Employment contracts are agreements entered into between employees and employers to establish working conditions and regulate the relationship between them; these contracts outline a series of rights and obligations for both parties. In this blog post, we’ll detail the different types of employment contracts and their characteristics, all following the entry into force of the labor reform on March 31, 2022 (Royal Decree-Law 32/2021, of December 28). These reforms are urgent measures designed to ensure job stability and transform the labor market. Let’s get started.
There are four types of employment contracts:
Employment Contract PERMANENT.
Employment Contract TEMPORARY.
Employment Contract PERMANENT INTERMITTENT.
TRAINING employment contracts .
Within each of these types, there are “subtypes” of contracts. Additionally, we can add clauses and conditions to these contracts to tailor the terms to the needs of both the company and the employee.
1. Open-ended employment contract
This type of contract is designed for long-term employment and is therefore established without a time limit—that is, for an indefinite period.
These are the most common and allow for the creation of a stable relationship with good working conditions and mutual commitment between the company and the employee.
The most significant change to be considered following the entry into force of the labor reform is the limitation of the duration of temporary contracts to 18 months. Once this period has elapsed, the temporary contract in effect must be converted into a PERMANENT contract. The aim is for this type of contract to become the default hiring model, thereby reducing the prevalence of temporary employment.
2. Temporary Employment Contract
These types of employment contracts are most appropriate when hiring is temporary in nature; that is, they are focused on the short- to medium-term and therefore cover a specific activity or period. They can be PART-TIME or FULL-TIME.
Until the 2022 labor reform, there were three types of temporary contracts: the contract for a specific project or service, the temporary contract due to production circumstances, and the interim contract; however, following this reform, the contract for a specific project or service was eliminated and other types emerged:
-
Temporary contract due to production circumstances: this type of contract applies to very specific situations, such as an increase in workload for a particular position. It may not exceed 6 months, but may be extended to 1 year under a collective bargaining agreement. Under this type of contract, if an employee has been actively employed in the same position for more than 18 months within a two-year period (whether directly with the company or through a temporary staffing agency), with two or more contracts of this type, they acquire permanent status.
-
Contract to Replace an Employee: This contract most closely resembles the former temporary contract. The purpose of this type of contract is to replace an employee on maternity leave, due to pregnancy-related risks, vacation, etc. One of the new provisions following the labor reform states that the person replacing the employee may begin work 15 days before the employee’s leave or absence begins.
-
Other types of temporary contracts
-
Contracts for workers in situations of social exclusion, victims of gender-based or domestic violence, victims of terrorism, or victims of human trafficking.
-
For workers in situations of social exclusion hired through integration companies.
-
For workers over 52 years of age who are recipients of unemployment benefits.
-
For workers in a partial retirementstatus .
-
For work rotation.
-
For work of social interest or promoting agricultural employment.
-
Workers in family household service.
-
People with disabilities.
-
For people with disabilities in special employment centers.
-
For researchers.
-
For inmates in correctional facilities.
-
Of minors and young people in juvenile facilities subject to committal measures.
-
3. Fixed-Term Intermittent Employment Contract
This type of contract is similar to a permanent contract, but the employment relationship in this case is intermittent; that is, work is not performed continuously throughout the year but rather on a seasonal basis. Therefore, these workers have the same rights as those with permanent contracts (vacation time, severance pay, etc.)
4. Training employment contract
There are two types:
Work-study program: This type of contract is designed to combine paid work with relevant vocational training programs, university studies, and other educational activities. One of the conditions is that the work must be directly related to the training activities that justify the employment contract. It may last a minimum of 3 months and a maximum of 2 years. In this case, the workweek may not exceed 65% of a full workweek in the first year and 85% of a full workweek in the second.
Professional internship: This type of contract may be entered into by individuals who hold an intermediate or advanced vocational diploma, a vocational training certificate, a university degree, or a master’s degree. It must last a minimum of 6 months and a maximum of 1 year, whether full-time or part-time.
5. Other Types of Contracts
Early Retirement Replacement: This type of contract involves hiring unemployed workers to replace employees who are retiring early, lowering their standard retirement age from sixty-five to sixty-four.
Relief contract: This type of contract is entered into with an unemployed worker or one who previously had a fixed-term contract with the company, to partially replace a company employee who is taking partial retirement, as they receive their retirement pension while simultaneously performing part-time work at the same company.
Choosing the right type of employment contract is an important decision for both the company and its employees. Each type of contract has its own characteristics and legal requirements. It is crucial to understand your rights and responsibilities before signing a contract. Additionally, keep in mind that labor laws may vary by country and jurisdiction, so it’s important to consult a qualified professional in this field to obtain guidance specific to your situation. We hope this blog serves as a guide to help you better understand each type of contract so you can make the decision that best suits your needs and those of the company.
Image by pch.vector on Freepik
Image by Drazen Zigic on Freepik
