Labor reform: fewer temporary contracts, more stable jobs

Automatic summary, not yet reviewed

1. The permanent contract becomes the general rule. Temporary contracts can only be for production circumstances or to replace another worker, and the contract for a specific work or service disappears.
2. A new training contract is created with two types: the alternating training contract, which combines paid work with studies, and the contract to gain professional practice appropriate to the level of studies.
3. The fixed-discontinuous contract is unified with the periodic permanent contract under a single regime, with more information about working hours and activity periods, and clear rules on how the company must call workers back.
4. In subcontracting, contractors and subcontractors are subject to the collective agreement of the sector of the contracted activity, to prevent competing by lowering working conditions.
5. Temporary layoff schemes (ERTE) are reinforced as an alternative to dismissals, and a new RED Mechanism for Flexibility and Employment Stabilization is created, which the Council of Ministers can activate in a cyclical or sectoral mode.
6. Temporary contracts of less than 30 days will carry an additional social security contribution paid by the employer, to discourage this type of very short-term hiring.
7. Company-level collective agreements will take priority over sectoral ones only in certain matters, such as schedules, shifts or job classification, while wages and working hours remain with sectoral bargaining.
8. The rule enters into force the day after its publication in the Official State Gazette, except for some key provisions, such as those on training and temporary contracts, which will take effect three months later.

Who it affects

• Temporary or young workers: They gain stability: more permanent contracts, limits on chaining contracts together, and conversion to permanent status if legal time limits are exceeded.
• Companies: They must precisely justify temporary hiring, face additional contributions for very short contracts, and have ERTE and the RED Mechanism for temporary adjustments.
• Fixed-discontinuous workers: They get a unified regime with periodic permanent workers, more information and guarantees on being called back, and priority access to training.
• People in training or internships: They are regulated through training contracts with duration, pay and social security contributions defined by law.

Words worth knowing

ERTE (expediente de regulación temporal de empleo)

A procedure allowing a company to temporarily suspend contracts or reduce working hours, with unemployment benefits for affected workers.

Mecanismo RED (RED Mechanism)

A tool the Council of Ministers can activate to allow reduced hours or contract suspensions during economic crises or changes in a sector.

Fijo-discontinuo (fixed-discontinuous contract)

A permanent contract for seasonal or intermittent work: the person works in certain periods and the company must call them back each time.

Descuelgue (opt-out from a collective agreement)

A situation where a company stops applying part of what was agreed in the sector's collective agreement.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries