Fixed-term contracts after the reform

At the end of the year, the labour market in Spain was reformed on various points through Royal Decree-Law 21/2021 (RDL), on urgent measures to reform the labour market, ensure employment stability and transform the labour market. In assessing the reform, it has already been agreed after a few days that the most important changes have been made in the area of fixed-term contracts.

The legislator's declared aim is to promote permanent employment contracts. Up to now, it was possible to limit the duration of employment contracts to the performance of a specific activity or service (for a specific assignment). This possibility has now been abolished.

The legal regulation provides for a presumption in favour of an unlimited employment relationship. The new regulation now only allows an exception to this rule in two constellations.

Firstly, due to production circumstances in the following two cases:

  • Occasional and unforeseeable increase as well as fluctuations in activity resulting in a temporary mismatch between available and required stable employment (maximum duration of 6 months, extendable up to 1 year by collective agreement).
  • Occasional, foreseeable situations of limited and minor duration. The maximum duration for this is 90 non-contiguous days in a calendar year, regardless of the number of persons required to deal with the situation in question.

Secondly, a fixed term is possible for contracts to replace an employee. This type of contract makes it possible to hire workers to replace others with a job reserved for return and/or to take over the working hours of workers who have reduced their working hours. What is new here is, in particular, that when replacing workers with a reserved workplace, simultaneous work by the replacement and the person being replaced is permitted for a maximum period of 15 days, which is intended to ensure that the work is completed appropriately.

The new regulation is completed by the increase of the sanction framework for situations in which employers illegally limit the duration of contracts. Employers are therefore advised to be particularly careful in this area.

If you have any questions about the innovations in this area, please do not hesitate to contact our labour law department:

Autor: Moritz Tauschwitz
Autor: Luis Bravo