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A Guide to Fixed-Term Contracts in Spain

When you hire employees abroad you will almost always have to offer a written employment contract that spells out the terms and duration, and conforms to local labor laws.  There are two basic choices: either a fixed-term or indefinite (open-ended) contract.

You will find that many countries have limits on how many fixed-term contracts you can offer to a single employee, and this is the case in Spain.  Here is a basic guide to the employment contract rules in Spain, but you may need some local assistance to make sure you are in compliance.

Why use fixed-term contracts?

A fixed-term contract for a defined time period (e.g. six months, one year) can be useful for a company that wants to see how a new worker performs, to fill a need for short term projects, or when a replacement worker is being hired.

It does give the employee some assurance of the initial length of employment following any probationary period.  One other advantage for the employer is that there may not be a notice period required for termination as with indefinite contracts, because the end date is already spelled out.

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How long can a company employ a worker on a fixed-term contract in Spain?

If you are hiring employees in Spain, your company will be limited on how many consecutive fixed-term contracts can be offered.  The basic rule is that an employee in the same position can only be offered two successive fixed-term contracts for 24 months total, in a 30-month timeframe.

If this limit is exceeded, the employee becomes permanent, and is given an indefinite contract.  The reason for this rule is so companies at some point have to make a commitment to the employee, and not just hire them for repeated time periods like a contractor.

Client Case: What happens if the contract is determined as indefinite?

We had a client with an employee in Spain who was concluding a 12-month fixed-term contract, and the client wanted to offer another 12-month contract after a two-week break.  We informed our client that they had already met the Spanish limit on fixed-term contracts for that employee, and the cooling-off period of 14 days would not be enough to ‘reset the calendar’ for the employee.

They had the choice to offer a fixed-term contract to a new employee, or place the existing employee on an indefinite term, so they chose the latter.  With the new indefinite contract, the employer was now bound to follow Spanish notice and termination rules if they needed to end the employment for any reason.

Do you need more information about Spain?

If limits on employment contracts are new to you, there might be more questions that come up such as:

How long a cooling-off period would be required to keep offering fixed-term contracts to the same employee? 

Do employees reaching the end of a fixed-term contract in Spain receive severance pay? 

Do the reasons an employer offers fixed-term contracts have any effect on the rules? (worker replacement, temporary projects, etc.)

These are the type of questions that we handle for our clients, to ensure their ongoing compliance with all employment and payroll rules.  We make international employment simple.

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The information in this article is subject to changes in local legislation.

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