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The long-awaited and feared reform of the Spanish Labour Law

It was announced, but no less feared because of it. Now it is here, the Reform of the Spanish Labour Law. On 30 December 2021 the Royal Decree-Law 32/2021 of 28 December on urgent measures to reform the labour market, to guarantee job stability and to transform the labour market was published in the BOE (Spanish Official Gazette).


Among the most important of the numerous aspects of this reform are the following aspects:


1. Fight against fixed-term labour contracts.

The Spanish government has initiated the fight against the temporal limitation of labour contracts.

The explanatory memorandum to the law states that the reform aims to make a decisive correction against the excessive use of fixed-term contracts, as this causes a «harmful routine that systematically destroys jobs in every crisis».

In this context it should be noted that Spain is the European country with the most fixed-term labour contracts in proportion.

The following measures should be highlighted:

– Expiry of fixed-term contracts for a specific work or service.

According to the Labour Office (SEPE), in December 2021, 35% of all employment contracts were concluded under this modality.

This possibility of fixed-term contracts for a specific work or service (contrato de obra y servicio), which were allowed to last up to 3 years, will be abolished. Thus, the employment contracts must be concluded for an indefinite period, unless they fulfill the conditions of the few new permitted exceptions for fixed-term contracts.

– Presumption of indefinite period employment contract.

The Workers’ Statute will be amended to establish a general presumption that employment contracts are concluded for an indefinite period.

– Reduction of the permissible contract modalities.

Only one fixed-term contract modality will be permitted. A time limit can then be imposed under certain conditions: for production-related reasons or the temporary substitution of an employee.

– Disincentives to prevent the excessive use of short-term contracts.

For contracts with a duration of less than 30 days, an additional social security contribution is to be paid.

– Chaining of labour contracts.

The law also stipulates that all employees who have been employed for 24 months and,

– of which more than 18 months for the same or a different activity,

– in the same company or group of companies,

– by two or more fixed-term contracts for production-related reasons,

– directly or through temporary employment agencies,

become permanent employees.

Specific requirements for contracts in the construction sector.

Labour contracts in the construction industry are now generally concluded for an indefinite period. When the tasks on the construction site – for which a worker was hired – are completed, the company must transfer the employee to another site or provide him/her with further training for a another position.

If the employee refuses the offer or if a transfer within the company is not possible because there is no suitable position, the contract will be terminated against payment of a compensation of 7% calculated on the basis of the salary concepts defined in the collective agreement.


2. The “new” fixed-term labour contracts.

As already mentioned in the section above, labour contracts can now only be fixed-term under very limited conditions.

– Formalities.

A justified limitation requires the precise justification in the contract. It must be explicitly described:

– the objective reason for the temporary employment,

– the special circumstances that justify the fixed-term,

– the connection with the planned duration of the labour contract.

– Concept of «production-related reasons”.

Production-related reasons that can justify a fixed-term labour contract exist if there is an occasional and unforeseeable increase or fluctuations which, even in the normal course of business, lead to a temporary mismatch between the available and permanent employment opportunities.

The maximum duration of this contract is six months; which may be extended up to further six months, if provided for in the applicable collective agreement.

– Occasional situations.

An exception are fixed-term contracts for occasional and foreseeable situations of short and limited duration.

These can be concluded for a maximum of 90 – but non-consecutive in total – days per year.

This provision addresses causes that, despite their foreseeability, have a short and limited duration (e.g. hiring additional employees for «Black Friday»).

Temporary substitution of employees with return guarantee.

New conditions for contracts for the temporary replacement of employees with a return guarantee are set. These require a more precise description of the causes and the name of the employee to be substituted (e.g. in the case of parental leave).

– Compensation in the event of termination due to the expiry of the agreed period.

The law states that upon termination of the contract, the employee is entitled to compensation equal to the amount that would result from the payment of twelve days’ salary for each year of employment, or to the amount defined in a special regulation that may be applicable.

This does not apply to training contracts and fixed-term contracts due to temporary representation of an employee.


3. Collective Agreements.

With regard to the applicable collective agreements, following changes should be highlighted:

  • Full «ultra activity» of collective agreements. This means that collective agreements are automatically extended after the expiry of their intended period of validity, without any time limit, until they are replaced by new ones.
  • The sectoral collective agreement takes precedence over a company agreement.
  • In the case of subcontracting agreements, the collective agreement of the sector of the main company is applied. A company agreement shall only apply if it provides for better salary conditions.


 4. Temporary workforce reduction programmes (ERTE).

 After the experience of the corona pandemic, the procedure for Temporary workforce reduction programmes (Expedientes de Regulación Temporal de Empleo) is also reformed.

The new law strengthens the use of this possibility to temporarily suspend employment contracts in order to avoid mass dismissals.

Among other regulations, some deadlines of the procedure are shortened, and individual employees can be sent to short-time work or taken back from it more quickly as needed.

Furthermore, the temporary suspension of employment contracts due to an governmental order has now also been provided as a reason for applying for short-time work.


This labour law reform still has to be approved by the Spanish Parliament. Let’s see what the outcome will be.

Bufete Mañá-Krier-Elvira