Employment Contracts in Spain: Types, Laws and Templates
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Employment Contracts in Spain: Types, Laws and Templates

What are the different types of employment requirements in Spain and their terms?

Navigating the intricacies of employment contracts in Spain is a crucial step for foreign employers looking to establish or expand their business operations in this vibrant country. With a complex legal framework governing labor relations, understanding the various types of spanish employment contracts, their specific regulations, and the advantages and disadvantages they present is essential. This article serves as a comprehensive guide, providing valuable insights into the elements of Spanish work contracts, policies, and the diverse array of contract types available. Whether you’re setting up a new venture or managing an existing one, being well-informed about these contractual nuances will ensure compliance with Spanish employment laws and facilitate smoother business proceedings.

hr managers review an employment contract in spain

Spanish employment contracts

In the realm of Spanish business, the creation of employment contracts with the right terms and benefits, in strict adherence to Spanish laws and regulations, is not just a formality but a fundamental aspect of operating successfully. Employment contracts in Spain, known as “contrato de trabajo,” are the bedrock of the employer-employee relationship, defining tasks, services, remuneration, and setting out mutual rights and obligations within a legal framework. The importance of safeguarding employees’ rights in Spain cannot be overstated, as the labor system is known for its rigidity and complexity, often posing challenges for foreign businesses to comprehend.

With the implementation of labor reforms and Royal Decree-Law 32/2021, there have been significant changes that necessitate careful consideration. Although verbal contracts are permissible under certain conditions, written contracts are standard practice to avoid ambiguity. Failure to comply with specific contractual formalities can lead to the presumption of permanent and full-time employment.

Employers looking to hire employees in Spain must navigate a variety of contract types and ensure compliance with mandatory employment legislation and any applicable collective bargaining agreement (CBA). The Spanish labor law is stringent on contract compliance, with violations now considered on an individual employee basis.

Understanding these nuances is critical for businesses to foster a compliant and effective workforce in Spain. As such, an employment contract in Spain must be carefully crafted to align with legal requirements while protecting both the company’s interests and the rights of its employees.

Drafting employment contracts in Spain requires a keen understanding of local labor laws and regulations. Lawants is here to ensure your contracts are not just legally compliant, but also fully aligned with your business objectives. Our team of seasoned labor advisors and attorneys excels in crafting contracts that protect your company’s interests while adhering to the specific nuances of Spanish employment legislation.

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Types of Employment Contracts in Spain

Spain’s labor market is characterized by a variety of employment contracts, each tailored to meet specific employment needs and circumstances. To standardize these agreements and ensure corporate compliance in Spain, contracts must be drawn up using standard templates provided by the Spanish government. This standardization streamlines the process and ensures that all the necessary legal provisions are included.

Currently, Spain recognizes four main types of employment contracts:

  • Indefinite or permanent contracts
  • Temporary contracts
  • Training and apprenticeship contracts
  • Internship or work experience contracts

While all four types have their place within the Spanish labor system, it is typically the indefinite and temporary contracts that hold the most relevance for hiring in Spain.

In the subsequent paragraphs, we will delve into each of these contract types in greater detail. We will explore their defining characteristics, when they are most appropriately used, and the specific legal requirements associated with each. This information will be invaluable for employers seeking to understand how to best structure their workforce within the Spanish legal framework.

Indefinite or Permanent Employment Contract

The indefinite or permanent employment contract is the cornerstone of the Spanish labor market.

Often referred to as the standard contract, it is an ongoing agreement without a fixed end date, providing employees with a stable and continuous work arrangement. These contracts can be either full-time or part-time, and there’s also a specific category for fixed discontinuous work, which caters to cyclical jobs that occur at separate intervals but are recurring over time.

Permanent contracts offer the security of long-term employment, potentially extending until an employee’s retirement unless terminated by events such as voluntary departure, disability, dismissal (objective or disciplinary), or retirement. There are various types of permanent contracts available to address different needs, including those for domestic workers, disabled persons, individuals over 52, victims of gender-based violence, and more.

