Spain: Changes in the areas of labor law and social security introduced by Royal Decree-Law 20/2022

Royal Decree-Law 20/2022, of December 27, 2022, on measures to respond to the economic and social consequences of the war in Ukraine and measures to support the reconstruction of the island of La Palma and other situations of vulnerability was published in the Official State Gazette on December 28, 2022. The law seeks to establish a specific legislative framework to contain the rise in prices and support the hardest hit citizens and companies in the areas of energy, food, transportation, the gas-intensive industry, economic and financial stability and the social shield.

The main measures introduced by the legislation in the labor law and social security areas are as follows:

1. Extraordinary increase in the noncontributory retirement and incapacity pensions under the social security system and in the guaranteed minimum income benefit

An extraordinary increase will be applied to noncontributory retirement and incapacity pensions and to the guaranteed minimum income benefit as from January 1, 2023 and for the entire year, by supplementing the percentage to be applied to such benefits for their review in accordance with the General State Budget Law for 2023 until a total percentage of 15% is attained.

2. Extension of the regulation of partial retirement with the simultaneous conclusion of a hand-over contract in effect prior to the entry into force of Law 27/2011

The General Social Security Law is amended to establish an extension of the regulation of partial retirement with the simultaneous conclusion of a hand-over contract, in effect prior to the entry into force of Law 27/2011, of August 1, 2011, on updating, adapting and modernizing the social security system, for pensions vesting before January 1, 2024. The requirements for qualifying for it are also established.

3. Extension of the validity of the National Minimum Wage for 2022

Until the royal decree that will set the National Minimum Wage for 2023 is approved, the validity of the National Minimum Wage set for 2022 is extended.

4. Extension of labor law measures linked to public aid received in connection with energy costs

It is established that an increase in energy costs cannot constitute an objective ground for dismissal until June 30, 2023, on the part of companies that receive the direct aid envisaged in the legislation. Failure to meet this obligation will require all received support to be refunded. Furthermore, any companies which elect reduced working hours or suspension of contracts measures under article 47 of the Workers’ Statute on grounds relating to the invasion of Ukraine and which also benefit from government support cannot use these grounds either for laying off employees.

Furthermore, Royal Decree 1058/2022, of December 27, 2022, on the review of social security pensions, civil service pensions and other state welfare benefits for fiscal year 2023 was also published in the Official State Gazette on December 28, 2022.

This legislation seeks to implement the provisions contained in Law 31/2022, of December 23, 2022, on the General State Budget for 2023 on the review of social security pensions, civil service pensions and other state welfare benefits. According to its wording, pensions and other benefits paid by the social security system, as well as state civil service pensions, will see an across-the-board increase of 8.5%.