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The 2018 General State Budgets were finally approved through Spanish Act 6/2018, of July 3 (published in the Official Gazette of the Spanish State on July 4), which introduces the following developments regarding employment and social security that directly affect companies:
- Extending contract suspension to five weeks for paternity leave
Effective July 5 and valid indefinitely, in cases of child birth, adoption or guardianship for the purposes of adoption or foster care, employees are entitled to suspend a contract for five weeks (formerly four) for paternity leave, which can be further extended by two additional days for each child subsequent to the second. Although the Spanish Budget Act does not specify as much, the National Social Security Institute has been interpreting the triggering event as birth, adoption or the guardianship of a child for adoption or fostering purposes.
- General Scheme contribution bases
The maximum limit of the contribution base for the various social security system schemes is set at €3,803.70 per month or €126.79 per day, an increase of 1.39% relative to 2017. The general minimum cap will be €963.26 per month or €32.11 per day.
Possible reforms to uncap contribution bases—which would help reduce the current Social Security system’s €18.8 billion deficit—is one of the issues that has recently appeared in the press and on the lips of some government officials. So much so, that the Toledo Pact Parliamentary Commission has proposed discussing this issue in the coming months with the aim of issuing a recommendation to the Spanish parliament.
- Changes to the contributions of the self-employed (freelancers)
- Contribution bases: The maximum contribution base, frozen until recently, increases to €3,803.70 per month, while the minimum is €932.70 per month, which is a €4 increase in the contributions paid by freelancers that pay the minimum.
- Contributions of freelancers with dependent employees, corporate freelancers and family-owned companies:
The minimum contribution base for 2018 will be €1,199.10 for freelancers that:
- simultaneously employed 10 or more workers at any time during 2017;
- carry out the duties of leadership and management that entail assuming the position of director or administrator;
- are working partners in family-owned businesses, unless they joined the business in the first 12 months of operation, counting from the effective registration date.
- Flat rate and incentives for freelance work, particularly in small municipalities:
Under Spanish Act 6/2017 of October 24, on Urgent Reforms to Self-Employed Work, the reduced fee of €50—known as the flat rate—for new freelancers was extended from six to 12 months.
Thanks to the current Spanish Budget Act, it is expected that freelancers living and working in municipalities with fewer than 5,000 residents (according to the municipal registries updated at the start of activity)—once the initial 12-month period of applying reductions to contributions for common contingencies (including temporary disability) has elapsed—will be entitled to the same incentives for the subsequent 12 months. In these cases, the 50% bonus will be applied once the initial 24 months have elapsed, during a maximum period of up to 36 months, until the completion of a maximum period of five years from the effective registration date.
- New bonus for making training contracts permanent
A new bonus is created for companies that convert training and apprenticeship contracts into permanent, full-time contracts for young beneficiaries of the new economic aid program designed to promote youth employment.
The amount of the bonus in employer contributions for common contingencies to Social Security will be €250 per month (€3,000 per year) and will be applied over the three years, counting from the date on which the training and apprenticeship contract for young beneficiaries of the aid contained in the Spanish Budget Act becomes permanent.
- Public pensions
Finally, one of the main developments of the Spanish Budget Act is the overall increase in public pensions.
- For 2018, the maximum contributory pension is fixed at €2,580.13 per month or €36,121.82 per year, thus increasing the 25% applied in recent years by 1.35%.
- The minimum amount of certain public pensions of a contributory nature increases by 2.75% (totaling 3%).
- The minimum non-contributory pensions for retirement and disability are €5,178.60/year.
- As a new development, the percentage applicable to the regulatory base of the surviving partner’s pension will also increase, in certain cases, to 56% from August 1, 2018, and to 60% from January 1, 2019.
You can access the legal flash with all the latest labor, tax, and public law developments at the following link.
This post is also available in: Español