Temporary contracts: what will they look like after the labour reform?

24 March 2022
Business Consultancy

As of 31 March, the new and unique type of temporary contract, known as the "contract for circumstances of production", will come into force, following the elimination of "contracts for work and services" in Royal Decree-Law 32/2021, of 28 December.

Thus, the new labour reform has sought to limit the temporary nature of contracts, presuming, unless otherwise agreed, that all contracts are of an indefinite duration.

We take a look at the new types of contract:

Contract for unforeseeable circumstances of production

In the same way as with temporary contracts, the reason for the temporary nature of the contract must be justified, making it very clear why the company has chosen this type of contract, as well as the causal relationship between the purpose of the contract and its temporary nature.

Two circumstances must be present:

a) A specific enabling cause.

b) A connection between its duration and its temporary nature.

However, this contract cannot be used in the case of activities to which a fixed-term contract corresponds. Likewise, activities with production peaks or excess demand cannot use this type of contract and must resort to a fixed-term contract.

Nor can they be used in contracts of a structural nature, within the normal activity.

How is this type of contract justified?

It is only justified when the situation is unforeseeable. To do so, the company must prove that the justification is of an unforeseeable nature and state it in the employment contract.

The company must prove the temporary mismatch between available and necessary employment, taking into account the specific circumstances at the time, as well as the occasional, sporadic and unforeseeable nature of the work to be contracted.

Circumstances of production and holidays

The regulation explicitly states that the contract may be used to cover workers' holidays, but the workers to be covered must be specified and it must be justified that it is not possible to replace them with regular employees from the workforce.

In which cases may this type of temporary contract not be used?

There are a number of circumstances in which this type of temporary contract cannot be used:

Catering: when one of its usual activities includes weddings, banquets, communions, baptisms and other events. As this is a regular activity of the company, but which takes place at uncertain times, it would correspond to a fixed-term contract.
Shops: the same situation would apply as above, which would correspond to a fixed-term contract.
Metal companies: this would apply to those companies that may have an emergency in the repair of parts, and it should be analysed whether the nature is occasional or not. If the urgency is a regular occurrence, the rule requires the use of indefinite or discontinuous permanent contracts.
Notary offices: those that usually see their workload increase on specific dates, such as summer or at the end of the year. In these cases, only a fixed-term contract is possible, and the unforeseeable nature disappears, as the increase in work is foreseeable.
Schools and training centres: this type of contract can only be used when there is an unforeseen increase in the number of students at a specific time, which cannot be taken on by the centre, or a specific training module.

Duration: the regulation establishes that the duration is a maximum of 6 months, extendable to one year, provided that the collective bargaining agreement for the sector so provides.

Compensation for termination of contract: the termination of these contracts will entitle the worker to compensation equivalent to the proportional part of the amount that would result from paying 12 days' salary per year of service or the amount established by the specific applicable regulations.

Contract for foreseeable circumstances of production

This is a novelty and is a sub-type of contract for circumstances of production, which makes it possible to cover foreseeable and occasional situations with a reduced and limited duration:

Duration: it is limited to 90 days, intermittent, within the calendar year, per company and per worker.

Legal representation of the workers: the company is obliged to inform the legal representation of the workers of the forecast of this type of contracting in the last quarter of each year.

Can it be used for repeated and cyclical activities? No, since in the case of activities that are repeated on specific dates, in a repeated and more or less foreseeable manner, the fixed-discontinuous contract must be used, since otherwise we could find ourselves in fraud of the law.

In which cases may this type of contract not be used? They cannot be used in the framework of contracts, subcontracts, administrative concessions that constitute a habitual or ordinary activity of the company, except in the productive circumstances indicated above.

Contract for the replacement of workers with job reservation

This is a contract very similar to the interim contract, which allows workers to be replaced, in the foreseen circumstances, with job reservation.

What requirements are necessary to formalise it?

For the contract to be valid, it must specify the name of the person being replaced and the reason for the replacement.

The most important new feature is that it may be signed 15 days in advance, if it coincides with the job.

Under what circumstances is it permitted?

It is allowed in the same cases as the previous interim contract, i.e., substitutions of personnel whose contract is suspended and with job reservation, as well as leaves of absence and leaves of absence.

In which cases may it not be used?

It may not be used during holidays, nor in the case of voluntary leave of absence.

Can it be used as a complement to the reduced working day?

As a novelty, cases of reduced working hours due to legal or conventional reasons are included as a cause for substitution. In addition, part-time work may be held to cover reduced working hours to care for children or family members, among other legally stipulated causes.

What happens with substitution to cover vacancies in selection processes?

In those cases in which the private company initiates a selection process to fill a definitive vacancy, the substitution contract can be used for a period of 3 months (maximum) or for the period established by the sectoral agreement (if it is less).

In addition, in the administration, vacancy-based interim contracts have a maximum duration of 3 years, in accordance with Law 20/2021, which also aims to regulate current interims.

Chaining of contracts

The new law restrictively regulates the interlinking of temporary contracts, which acquire the status of permanent contracts. This would affect:

Workers hired for 18 months (within a period of 24) for the same or a different job with the same company or group of companies through two or more contracts due to circumstances of production, either directly or through a temporary agency. This also applies in cases of company succession or subrogation.
Those workers who have occupied a job, already occupied by another worker in a period of 18 months (within 24 months), either through a contract due to circumstances of production or through a temporary employment agency (ETT).

Penalties for the fraudulent use of temporary contracts

The new Labour Reform has foreseen a series of sanctions to discourage temporary hiring, so that the Law on Labour Infringements and Sanctions (LISOS) does not apply a single sanction for the whole company in which there are several fraudulent contracts, but for each of the persons whose contract is being formalised in fraudulent use of the law.

The infringement applied is provided for in Article 7.2. LISOS, classified as serious, and given that it carries the sanction of art. 40.01.c bis) LISOS, for each of the workers affected, the fines can range from 1,000 € to 10,000 €.

Contributions for contracts of less than 30 days

For fixed-term contracts of less than 30 days, an additional contribution is payable by the employer.

The additional contribution will be calculated by multiplying by 3 the quota of the minimum daily contribution base of group 8 of the General Scheme for common contingencies. The general contribution rate to be paid by the company to cover common contingencies.

The result of these operations is approximately 26.571 euros of additional contribution.