A new reform, based on the Royal Decree – Law 3/2014, published on March 1st, came into force in order to stimulate economic growth and help create stable jobs to reduce unemployment in Spain.
The Spanish government announced a reduction of 100 euros a month in social contributions for the first two years for companies that recruit new employees regardless of their age on permanent contracts.
• Contracts that can benefit from this rate:
All businesses, regardless of their size, can benefit from this flat rate for a period of 24 months (calculated from the effective date of the contract), regardless of whether it is a full-time job or a part-time job, for permanent contracts formalized in written and executed between February 25, 2014 and December 31, 2014.
• The amount of the contribution:
If it is a full time contract, the social security contributions for common contingencies are reduced to € 100 for 24 months.
If it is a part time contract, the social security contributions for common contingencies are reduced to:
- € 75 per month over a period of 24 months when part time is equal to at least 75% of the working hours of a comparable full-time worker.
- € 50 per month for 24 months when part time is equal to at least 50% of the working hours of a comparable full-time worker.
• Additional discount for companies with fewer than 10 employees:
Once completion of the 24-month period and for the following 12 months, all companies with at least 10 workers under a permanent contract will be entitled to an additional reduction of 50% to their contributions for non occupational contingencies.
• To receive these reductions:
- The employer must keep the employee for 36 months on the effective date of the permanent contract, no matter whether the employment is full time or part time.
- The employer must not have terminated the employment contracts for objective reasons or disciplinary dismissals in the 6 months preceding the contract giving the right to this reduction. Contract terminations before February 25, 2014 will not be taken into account.
- The employer must be up to date in compliance with their tax and social security obligations. In the event of failure to make all or part of any payment by the statutory deadline in the above period, the right to the reduction will automatically be forfeited from the month in which the failure occurs.
- The employer must not have been deprived access from receiving any benefits due to having committed a serious infringement.
- Employees hired, in the six months preceding the date of the contract that have worked in the same company on a permanent contract. This reduction does not apply either in the case where the contracts were terminated before 25 February 2014.
- These reductions cannot be taken alongside any other Social Security contribution-related benefit for the same contract.
- No reduction applies for overtime in part-time contracts.
- The self-employed who employ their children under 30 years old or their children (over 30 years old) with special needs and finding it difficult to find a job because of their disability, may also benefit from the flat rate.