Although fixed-term employment contracts in Spain are only permitted in certain duly justified circumstances, a large proportion of employment relationships have traditionally been entered into through fixed-term contracts, known as “contratos temporales”. Where such contracts are used fraudulently or abusively, the employment relationship may be deemed permanent.

One of the main reasons for the widespread misuse of this type of contract is that, in Spain, termination of an employment relationship may generally entail the payment of severance compensation to the employee, whereas the compensation payable upon termination of certain fixed-term contracts may be considerably lower.

Thus, upon termination of certain fixed-term employment contracts, compensation equivalent to 12 days' salary per year of service may be payable, whereas in the case of an unfair dismissal under a permanent employment contract, the corresponding compensation may amount to 33/45 days' salary per year of service, depending on the period during which the services were provided.

Example: if you are dismissed after 2 years of employment with a monthly salary of EUR 2,000, under one or more fixed-term contracts you may be entitled to compensation of EUR 1,600. However, if your employment relationship should be considered permanent, the compensation could amount to EUR 4,400. The fraudulent use of a fixed-term contract could therefore result in a difference of EUR 2,800 in the compensation payable.

In many cases that may be considered abusive or fraudulent, the employer requires the employee to sign a new fixed-term employment contract every 2 or 3 months in an attempt to avoid formally establishing a permanent employment relationship.

 

 

When can your fixed-term employment contract be considered fraudulent or abusive?

To determine whether you are entitled to permanent employment status, it is essential first to identify the type of employment contract you have. A significant proportion of fixed-term contracts used fraudulently have traditionally been either fixed-term contracts for a specific project or service (contrato temporal de obra o servicio determinado) or temporary contracts due to production-related circumstances (contrato temporal eventual por circunstancias de la producción).

A) Contrato temporal de obra o servicio determinado

Under this type of contract, the employment relationship had to be limited to a specific activity that could be clearly distinguished from the company's general business activity. It was also important for this activity to be specifically identified in the contract. If the contract merely referred to a general activity without adequately describing or defining it, the fixed-term contract could be considered fraudulent and the employment relationship could be deemed permanent.

The employment relationship could also become permanent if, after completion of the specific project or service, the employee continued working for the company without the employment relationship being terminated.

B) Contrato temporal eventual por circunstancias de la producción

This type of contract could only be used in certain circumstances involving fluctuations in production, market conditions or orders. Unlike the previous type of contract, the work performed could form part of the company's ordinary business activities.

It should be noted that this type of contract was subject to maximum duration limits. In certain circumstances, if the employee continued working for the company after the maximum legally permitted period had expired without the employment relationship being terminated, the relationship could become permanent.

For this type of contract, it was likewise essential for the reason justifying the temporary employment to be specifically stated and clearly defined in the contract. If the contract merely referred to a general reason without adequately describing or justifying it, the fixed-term contract could be considered fraudulent and the employment relationship could be deemed permanent.

In certain circumstances, failure to comply with the formal requirements or statutory limits applicable to fixed-term employment may result in the employment relationship being deemed permanent. Successive fixed-term contracts are also subject to specific limits under Spanish employment legislation.

There are also various types of employment contracts that are subject to specific conditions and rules, including certain replacement contracts, training contracts, relief contracts, contracts for persons with disabilities, special employment relationships and other contractual arrangements provided for under Spanish employment law.

What can you do if you suspect that your fixed-term employment contract is fraudulent?

If a fixed-term employment contract that should be considered fraudulent is terminated, the employee may challenge the termination within the statutory period of 20 working days from the date on which it takes effect. If the dismissal is declared unfair, the legal consequences applicable to unfair dismissal may apply.

In any event, it is advisable to contact a qualified labour relations specialist (Graduado Social) or an employment lawyer (Abogado) as soon as possible, as the statutory time limit for challenging a dismissal is particularly short.

Our law firm will be pleased to assist you in analysing your particular circumstances and to represent you before the Spanish authorities, in dealings with your employer and before the Spanish courts. If you require further information or have specific questions regarding this matter, please do not hesitate to contact us by email or telephone.

Author:

J. Francisco Santos Postigo
Lawyer
CEO, Partner, Director Labour Law
info@sspartners.es
Tel: (+34) 951 12 13 06
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