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Spain’s telecoms giant Telefónica rolls out four-day work week

After the Spanish government proposed plans for a four-day work week in 2021, this slowly appears to be becoming reality as one of the country's biggest companies starts to offer the option to its employees.

telefonica spain 4 day work week
The reduction of work hours will mean Telefónica employees will have a proportional reduction in salary, although the company will reimburse 20 percent of workers' losses. (Stock photo by JEWEL SAMAD / AFP)

The dream of a shorter work week and longer weekend has crossed the minds of millions of workers around the world, eager to find a better work-life balance in the fast-paced society we live in. 

It was perhaps no surprise then that Spain, a country where quality of life usually comes before career prospects, was the first major European economy to propose the idea of a shorter work week.  

In February 2021, we reported on how the Spanish government announced it would provide €50 million in funding to companies who tested out the effectiveness of a four-day working week.

The aim of this was to see if productivity and wellbeing could be increased within a shorter four-day work week, whist maintaining employees’ wages at the same level.

A restaurant chain in Madrid, a hotel in Asturias, a software company in Jaén, an awning shop in Galicia and dozens more were among the businesses in Spain who took advantage of state funding to trial whether allowing its employees to work 4 days a week was viable.

The Spanish branch of telecoms giant Telefónica was among the bigger companies to test this, and on June 7th 2022, their management agreed with trade unions to extend the offer of a four-day work week to its entire workforce after the positive results obtained during the pilot scheme carried out since last October.

This means that around 18,000 employees of the company will be able to choose to work a four-day work week on a voluntary basis.

How will it work?

If employees choose the so-called Flexible Weekly Bonus option, they will work 32 hours a week, eight hours a day from Monday to Thursday, instead of the 37.5 hours they currently work from Monday to Friday.

However, the cutback in work hours will mean they will also have a proportional reduction in salary, even though Telefónica will reimburse 20 percent of workers’ losses.

Employees have form June 9th to July 15th to decide if they want to take part in the scheme or not.

For those who decide they want to go ahead with it, the four-day weeks will begin on September 1st and will end on December 31st 2022.  

While this is only three months, Telefónica’s intention is to extend this plan on an annual basis as of January 2023.  

Employees already participating in the pilot programme will be able to continue their four-day week in July and August if they wish. 

How have the trade unions reacted to the news? 

The majority of trade unions, including the General Union of Workers (UGT) and the Federation of Workers Commission Services (CC OO) have been satisfied with the extension of the scheme, although they will continue to seek to improve the bonus that the company applies, to make it flexible working more attractive and increase the salary. 

This is not the first time that Telefónica has shown itself to be at the forefront of new approaches to employment.

After returning to the office after Covid-19 lockdowns, the company allowed its employees to continue working from home two days a week and implemented a mobile work model for its sales representatives and engineers, which 80 percent of the staff benefitted from.

Other countries trialing four-day work weeks

Spain has inspired other countries to consider introducing four-day work weeks. Recently, the UK announced the largest four-day work week trial of its kind in the world. 

The pilot scheme will last for six months and involves 3,300 workers working in 70 companies, from financial services to hospitality. 
 
Unlike in Spain however, these workers will receive 100 percent of their pay for working only 80 percent of their usual week, in exchange for promising to maintain 100 percent of their productivity.
 
There is also talk of Japan’s big corporations venturing into the four-day work week and strong interest in the concept in New Zealand, the US and Canada.
 

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WORKING IN SPAIN

The requirements for Spain’s new Startups Law

Foreign entrepreneurs waiting for Spain's highly anticipated Startups Law to come into force should know that the legislation comes with some requirements. The Local has outlined the major ones here.

The requirements for Spain's new Startups Law

Spain’s new Startups Law (Ley de Startups), which the Spanish government first announced all the way back in 2019, could finally come into force as early as September 2022, as indicated by Economy Minister Nadia Calviño, although Spanish media outlets are reporting that it is more likely to be early 2023.

The legislation is a recalibration of the well-known ‘Beckham Law’.

The original measure was a tax-decree aimed at foreigners living in Spain created in 2005 that got its name due to the famous England and former Real Madrid footballer David Beckham being one of the first people to take advantage of it. 

Regardless of when the new legislation actually comes into force for the first time, Spain will finally have a law directly aimed at the particularities of small technology-based companies.

The new ‘Startups Law’ hopes to attract foreign companies and talent, making it easier for startups to choose Spain by giving them incentives such as tax reductions. 

READ MORE: Spain’s new tax rates for the self-employed from 2023 onwards

Who will be able to benefit from Spain’s new Startups Law?

The Startups Law is open to anyone from the EU or third countries, as long as they haven’t been resident in Spain in the five previous years. It will allow them to gain access to a special visa for up to five years. 

This visa will be open to executives and employees of startup companies as well as investors and remote workers, in addition to their family members.

Self-employed workers will have three chances to make it work

The failure of a business is something that is being contemplated for the first time in legislative text in Spain.

The startup bill will make serial entrepreneurship easier, meaning that a freelancer who has started a business which ultimately doesn’t work, can try again and can continue to benefit from the advantages. Specifically, entrepreneurs are allowed to benefit from the Startups Law up to three times.

Deduction in Corporation Tax 

It will give startups and investors a reduction in Corporation Tax from the current 25 percent to 15 percent. 

The elimination of obstacles for foreign investment 

One of the main problems foreign investors encounter when they want to invest in a Spanish startup is bureaucracy.

As a result of this, the new law aims to eliminate the obligation for international investors to request a NIE (foreigner ID number) to carry out this type of business. Both investors and their representatives will only need to obtain Spain’s tax identification numbers (NIFs).

Fortunately for budding entrepreneurs, the Startups Law will work retroactively, meaning that those who have started a new company before the legislation comes into force (expected in September but not confirmed) can benefit from its advantages provided they meet the requirements. 

The new law does have some specific requirements, however. You can find a full Spanish government summary of the legislation here, but The Local has outlined the major criteria for you below.

READ ALSO: The tax cuts and other benefits Spain’s new Startups Law will bring to entrepreneurs

Requirements

Up and coming companies 

Companies wanting to take advantage of the new Startup law must be relatively new companies – founded in the last five years. They also must not have been created as part of restructures or rebrands, or have been divisions of another company or acquired through mergers.

In the case of startups in the biotech and energy sectors the limit is extended slightly to seven years.

Innovation

Start-ups must be considered innovative. The business must be trying to solve a problem or improve an existing situation. An agency will be created to accredit both this status and that of an ’emerging’ company: ENISA.

Dividend distribution 

Start-ups benefiting from the new law must not distribute dividends for as long as the law is in force. Furthermore, for tax purposes, the start-up must be permanently based in Spain.

Spanish contracts

Similarly, 60 percent of a company’s workforce must have employment contracts in Spain. 

Turnover 

To qualify for the new start-up law and special visas that come with it, companies must not exceed an annual turnover of €5 million.

Stock market

To qualify for the law, companies must be unlisted on the stock market.

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