New Legislation On Employment Contracts And Subcontracting Anticipated In 2018

Co-authored by Juan Bonilla and Ana Campos Rodríguez Tembleque of Cuatrecasas

After a reasonably quiet year for employment law reform in 2017, legislative changes are expected in 2018 regarding subcontracting and employment contracts.

Outsourcing non-core functions like office cleaning and catering has been a major business strategy in recent decades in both the private and public sectors, enabling organizations to become more streamlined, lighten their management workload, and gain efficiency. This has, however, brought with it a number of labor conflicts, often around the uncertainty of the legal definition of subcontracting, and because of differences in working conditions between outsourced and regular employees.

Employment laws applicable to subcontracting are set out in Section 42 of the Workers' Statute, which also assigns responsibilities between the principal companies and subcontractor. However, case law has demonstrated wide discrepancies, and there is a lack of clarity for employers.

Additionally, employee representatives have criticized differences in working conditions between employees of principal companies and employees of subcontracting companies, which have increased since labor reform in 2012 allowed companies more freedom to depart from industry-wide collective agreements on matters such as remuneration.

The Spanish Parliament is currently working on reform that should:

clarify the definition of subcontracting; and...