Inflation and the general increase in prices that is occurring in Spain and throughout Europe has led companies to consider flexibility measures available under Spanish law to enable them not to have to increase their employees’ salaries in the same proportion.

This concern is greater at companies that are subject to collective labor agreements that provide for a salary increase tied to the CPI or that include salary review clauses based on its trend, taking into account that cumulative inflation in 2021 was 6.5% and estimated annual inflation in October 2022 was 7.3%.

This rise in the CPI is occurring at a time when there is a significant uptick in production costs, which means that some companies cannot meet the salary increase without compromising their viability.

One of the tools available to deal with this situation, which was modified in the 2012 labor reform but has not been affected by the 2022 labor reform, is the procedure for disapplying collective labor agreements provided for in article 82.3 of the Workers’ Statute.

What does this measure consist of?

It is an internal flexibility mechanism that is envisaged solely for the purpose of disapplying, on a temporary basis, conditions established in collective labor agreements, and it requires the presence of economic, technical, organizational and/or production-related grounds.

Disapplying working conditions set in collective labor agreements requires negotiation with the workers’ statutory representatives. In addition, to apply the measure, the company must reach an agreement with the workers’ statutory representatives that precisely determines the new working conditions and their duration, which may not extend beyond the point at which a new collective labor agreement becomes applicable at the company.

Conversely, if the negotiation ends without an agreement, the company cannot unilaterally decide to disapply the collective labor agreement, unlike what happens, for example, in the case of material modifications to collective working conditions.

If no agreement is reached, either of the parties may submit the dispute to the competent body.

How useful is this measure?

One of the main problems raised by the measure is that there must be an objective ground for it and, moreover, given the singular nature of the procedure, it is necessary to reach an agreement or submit the matter to arbitration.

However, it can be a useful tool, especially in an uncertain environment, since it allows the company to disapply the conditions of the collective labor agreement temporarily. The fact that it is a temporary measure limited to the duration of the collective labor agreement can be an incentive to reach an agreement since it allows workers’ compensation to be adjusted at a given time in response to a business crisis situation.

Francisca María Pérez

Garrigues Labor and Employment Department

La entrada Spain: Can companies combat the effects of inflation with a labor-related measure? apareció primero en Labor and Employment Law – Garrigues.