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The latest youth recruitment bonuses

On February the 4th 2014, Royal Decree Law 8/2014 came into force, approving urgent measures for growth, competitiveness and efficiency. Among its aims is the establishment of bonuses for hiring young people between 16 and 25 years old.

The application requirements for companies and the self-employed are:

Target group: young people over 16 and under 25 years old, except in cases of disability equal to or greater than 33%, where the age limit is extended to 30 years old. Registry in the National Youth Guarantee System is necessary.

Contract Type: This reduction in the Social Security contribution rates will only apply in permanent contracts, including permanent discontinuous contract type, not being applicable, therefore, in the remaining contract types.

Working days on which this reduction shall apply: This “flat fee for young people” may apply to both full-time permanent contracts and part-time permanent contracts, although, in this last case, the working day must be at least 50% of the full-time working day.

Date of effect: a monthly bonus will be applied to the business contribution to social security contributions for those contracts that are signed between the 5th of July 2014 until the 30th of June 2016.

Can I apply the bonus again if I hire the same worker a second time?

No. The reduction can only be applied once per worker.

Can I apply the reduction to two workers at the same time?

Yes. The bonuses may be applied to each of the beneficiaries who are hired regardless of the bonus period enjoyed by the company for each worker.

What will be the bonus limit?

That the monthly Social Security contribution comes out negative, i.e., that there ends up being an amount owed to the company.

Bonus Sums: There are different rates depending on the working day of the worker:

a) If the employment is full-time: a monthly bonus of 300 Euros will be applied.

b) If the employment is part-time: when the working day is at least equivalent to 75 % of the working day of a comparable full-time worker, a monthly bonus of 225 Euros will be applied.

c) If the employment is part-time: when the working day is at least equivalent to 50 % of the working day of a comparable full-time worker, a monthly bonus of 150 Euros will be applied.

Term of the bonus: These reductions will apply for a period of 6 months, counted from the date of commencement of the contract, which must be a written contract.

Compatibility: This measure will be compatible with all kinds of incentives, provided the monthly social security contribution amount for the company or independent worker is not negative.

What are the requirements for companies to qualify for this bonus?

1 –. To be up to date in meeting their tax and Social Security obligations, both at the date of effect of registration of workers and during the application of the reduced business contribution.

2 –.  To sign permanent contracts that involve an increase in both the level of permanent employment and the level of total employment of the company and to maintain the new level achieved by hiring throughout the period of enjoyment of the bonus.

How is this increase calculated?

The average number of permanent employees and the average total workers in the month in which this condition is examined will be taken as a reference point.

The continuity of the level of permanent employment and the level of total employment within six months of hiring will be examined.

3 –. To keep the worker for at least 6 months from the date of commencement of the employment relationship.

Will I break this condition if I end contracts legally?

No. In order to examine the employment level and its continuity in the business, terminations of employment contracts for objective reasons or disciplinary dismissals that have not been declared inadmissible shall not be taken into account. Workers fired legally must be replaced to maintain the required levels.

What if I do not maintain this level of employment?

In case of breach of this obligation, the bonus must be refunded.

Situations that are excluded: the bonuses shall not apply in the following circumstances:

a) Recruitment of workers whose work activity is included in any of the special systems established in the General System of Social Security.

b) Employment by government and public entities, except the employment of workers with disabilities by special employment centers which are owned publicly.

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