On 9 November 2017, the Official State Gazette published Law 9/2017, of 8 November, on Public Sector Contracts Law (PSCL), with the entry into force scheduled for 9 March 2018, transposing European directives on public procurement into Spanish law. The standard introduces important new social and labour developments on which comments are set out below.

Objectives of the PSCL

The PSCL aims to introduce greater transparency and efficiency in public procurement and improve the value for money of the services required by the public sector, redesigning the award criteria and including social aspects related to the subject matter of the contract.

For this reason, the new PSCL reinforces the guiding principles of public sector contracting and regulates the requirements with which bids must comply in order to contract with the Public Sector more rigorously, ensuring that they cannot be abnormally low or reduced for not complying with the applicable obligations in environmental, labour or social issues.

Main novelties of the PSCL in the labour field

The main impacts on labour law of the new PSCL are as follows:

• The successful bidder is obliged to comply with the contractual sectoral regulations:

The new PSCL requires that the reference regulation for companies wishing to bid for public contracts be the sectoral agreement, thus shifting the possible company agreement, which has generated controversy by dissipating the priority application of the company agreement that introduced the Labour Reform of 2012. The aim of this measure is to avoid a reduction in working conditions in the public procurement field.

• Subrogation in employment contracts and reporting obligations:

Where the successful tenderer has a legal, contractual or collective bargaining agreement of general effectiveness, or an obligation to subrogate himself in certain employment relationships, the contracting authorities must provide the tenderers (in the tender dossier itself) with detailed information on the terms and conditions of the workers' contracts to which the subrogation relates and which is necessary to enable the assessment of labour costs.

This information must be provided by the previous contractor/employer, and in the event that labour costs are higher than indicated, the new contractor will have direct effect against the previous one.

• Remunicipalisation of public services:

The obligation of subrogation in employee contracts, whether there is a legal obligation (business succession), contractual or deriving from a generally effective collective bargaining agreement, also applies if a public administration reverses/remunicipalises the service.

In this sense, if the remunicipalisation of the service entails a succession of companies ex Article 44 of the Workers' Statute, the Administration must subrogate itself in the contracts of the workers who have been developing this activity, which raises serious doubts given that the Administrative Documentation 26 and 36 of The National Budget Act do not allow this automatic integration of public workers, so it is not clear whether they would have the status of indefinite non-regular workers, or freeze the private legal status as a new category known as "subrogated staff".

• Impossibility of subrogation imposed by public procurement procedures:

Public procurement contracts may not impose ex novo subrogation of workers. Consequently, unless the cases required by Article 44 Law of Statute of Workers or imposed by a Collective Bargaining Agreement occur, the specifications shall not have such power.

• Redefinition of the principles to be considered in public procurement:

The price and budget of the tendering procedure shall include a breakdown - with gender and occupational category breakdown - of the estimated wage costs based on the reference agreement.  Likewise, instruments aimed at promoting equality and integration are also implemented, specifically, social criteria can be applied in the face of equal offers (disabled persons, gender, etc.).

• Establishment of coercive measures to ensure compliance with labour obligations:

To strengthen workers' employment guarantees, coercive measures are established, which prevent access to public contracts for those companies that do not comply with equality and integration policies, which have been sanctioned for very serious labour violations, or which have been convicted of a crime against workers' rights.

For further information, please contact:

Álvaro del Castillo Riba

alvaro.delcastillo@AndersenTaxLegal.es

Belén Conthe Alonso-Olea

belen.conthe@AndersenTaxLegal.es