One significant advantage of permanent contracts is financial stability and entitlement to substantial compensation in the event of dismissal. Additionally, they can facilitate obtaining permanent residence in Spain.

Permanent contracts with government incentives exist for specific groups such as older workers, women in under-represented sectors, and young unemployed individuals. The main feature following recent labor law changes is that severance pay for improper dismissal has been updated to 33 days of salary per year worked, with a cap at 24 months’ salary. This change underscores the Spanish commitment to protecting workers while balancing flexibility for employers.

Fixed-term or Temporary Employment Contract

Fixed-term or temporary employment contracts in Spain are designed for specific, short-term employment needs and are less common compared to indefinite-term contracts.

Unlike permanent contracts that lack a defined end date and could potentially extend until an employee’s retirement, fixed-term contracts have a clear start and end date, serving specific short-term purposes within the business.

Recent legislation introduced in December 2021 has imposed strict regulations on the use of fixed-term contracts, generally encouraging employers to favor indefinite-term agreements.

Temporary contracts are now permissible primarily in two scenarios: when there is a temporary increase in workload beyond the company’s normal production requirements, and for substituting employees who are temporarily absent but retain the right to return to their position.

Key types of fixed-term contracts include:

  • Contract for a specific project or service with an uncertain duration.
  • Casual contract due to production overload, limited to six months within a twelve-month period.
  • Contract to sit in for employees with job-return rights, lasting for the duration of the absent employee’s entitlement.

These contracts must be made in writing and should detail the reason for their temporary nature, including the circumstances justifying it and its connection with the expected term. If a contract fails to specify these details or if the reason does not align with legally established grounds, it may be considered indefinite by default.

Temporary contracts offer advantages such as lower compensation obligations upon termination compared to permanent contracts.

Training or Apprenticeship Contract

Training or apprenticeship contracts in Spain are tailored specifically for young workers, typically between the ages of 16 and 21, who lack the necessary qualifications to secure a work experience contract. The primary objective of these contracts is to facilitate entry into the labor market by combining practical work with formal training.

The duration of a training contract can vary from six months to two years and may be extended up to three years through a collective labor agreement. In an effort to improve the employability of young professionals, the Spanish Labour Reform Act has introduced new regulations for these contracts, aligning them with vocational education and training (VET) and alternating employment within a company.

While the usual age cap for such contracts is under 25, this limit can be raised to under 30 when the national unemployment rate exceeds 15%. There is no age restriction for individuals from socially excluded groups. The minimum contract term is set at one year with a three-year maximum, though this limit does not apply to students engaged in employment-training projects.

Trainees must receive their education from an approved training center or, if the employer has adequate facilities and staff, directly within the company. The training must correlate with the work performed at the company, and evidence of the completed training should be documented within the contract’s terms and upon its conclusion.

The skills acquired through a training or apprenticeship contract will be officially recognized in accordance with the qualifications and vocational training law. Participants may earn a certificate of qualification or a vocational training title and can accumulate partial accreditation toward their qualification.

Furthermore, Spain’s Royal Decree 1529/2012 established a dual vocational training framework allowing for apprenticeship contracts within this system. This decree outlines critical aspects such as curriculum content, company hours, and the necessary details in agreements between training centers and companies.

Employers benefit from hiring under these contracts through reductions in social security contributions for unemployed individuals registered as job-seekers. Overall, these contracts serve as a bridge for young individuals to gain valuable skills while providing employers with incentives to nurture new talent.

Work Experience or Internship Contract

The work experience or internship contract in Spain is designed for individuals who are seeking to gain practical experience in their field of study, serving as a gateway to their first temporary job. This type of contract is particularly suited for university or junior college graduates, as well as those with vocational qualifications or recognized equivalent certifications.The duration of these contracts can range from six months to a maximum of two years.

The purpose of the work experience contract is to afford the employee the opportunity to develop professional skills relevant to their academic background. To be eligible for this contract, no more than five years should have elapsed since obtaining the qualification; this period extends to seven years for disabled employees. Notably, age restrictions are relaxed for employees under 30, as the date of obtaining their qualification is disregarded.

