The new temporary contract. The labor reform limits the use of temporary contracts.

The labor reform limits the use of temporary contracts. These contracts may only be signed on the grounds of production circumstances or to replace a worker, and their duration will be a maximum of 6 months. A sector-level collective bargaining agreement could extend the maximum duration to 1 year.

The new labor reform, regulated by Royal Decree-Law 32/2021, of December 28, on urgent measures for labor reform, guaranteeing employment stability, and transforming the labor market, which will enter into force on March 30, 2022, has substantially changed the requirements for entering into certain employment contracts.

The contract that has probably undergone the most changes is the temporary contract. The legislature has sought to restrict its use as far as possible so that most jobs are filled through permanent (open-ended) contracts.

In what circumstances can a temporary contract be entered into?

The Government has sought to reduce the cases in which these contracts may be concluded. Specifically, the three traditional grounds for temporary hiring are eliminated and replaced by two new ones, which leave no room for the contract for a specific project or service (obra o servicio determinado):

• Production circumstances, understood as an occasional and unforeseeable increase in demand and fluctuations that, even when they relate to the company’s normal activity, create a temporary mismatch between the stable employment available and the employment required. The duration of these contracts may not exceed six months, although a sector-level collective bargaining agreement may extend it to a maximum of one year.

• Replacement of a worker entitled to have their job held open, provided that the contract specifies the name of the worker being replaced and the reason for the replacement. The duration of these contracts may not exceed three months.

Under no circumstances will the performance of work under contracts, subcontracts, or administrative concessions that constitute the company’s usual or ordinary activity be accepted as grounds for temporary hiring. However, temporary hiring is permitted in these cases when the production circumstances described in the preceding point are present.

It should be noted that temporary contracts of less than 30 days will be subject to an additional social security contribution payable by the employer once the contract has ended.

Conversion from temporary to permanent

The new labor reform also sets a period after which a worker on a temporary contract becomes permanent. Specifically, workers who, within a twenty-four-month period, have been employed for more than eighteen months, with or without interruption, in the same or a different position with the same company or group of companies, under two or more temporary contracts for production circumstances, will acquire the status of permanent workers, and their contract will become open-ended.

Likewise, a worker will acquire permanent status if they hold a position that, with or without interruption, has been filled for more than 18 months within a 24-month period through contracts for production circumstances, including placement contracts (contratos de puesta a disposición) entered into with temporary employment agencies.

Rights of workers on temporary contracts

The labor reform also gives workers on temporary contracts the same rights as those on permanent contracts.

Contracts with fixed-discontinuous workers (fijos-discontinuos).

Contracts of this type may be entered into to carry out work that is seasonal in nature or linked to seasonal production activities. They may also be used for work that, although not of that nature, has definite periods of performance, whether on fixed or unfixed dates.

In addition, they may be entered into for the performance of commercial or administrative contracts that, being foreseeable, form part of the company’s ordinary activity.

The employment contract must be in writing and must state the duration of the period of activity, the working hours, and how those hours are scheduled.

At the beginning of each calendar year, and with sufficient advance notice, the company must provide the workers’ legal representatives with a calendar setting out the expected annual or, where applicable, half-yearly call-ups. It must also provide data on the actual registrations of fixed-discontinuous workers once they take place.

Fixed-discontinuous workers are entitled to have their seniority calculated on the basis of the entire duration of the employment relationship rather than the time during which services were actually provided.

When there are vacancies for ordinary permanent positions, the company must inform fixed-discontinuous workers and the workers’ legal representatives of those vacancies.