What happens to the temporary contracts already signed that the labor reform eliminates

What happens to the temporary contracts already signed that the labor reform eliminates

The coalition government closed 2021 with the approval of the labor reform. The norm, still pending validation by Parliament, aims to reduce the high figures for temporary work in Spain and eliminates temporary contracts in force so far (such as the many work and service contracts) and basically creates two new modalities. But the old temporary contracts do not decay instantly with the approval of the legislation in a Royal Decree-Law approved on December 28. The Executive has given three months for the entry into force of the new contractual figures and has also granted a transition period for contracts signed before that date.

Thus, the new modalities of temporary contracts for substitutions and for “production circumstances” will enter into force on March 31st. This date marks the deployment of other key measures, such as the transformation of fixed-discontinuous contracts and the reformulation of training contracts. Also of the new stricter limits to the chain of temporary contracts. All these measures can be consulted summarized here and in depth in the labor reform legislation already published in the BOE.

Adapting to the new contracts is a challenge, especially in a country like Spain that relies heavily on temporary workers. For this reason, the Government has established rules for the transition, which address two situations. On the one hand, that of workers who already had a temporary contract signed before December 31, when the decree of the new labor reform came into force (except for those precepts already mentioned). And, on the other hand, that of those that are contracted with these contractual modalities in the process of extinction during the discount time. That is, from December 31 to March 30.

For temporary workers hired before the last day of the year 2021, it is established that their contracts may be extended to their maximum duration. For example, generally up to three years in the case of contracts for works and services, and even four years when it is agreed upon by agreement.

The same happens with the rest of the contracts, such as the eventual ones due to production circumstances or training contracts (“in practice” or “for training and learning”). All these contracts may exhaust their maximum times set in the previous legislation.

A practical example: a journalist has been employed with a contract for works and services since last February 5, 2020 in a temporary research project. The contract may be maintained until February 2023.

Different is the situation of temporary contracts that are signed between December 31 and March 30. Companies may continue to sign temporary contracts according to the previous legislation (work and service, eventuals, etc.) in this discount time until the new contractual modalities are deployed, but these will have a maximum of six months.

Therefore, if a company signs a temporary contract on January 1, at most it can be extended until July 1.

In any case, companies have to remember that these contracts will already be affected by one of the measures to combat the most precarious temporality, the one with the shortest duration: the penalty in what companies pay to Social Security. Since last December 31, the additional price of 26 euros designed by the Ministry of José Luis Escrivá has already been in force, which seeks to make shorter hiring more expensive and discouraged.

The toughening of penalties for abusive temporality, since last December 31st. The fines are increased in their amount up to a maximum of 10,000 euros and, the most relevant, will be applied for each fraudulent worker of the company. Before, the company was only sanctioned for an infraction.

This is relevant to the possible abuses that may exist with the temporary contracts prior to the labor reform led by the Vice President and Minister of Labor, Yolanda Díaz. A situation, unfortunately, quite common, as shown the campaigns of the Labor Inspectorate on abusive temporary employment.

Companies can extend contracts for work and service and the rest of the old temporary contracts up to the maximum allowed, but the temporary cause of these positions must be real. If the Labor Inspection detects that one of these temporary workers is fraudulent, it will fine the company with the new toughened sanctions. And, beyond the economic sanction, as established by the Workers’ Statute before the new reform, “temporary contracts signed in fraud of law will be presumed for an indefinite period of time.”

The labor reform specifies that there is no “retroactivity in sanctioning matters”. In other words, the new rules apply to fraud committed and detected since December 31. For previous events that are pending resolution by the Labor Inspection, the fines will be the above.


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