Financial incentives are offered to employers who utilize these contracts. If the employee is under 30 or under 35 with a recognized disability of more than 33%, the company may receive a 50% reduction in professional contingency fees. This reduction can increase to 75% if the employee was previously engaged in unpaid work experience. Additionally, employers can benefit from a discount of €500 in contributions for three years, or €700 if the employee is female.

The salary for positions under this contract may be adjusted according to collective agreements, with potential reductions up to 60% in the first year and up to 75% in the second year. These contracts are a valuable tool for young professionals to bridge the gap between education and employment while providing employers with financial benefits for supporting emerging talent.

Remote Work or Distance-Work Employment Contract

The landscape of the workplace in Spain has seen a significant shift towards remote working, spurred by evolving work-life balance considerations and technological advancements. Spanish legislation has adapted to this trend, introducing regulations to ensure that remote work arrangements are structured and beneficial for both employees and employers. A remote work contract in Spain is an agreement that outlines the terms under which an employee can perform their duties from home or another location of their choosing for a substantial portion of their working hours.

According to Law 10/2021 on remote work, the regulation becomes applicable when an employee works remotely for at least 30% of their statutory hours over a three-month period. This arrangement cannot be unilaterally imposed by either party; it requires mutual consent and a written agreement that includes mandatory minimum provisions. Employers bear the responsibility for covering expenses incurred by the employee due to remote working, such as electricity, and must provide the necessary equipment and materials.

The remote working agreement must be voluntary and reversible, with clear terms regarding the division of on-site and remote working hours, availability periods, inventory of provided equipment, compensation for additional expenses, designated workplace, methods of corporate oversight, data protection policies, and information security guidelines. Both the employee’s statutory representative and the Public Employment Service must receive a copy of this agreement within ten days of its signing.

This written contract ensures transparency and fairness in remote work arrangements, defining the framework within which employees can benefit from flexibility while maintaining productivity and adherence to company standards. With these regulations in place, Spain acknowledges the importance of accommodating modern work practices while safeguarding employees’ rights and employers’ interests.

Part-time Contract

In the Spanish labor market, part-time contracts offer a flexible working arrangement and can be established as either indefinite or temporary/fixed-term agreements. These contracts are a vital component of employment law, catering to individuals seeking reduced hours compared to a full-time role. They are required to be formalized in writing, detailing the workplace and the specific duration of the workday.

Employers must clearly outline the agreed number of working hours—be it daily, weekly, monthly, or annually—and the distribution of these hours. Any lapse in documenting these details could lead to the presumption that the contract is full-time. Part-time contracts stipulate that the worker’s hours are fewer than those of a comparable full-time employee within the same company and role.

While part-time workers enjoy equivalent rights to their full-time counterparts, certain benefits may be proportionate to their working hours. It’s imperative to ensure that there is no discrimination based on gender or any other factor. Although overtime is generally not permitted for part-time employees, they may work additional hours through a complementary hours agreement if they already exceed 10 weekly hours.

These supplementary hours, which are pre-agreed between employer and employee, should not surpass 30% of the ordinary working hours—or up to 60% if a collective labor agreement allows for it. For those on an indefinite part-time contract with at least 10 weekly hours, employers can offer voluntary supplementary hours up to 15% of ordinary contract hours, extendable to 30% under a collective agreement. The sum of ordinary and supplementary hours must not exceed the legal limit for part-time employment, maintaining a clear distinction from full-time obligations.

ceo and employee shake hands over an employment contract in spain

Employment Laws and Policies in Spain

Spain’s labor market is regulated by a comprehensive legal framework designed to protect the rights of workers while providing guidelines for employers. The cornerstone of Spanish labor law is the Workers’ Statute (Estatuto de los Trabajadores), which outlines the rights and obligations of both employees and employers. Additionally, the Labor and Social Security Code, along with various other laws and decrees, govern health and safety, trade unions, and other employment-related matters.

