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1.- Introduction:

After the initial uncertainty existing with the new employment reform and the deep hostility, which it has raised amongst the social agents and in certain political parties, the government has gone ahead with the Royal Decree Law 10/2011 of 26th August in Parliament, in order to promote stable employment.

The new Royal Decree Law contains several modifications to training contracts, temporary contracts and other provisions.

2.- Training contracts:

➢ The age limit for this contract has been increased from 21 to 25 years old, and even to 30 years old, for those contracts signed before 31st December 2013, if the employee does not have any professional qualification.

➢ Minimum length, 1 year, maximum length 2 years, extendable for 12 more months if required by the company for organizational and productive purposes.

➢ Reduction in company social security contributions until 31st December 2013, for those companies that signed contracts with an unemployed person over 20 years old who was registered in the unemployment office before 16th August 2011.

➢ This reduction shall last during the validity of the contract, including any extensions, and will consist of a 100% reduction, if the agreement is made by companies with less than 250 employees, and a 75% reduction if the company has 250 or more employees.

➢ In order to have the right to these reductions, the training and apprentice contract should bring about a staff increase.

➢ If afterwards, these contracts become permanent, the companies will have the right to a reduction in Social Security contributions of 1500 €/year, during 3 years, and in the case of women, this reduction will be 1800 €/year.

3.- Temporary Contracts:

➢ Suspension during 2 years as from the enforcement of this RD, of article 15.5 of the Employees Statute, which establishes that those employees that have enjoyed temporary contracts for more than 24 months in a period of 30 months shall become permanent. Therefore, according to this suspension it shall not be necessary for employers to convert said contracts into permanent contracts and they shall be able to maintain the temporary condition thereof.

➢ Although the initial idea of the government was to establish permanent contracts as the main contract type, the situation of the market has modified this idea on the understanding that is better for employees to have a temporary contract and continue their professional growth than to be unemployed.

4.- Provisional requalification:

➢ Extension of the professional requalification of those people that use up their unemployment benefits during the period comprised between 16th August 2011 and 15th February 2012, inclusively, and do not have the right to receive any of the unemployment subsidies established in the law.

➢ This program establishes benefits of 400 € for those unemployed that during their active job search, participate in training courses offered by the Public Employment Services.

5.- Merger:

➢ Merger of the State Public Employment Services and the Salary Guarantee Fund into one organism.

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