Types of Employment Contract

Find out about the various types of job contact that apply in Spain...

Short Term or Temporary work contracts (Contratos de duración determinada): The most frequent contract type; temporary contracts are usually issued when the work undertaken is for an uncertain period of time.

Internships (Contratos Formativos): Used to employ young people in business. This type of contract is used where an employee has a degree or vocational qualification but no experience. It can also be used to train young people aged between 16 and 21 with no formal qualifications. Contract duration is six months to two years and incentives are available to employers for taking on young apprentices. Further bonuses are available if a permanent contract is awarded at the end of the scheme.

Retirement of Workers (Contratos relacionados con jubilacion de trabajadores): Generally used short-term to replace a worker that is retiring.

Disability contracts (Contratos para discapacitados): Businesses with over 50 employees are obliged by law to employ people with disabilities. This must represent two percent of staff. A special contract is available to protect the rights of those with disabilities, as well as giving the employer further benefits, such as a reduction in social security payments.

Verbal or Written Contracts: Often used for casual or seasonal work. In the absence of a written agreement, the verbal contract assumes that the period of work is for one year. There is little protection working under such an agreement, with only seven days notice required to terminate the contract and seven working days redundancy/severance pay due per year worked.

Indefinite term contracts (Indefinido): In the absence of any other contract type, an employee is presumed to be on an indefinite contract. Many of these contracts contain 14 or 15 ‘monthly’ payments, with the extras often being paid at Christmas, at Easter and in summer. Severance pay (finiquito) is payable at 45 days salary for every year that the employee has worked, up to a maximum of 42 months salary. This is calculated pro rata for part years.

Incentives

The Spanish Government introduced incentives for employers to help people back into the work force. Incentives are available for:

  • Hiring people under the age of 30
  • Hiring those aged over 30 that have been unemployed for over a year
  • Hiring women unemployed for over a year, recruited in sectors where females are under-represented

Incentives for employers include:

  • Lower severance pay burden of 33 days salary per year and a maximum of 24 months salary
  • Subsidies up to 75 percent of the employer’s social security contribution
  • Tax benefits

More information on employment contracts can be found on the website of SEPE (in Spanish).