Temporary Contracts After Spain's Labour Reform: What Changed With RDL 32/2021

The end of the traditional temporary contract

Royal Decree-Law 32/2021 on urgent measures for labour reform brought a profound change to hiring in Spain. Its main goal was to reduce temporary employment and establish the permanent contract as the ordinary form of hiring. Since it came into force, the old temporary contract for a specific project or service was abolished, and temporary hiring became a strictly limited exception.

The new temporary contract types

The reform reduced temporary contracts to two main scenarios:

• Contract for production circumstances: to cover occasional and unforeseeable increases in activity or temporary mismatches between available and needed staff. Its maximum duration is six months, extendable to one year by collective agreement. There is also a form for foreseeable occasional situations, limited to 90 non-consecutive days per year.
• Substitution contract: to replace a worker entitled to keep their position, cover another person's reduced working hours, or fill a vacancy during a selection process, in which case the maximum is three months.

When a permanent contract is required

The general rule is that all hiring is presumed to be permanent. A temporary contract can only be used when one of the legal grounds applies and is justified in writing. If the cause is not specified or is not real, the contract is deemed permanent.

Temporary work shifts from being the norm to being the exception: without a valid, justified cause, the contract is permanent.

Penalties for abuse

The reform significantly toughened the consequences of chaining contracts and fraud:

1. Workers who, within a 24-month period, have been employed for more than 18 months in the same or a different role under two or more contracts acquire permanent status.
2. Contracts for production circumstances of less than 30 days trigger an additional Social Security contribution when they end.
3. Penalties for fraudulent use are applied per affected worker, not per contract, which multiplies the amount of the fines.

What SMEs should do

It is wise to review contract templates, always justify the cause in writing, and track the cumulative duration for each person. With RegulaKit you can manage employment documentation, monitor contract expiry dates and avoid unwanted chaining. To estimate the cost of a potential penalty, use our fines calculator.

In short, the labour reform bets on job stability and forces companies to plan their staffing needs more carefully.