If you are looking for a job or want to hire staff for your company, it is essential to understand the different types of employment contracts that exist in Spain. Two of the most common types are the permanent contract and the fixed-term contract. Although both guarantee certain rights and stability for the worker, they have key differences in terms of their duration, conditions and application.
In this guide, we explain in detail what each type of contract entails, its main characteristics and how to choose the best option for each case so that you can have the best experience in the labor market.
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What is a permanent contract?
An indefinite contract is one that does not have an end date. It is the type of contract that offers the greatest stability to the worker, as it guarantees a continuous working relationship until one of the parties decides to terminate it, in accordance with current legislation.
Characteristics of the indefinite contract
- Unlimited duration: It has no expiry date, which allows the worker to have job stability and plan his or her professional future within the company.
- Protection against dismissal: In the event of unfair dismissal, the worker is entitled to higher compensation compared to other types of contract.
- Access to employment benefits: Workers with a permanent contract can access unemployment benefits, seniority, training and other rights established in labor legislation.
- Flexibility for the company: Although it is a long-term contract, the company can terminate it for economic, organizational or disciplinary reasons, provided that it complies with legal procedures.
What is a fixed-term contract?
The fixed-term contract is designed for activities that are intermittent but which are repeated over time. It is an ideal option for sectors that operate seasonally, such as hospitality, tourism or education.
Characteristics of the fixed-term contract
- Intermittent work: The employee only works at specific times of the year, according to the company’s demand.
- Stable employment relationship: Even if the worker is not active all year round, the company is obliged to call them each season.
- Entitlement to unemployment benefits: During periods of inactivity, the worker can apply for unemployment benefits if they meet the requirements.
- Compulsory reinstatement: The company must call the worker back when they resume their activity. Failure to do so is considered unfair dismissal.
Key differences between permanent and fixed-term contracts
Although both contracts offer stability, there are important differences in their application and associated rights. We present the main differences between these types of employment contract so that you can have a comprehensive and complete view of each situation.
1. Continuity of employment
- Permanent contract: The worker maintains an uninterrupted employment relationship.
- Fixed-term discontinuous contract: Work is only carried out in specific periods, with interruptions in the work activity.
2. Rights during inactivity
- Permanent contract: There are no periods of inactivity, except in exceptional cases such as leave of absence or temporary employment regulations.
- Fixed-term discontinuous contract: During periods of inactivity, the worker does not receive a salary, but can access unemployment benefits if they meet the requirements.
3. Severance pay
- Permanent contract: In the event of unfair dismissal, severance pay can be up to 33 days per year worked.
- Fixed-term contract: Severance pay is calculated based on the periods actually worked.
4. Obligation to recall
- Permanent contract: No recall is required, as the employment relationship is continuous.
- Fixed-term contract: The company is obliged to rehire the worker each season. If it fails to do so, the employee can claim their right to be rehired or receive compensation.
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Which is the best option in each case?
The choice between a permanent contract and a fixed-term one will depend on the needs of the business and the worker. Both have their advantages, but it is important to evaluate which type of employment relationship best suits each situation.
The permanent contract is ideal for companies that require a stable workforce and for workers who are looking for continuity and professional growth.
The fixed-term contract is the best alternative for sectors with seasonal demand, where staff are needed at certain times of the year, but not throughout the year.
Sectors such as hospitality, education and tourism tend to use the fixed-term contract to optimize costs without affecting staff stability. On the other hand, companies looking to consolidate a committed workforce and reduce staff turnover opt for permanent contracts.
Types of work in Spain: Permanent contract and fixed-term contract
Understanding the differences between an open-ended contract and a fixed-term contract is key to making informed decisions in the workplace. Both employers and workers must be aware of their rights and obligations in order to avoid conflicts and guarantee fair working conditions.
If you need advice on hiring, our team of experts is ready to help you choose the best option for your business or career. Don’t hesitate to write to us!
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Disclaimer: This article is for informational purposes only and may contain errors or be outdated. It does not constitute legal advice. For an updated initial consultation, contact us. One of our expert attorneys will assist you.
