This safeguard will extend from Tuesday through June 30 due to the ongoing conflict in Ukraine and the current energy crisis. It was announced by the Head of Government, Pedro Sánchez, at a briefing held at the El Beatriz Auditorium in Madrid earlier this week. The move forms part of the administration’s action plan to address the disruptions triggered by the Russian invasion. The Ministry of Labor is reversing the earlier prohibition on layoffs and tightening the rules around reductions in force.
Under the new rules, companies cannot rely on price increases as a justification for objective dismissals to trim their payrolls. In practical terms, a layoff deemed “actual” would raise costs by 20 days for each year of service, or 33 days in cases where the action is deemed unacceptable. This approach aligns with the interpretations of major higher courts during the initial phase when dismissals deemed prohibited sparked controversy and debate.
The proposal, advanced by second vice president Yolanda Díaz last week, was presented within a workers’ bloc that could also include a temporary cap on employers’ ability to unilaterally adjust terms of employment in a bid to avoid wage reductions. Díaz cited the financial strain caused by the war and underscored that this is not the moment for layoffs or wage cuts. She conveyed these concerns during a speech to Congress, urging a careful balance between business needs and worker protections. (Attribution: Ministerio de Trabajo)
The Path Forward
“There is no need to fire anyone. The focus should be on using the adjournment mechanism,” Díaz stated after Sánchez’s remarks in Madrid. In parallel, the government had already established funds earlier in the year to cover delays caused by workforce adjustments. This network-based mechanism flows through the latest labor reform, created to support the social and economic fallout from the conflict. The fund is designed to operate as a bridge for workers while other crises—such as COVID-related supports—wind down, with a target end date following the conclusion of the healthcare and emergency measures. The mechanism was negotiated with employers and unions as part of the evolving labor reform to mitigate the impact on workers and ensure a smoother transition for businesses facing disrupted demand and supply chains. (Attribution: Ministerio de Trabajo)