Employment contracts in Spain must comply with the following regulations:

  • National Minimum Wage: Adherence to the statutory minimum wage, which varies depending on collective bargaining agreements.
  • Working Hours: Compliance with legal limits on working hours, including provisions for rest periods.
  • Overtime: Regulation of overtime work and compensation as per collective agreements or statutory provisions.
  • Evaluation Period: Provision for performance evaluation periods where applicable.
  • Paid Holidays: Entitlement to annual paid leave as stipulated by law or collective agreements.
  • Sick Leave: Rights to sick leave and associated compensation.
  • Maternity and Paternity Leave: Provision for parental leave in line with statutory requirements.
  • Discrimination: Prohibition of any form of discrimination in the workplace.
  • Termination and Severance: Clear terms regarding contract termination, including notice requirements and severance pay where applicable (read our article on severance pay and employment termination in Spain).
  • Social Security: Employer’s obligation to contribute to social security on behalf of their employees.
  • Notice Period: Specification of notice periods for contract termination.

Each regulation is an integral part of the employment contract, ensuring that all parties are aware of their rights and obligations under Spanish labor law. Compliance with these regulations is not only a legal requirement but also a best practice that fosters a fair and productive working environment.

Trust Lawants to transform your employment contract process into an asset for your business’s growth and stability in Spain.

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Legal requirements for Employment Contracts in Spain

When hiring employees in Spain, it is paramount to adhere to various regulations to ensure legal compliance. Here are the main aspects of formalizing employment contracts under Spanish labor laws:

Written contracts

While Spanish law permits oral agreements, written contracts are prevalent as they provide clear evidence of the terms agreed upon by both parties. Certain types of contracts, including temporary, special labor relations, those exceeding four weeks, and part-time contracts, must be executed in writing. The Public State Employment Service (SEPE) must receive notification of the contract within ten days of its initiation.

Specific clauses and provisions

Contracts should outline specific clauses and provisions that detail the rights and responsibilities of both employer and employee. These may include job description, compensation, working hours, and conditions for termination.

Obligations of the employer and employee

Both parties have obligations that must be fulfilled. Employers are responsible for ensuring a safe working environment and providing agreed-upon remuneration. Employees are expected to perform their duties competently and adhere to company policies.

Compliance with spanish Labor Laws and lurisdiction

Employment contracts must comply with mandatory employment legislation and any applicable collective bargaining agreements (CBAs). Failure to comply with established rules may render a contract null and void.

Formalization

The formalization process includes registering the contract with the appropriate authorities and ensuring that all necessary documentation is in order. This step is crucial for establishing a legal employment relationship.

Collective Bargaining Agreements (CBAs)

CBAs play a significant role in determining employment conditions within various sectors. They may set out specific terms regarding wages, working hours, and other employment conditions that surpass the minimum legal standards.

Establishing a compliant employment contract in Spain requires attention to detail and adherence to a structured set of legal requirements. These measures protect both the employer’s interests and the employee’s rights, fostering a transparent and equitable working relationship.

Elements of working contracts in Spain

A comprehensive employment contract in Spain must include the following elements:

  • Identification of the Parties: Full legal names and details of both the employer and the employee involved in the contract.
  • Job Position and Duties: Clear description of the role, responsibilities, and expectations associated with the position.
  • Work Schedule and Salary: Detailed information on working hours, salary breakdown, including base salary and any additional compensation.
  • Benefits and Allowances: Outline of any extra benefits provided, such as health insurance, pension contributions, or travel allowances.
  • Termination Clauses: Conditions under which the contract may be terminated by either party, including notice periods and any severance pay.
  • Confidentiality Clause: Agreement to protect sensitive company information both during and after employment.
  • Implied Terms: Statutory rights that are automatically applied to the contract by law, which cannot be overridden by express terms.
  • Probationary Period: The duration of any probationary period during which the contract can be terminated without cause.
  • Type of Contract: Specification of whether the contract is indefinite, temporary, training-related, or for a specific project.
  • Rights According to the Contract: Employee rights as stipulated in the contract and by applicable laws or collective bargaining agreements.
  • Project Team or Training: Details on team involvement or required training programs.
  • Amount for Retirement: Information on retirement contributions linked to salary and contract type.
  • Mandatory Information: Employer’s obligation to provide a written statement of employment terms within two months of employment commencement.

