinguished by objective causes or for disciplinary dismissals that have been one or the other judicially declared as inadmissible, or for collective dismissals, in the six months prior to the celebration of contracts that give the right to the reduction.

Special employment relationships.

Family jobs: Hiring that affects the spouse, ascendants, descendants and other relatives by blood or affinity, up to the second degree inclusive, of the entrepreneur or those who have business control, hold management positions or are members of the administrative bodies of the entities or companies that have the legal form of a company, as well as those that arise with the latter.

The hiring of children who meet the conditions outlined in the tenth additional provision of the Self-Employed Work Statute Law is excepted from the provisions of the previous paragraph.

Hiring of workers whose activity determines their inclusion in any of the special systems established in the General Social Security Regime.

7) Incompatibilities:

  • It is incompatible with any other benefit in Social Security contributions for the same contract, regardless of the concepts that such benefits could affect.
  • Part-time contracts: The planned reduction in the contribution for additional hours made by part-time workers whose contracts give the right to the reduction will not apply.

8) If the reduction is applied improperly:

The reimbursement of the amounts left unpaid will be refunded with the corresponding surcharge and late payment interest by the provisions of the Security collection regulations. Social.

If the “maintenance of employment” requirement (36 months) is not met, the reduction will be void and the reimbursement of the difference between the amounts corresponding to the business contributions to the contribution for common contingencies that would have been applicable if the reduction was not applied and the contributions already made from the date of start of the application of the reduction, in the following terms (it is anticipated that the late payment surcharge and interest will not be required):

1º If the non-compliance with the requirement of maintaining the employment level occurs twelve months from the hiring, the 100 will be refunded % of the difference above.

2º If such non-compliance occurs twenty-four months from the contracting, 50% of the aforementioned difference will be refunded .

3º In case the incucompliance occurs thirty-six months from the contracting, 33% of the aforementioned difference will be refunded.

If you need to know more you can consult our Labor Consulting service.