Understanding Different Types of Work Contracts in Spain
Work or Service Contract (Contrato de Trabajo)
1. Duration and Working Hours (Jornada):
- The duration will be until the completion of the work or service.
- May be negotiated as full-time or part-time.
- If the contract specifies a term, these terms are considered indicative.
- If it takes more than a year, the contracted worker should be advised with 15 days’ notice to terminate the contract.
- If the working time is less than 7 days, the Social Security amount will be increased by 36%.
2. Contract Requirements:
- Once the work or service is completed, if the employee continues to work, the contract may be extended indefinitely if there is evidence that a temporary contract is not appropriate.
- At the end of the contract, the worker will receive compensation of 8 days of salary per year worked.
- The contracts may become permanent if the employee is performing tasks beyond the scope of their initial hiring.
3. Company Requirements:
- The employer is obliged to notify such employees of vacancies within the company.
When a Contract Becomes Indefinite (Contrato Indefinido):
- For lack of written form: In the event of a part-time contract, the lack of written form will presume a full-time contract.
- For lack of registration with Social Security beyond the trial period.
- If the contract reaches its end and there has been no complaint from either party, and the service continues.
- Contracts established fraudulently.
- Workers employed for a period exceeding 24 months within a 30-month period, with or without continuity, for the same job with the same company, through two or more temporary contracts, directly with the Temporary Employment Agency (ETT), or through an interim contract.
Interim Contract (Contrato de Interinidad)
This contract aims to:
- Replace workers with the right to retain their job.
- Temporarily cover a job during the recruitment or promotion process for final coverage (without the selection time exceeding 3 months, except in competitions for public office, which will have no time limit).
- Replace workers in training or unemployed workers.
1. Working Hours (Jornada):
Will be full-time except in two cases:
- When the worker was hired part-time.
- Incentives for workers on maternity leave, legal guardians of the disabled, those at risk of pregnancy, lactation, etc. (in the case of risk, there will be a 100% bonus on the Social Security contribution).
2. Duration:
The duration shall be as long as the absence of the substituted employee or the duration of the selection process (it will be necessary to indicate the position for which the selection is being made).
3. Formalization:
The contract must be formalized in writing, stating the worker being replaced, the cause of the substitution, and the nature of the recruitment.
- It must indicate if the worker will perform the exact job of the person replaced or other tasks related to that position.
- Workers must be informed of the contract’s end date unless otherwise agreed.
4. Bonus:
- 95% of the Social Security tax in the first year.
- 60% of the Social Security tax in the second year.
- 50% of the Social Security tax in the third year.
These tax rebates will not be effective if the substitute’s or substituted’s family member (up to 2nd degree) is an executive of the company.
Termination (Extinción)
The employee must be notified of the termination of their contract, following a complaint by either party, when any of the following reasons occur:
- Reinstatement of the substituted worker.
- The deadline established by law or agreement for reinstatement.
- The end of the cause that led to the reservation of the job position.
- The passage of three months in the recruitment or promotion processes for the final provision of jobs, or the term applied in selection processes in public government contracts.
When a Contract Becomes Indefinite (Contrato Indefinido):
- In the case of a part-time contract, the lack of written form will presume a full-time contract, unless proven otherwise.
- For lack of registration with Social Security beyond the trial period.
- If the contract reaches its end and there has been no complaint from either party, and the work continues.
- Contracts established fraudulently.
Substitution Contract for Early Retirement (Contrato de Sustitución por Jubilación Anticipada)
1. Purpose:
Recruitment of unemployed workers to replace workers who anticipate their normal retirement age from 65 to 64 years.
2. Duration:
At least one year.
- The worker who retires will be missing one year to reach the normal retirement age.
- The replacement contract may agree with any of the forms of contract (except for part-time employment and possible circumstances of production).
3. Formalization:
It must be formalized in writing and a basic copy of the contract delivered to the workers’ representatives within 10 days, one copy to the retired employee, and one for the pension management.
4. Employer Requirements:
If within 15 days the employer has not hired anyone, they should return the bonus amount to Social Security.
5. Indemnity:
Will be 8 days per year worked in case of unfair dismissal or termination of the contract.
Relief Contract (Contrato de Relevo)
1. Worker Requirements:
A worker enrolled in unemployment or who had a contract with the same company and is replacing the worker accessing the early retirement pension may work part-time, provided that their part-time work is supplemented.
2. Duration:
Indefinite or equal to the remaining time for the substituted employee to reach retirement age. If the replaced worker wishes to continue working beyond retirement age, the reliever may sign annual renewals.
3. Working Hours (Jornada):
May be full-time or part-time.
- The reliever’s schedule can complement or coincide with the early retirement schedule.
- The working day can vary between 25% and 85% when full-time and indefinite, and between 25% and 75% otherwise.
- The job may be the same as the early retiree’s or similar (at least it should have the same contribution base).
4. Termination (Extinción):
- If during the term of the contract the employee terminates their employment, the employer must replace them within 15 days with another unemployed worker.
- If the early retiree is unfairly dismissed, the duration of the relief worker’s contract will be extended.
5. Characteristics of Partial Retirement:
- Partial retirement is linked to this relief contract, unless the worker has reached retirement age and can work full-time without relief.
- If the early retiree is declared totally or severely disabled, the pension received will be 100% of the base amount.
- The retirement pension is incompatible with: Total disability, Permanent total disability, Permanent total incapacity for the activity.
- The partially retired worker is considered a pensioner for all purposes.
- Partial retirement may be terminated by: Death of the pensioner, Access to early retirement, Recognition of total disability, Recognition of a disability pension.
Part-Time Work Agreement (Contrato a Tiempo Parcial)
1. Formalization:
Part-time work is when services are provided for fewer hours per day, week, month, or year than a full-time worker.
- May be concluded for an indefinite period (when the work arrangement is fixed and regular within the normal volume of business activity).
- Fixed duration (if less than 7 days, the Social Security amount will increase by 36%). In this case, any form of contract is permitted (except for the training contract and the replacement for early retirement).
- The contract must contain the number of normal working hours per day, week, month, or year of the contract and their distribution.
2. Working Hours (Jornada):
The working day in part-time work may be carried out continuously or in shifts. When part-time contracts entail a working day shorter than that of full-time workers and this is undertaken in shifts, only a single break in the workday is permitted.
- Extensions or modifications to the contract must be communicated to the workers’ representatives.
Other Features
Overtime:
Hours worked beyond the agreed-upon regular hours. Requires a specific agreement in the contract. Only applicable to permanent contracts and may not exceed 15% of the ordinary hours. Sectoral collective agreements may fix different rates without exceeding 60% of the ordinary hours. The sum of regular and overtime hours may not exceed the legal limit of the contract. The agreement for additional hours may be terminated by the worker’s resignation, with fifteen days’ notice, once a year has passed since the agreement’s establishment. There will be no overtime except in cases of major breakdown or incidents that require the worker’s presence.
Remuneration:
Proportional to the number of hours worked per day, week, month, or year compared to the normal working day in the relevant activity. In the case of partial retirement, the worker’s pay will be compatible with the Social Security pension.
Social Security:
The basis for Social Security contributions is the wages actually received in terms of hours worked, both ordinary and additional.