Additional clauses may include:

  • Post-Termination Restrictions: Non-compete clauses that are reasonable in scope and duration, with adequate financial compensation for compliance.
  • Non-Solicitation/Non-Dealing/Non-Poaching: Clauses that prevent an employee from soliciting clients or employees after leaving the company.
  • Garden Leave: Provisions allowing an employer to require an employee to stay away from work during their notice period while still remaining employed.
  • Intellectual Property: Terms governing the transfer of rights for any intellectual property created during employment.

Each element plays a crucial role in defining the working relationship and ensuring clarity and fairness for both parties.

Probationary period

A probationary period in Spain is a trial duration included in employment contracts, designed to assess an employee’s suitability for a role. It allows both the employer and the employee to terminate the agreement with minimal formalities if expectations are not met.

This period is regulated and subject to limits established by the applicable collective bargaining agreement (CBA). In instances where the CBA does not specify the duration, the probationary term is set at six months for qualified technical employees and two months for unqualified employees. For businesses with fewer than 25 employees, the probation period is three months.

It’s essential to note that the probationary period must never exceed six months, regardless of the position or qualifications of the employee. This initial phase is a crucial time for both parties to evaluate compatibility without long-term commitment. The duration of this period reflects the level of expertise required for the job, with more extended periods allowed for roles demanding higher qualifications and technical knowledge.

Read also: Payroll in Spain: Guide for Employers

Spanish employment contracts template

In Spain, a fundamental aspect of employment contract management is the requirement to lodge a basic copy (copia básica) of the main terms with the Employment Office. This step ensures transparency and adherence to labor regulations. For specific types of contracts, such as seasonal employment agreements, the Employment Office mandates the use of an official template to standardize the employment agreement process.

However, at Lawants, we believe that each company’s needs are unique, and a one-size-fits-all approach may not serve your best interests. Templates can serve as a starting point, but they lack the customization necessary to address the specific requirements and nuances of your business. Therefore, we advocate for the drafting of bespoke contracts that are meticulously tailored to align with your company’s objectives and the intricacies of Spanish labor law.

Custom-drafted contracts provide a robust framework for employer-employee relationships, reflecting the specific terms agreed upon and offering greater protection for both parties. Our legal experts at Lawants are committed to crafting contracts that not only comply with legal standards but also support your company’s strategic goals. Let us help you develop employment contracts that are as unique as your business.

employee sings a contract of employment in spain in front of the hr manager

Draw your employment contracts with Lawants

Crafting a legally sound and beneficial employment contract is pivotal for the success and compliance of your business in Spain. At Lawants, we understand the challenges foreign companies face when grappling with the complexities of Spanish labor law. That’s why our team of seasoned lawyers and advisors, with their extensive international experience, is dedicated to guiding you through every step of the employment process.

Our labor advisory services are tailored to ensure that your company remains abreast of all obligations to the State and Public Administration, while also safeguarding your interests by aligning with national and international labor legislation. We assist employers in making informed decisions about recruitment, dismissal, and taking advantage of available benefits and subsidies.

Lawants operates as an integrated part of your company, providing a wealth of technical knowledge and the ability to make efficient decisions that prevent unnecessary costs and save time. Our experts are always up-to-date with changes in employment legislation, helping you avoid potential infractions that could lead to fines or sanctions.

We offer a full suite of services, from personnel selection to contract drafting, payroll processing, and liaising with Spanish authorities. Partner with Lawants, and gain peace of mind knowing that your employment contracts are managed by experts who prioritize clear understanding and sound decision-making for your employee management.

Reach out to discover how we can assist you with your labor needs in Spain. We are here to provide you with exceptional service and support.

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