New bonuses for indefinite contracts

Last February 28th was published in the Official Gazette the Royal Decree-Law 1/2015 of February 27th, of second opportunity mechanism, reduction of financial burden and other social measures. This decree introduces, on Article 8, as a measure for encouraging indefinite contracts, new bonuses in terms of social contributions. This article introduces a new Social Security contribution exemption minimum for encouraging indefinite contracts.

In all those cases in which an indefinite contract in every form takes place, provided that the conditions established on Article 8 have been met, the social security contribution for common contingency made by the company will be determined according to the following norms:

►► If the contract is a full-time contract, the first 500€ of the contribution base for each month by common contingencies will be exempted from the application of the contribution rate in the part which corresponds to the company. The contribution rate in effect will apply to the remaining amount of the base at all times.

►► If the contract is a part-time contract, when the working day is, at least, equivalent to a 50% of a full-time working day journey, the amount will be reduced proportionally to the percentage of journey reduction of each contract. This contribution benefit will consist on a bonus when the full-time contract affects workers registered on the Youth Guarantee National System who comply with the requirements established on Article 105 of the Law 18/2014 of October 15th, which approves urgent measures for growth, competitiveness and efficiency.

This measure will be applied during a 24 month period, counted from the date of effect of the contract, which must be written and signed, and the contracts affected will be those dated between the entry into force of the Royal Decree-Law (from March 1st, 2015) and august 31st, 2016. After the 24 months period, and during the following 12 months, those companies that at the time of concluding the contract to which this benefit applies in the price had less than ten workers are entitled to keep the increase or the reduction. During this new period, the first 250 Euros of the contribution base or the corresponding amount reduced proportionately in cases of part-time contracts will be exempted from the application of the contribution rates. To apply this bonus, companies must meet the following requirements:

1) Creating indefinite contracts involving an increase in the level of permanent employment and the level of total employment in the company.

2) Maintaining the level of employment in the company during the 36 months following the contract’s signature.

3) Not to have made collective redundancies declared illegal or individual dismissals declared unfair in the six months prior to the moment in which the permanent hiring is done.

4) Be up to date in fulfilling their tax and social security.

5) Not have being excluded from access to benefits in this area for having been sanctioned by the commission of certain offenses in terms of employment and social security.

In conclusion, the objective pursued is to encourage economic growth, to increase job creation and affiliation to social security, to achieve a greater job security and significant savings in companies derived from the reduction in employer contributions to Social Security.