Permanent Employment Contract in Spain

Permanent Employment Contract in Spain (Contrato Indefinido): Complete Guide

A permanent employment contract in Spain — known as contrato indefinido — is an open-ended agreement with no fixed end date. Under the Estatuto de los Trabajadores (ET), every employment relationship is legally presumed to be permanent unless the employer can prove a valid legal basis for a temporary contract. If no valid temporary basis exists, the contract is automatically treated as a permanent one (indefinido), regardless of what it is labelled.

This contrasts sharply with fixed-term (temporal) contracts, which are only valid for specific, time-limited causes: a worker replacement, a genuine project with a defined completion date, or a situation covered by the fixed-discontinuous contract. The 2021 labour reform tightened these grounds significantly, eliminating the most widely abused temporary contract type (contrato eventual por circunstancias de la producción for seasonal peaks) and replacing it with the fixed-discontinuous permanent contract.

BMC’s employment contracts and HR advisory team helps companies structure permanent and fixed-discontinuous contracts correctly, minimising reclassification risk.

The 2021 labour reform (Royal Decree-Law 32/2021, in force from 30 March 2022) dramatically reinforced this default by eliminating several previously common temporary contract types, introducing the fixed-discontinuous contract (contrato fijo-discontinuo) as the preferred vehicle for seasonal and cyclical work, and increasing the administrative and financial consequences of improper use of temporary contracts.

Permanent vs Fixed-Term (Temporary) Contract: Key Differences

Key takeaway: Since the 2021 labour reform, the cost of using a temporary contract without a valid legal cause is immediate reclassification as permanent — with full back-dated seniority and unfair dismissal exposure if subsequently terminated.

Types of Permanent Contract

Standard Permanent Contract (Contrato Indefinido Ordinario)

The default contract for ongoing, continuous work with no specific end date. Suitable for most employment relationships where the work is regular and expected to continue indefinitely.

Fixed-Discontinuous Contract (Contrato Fijo-Discontinuo)

A permanent contract for work that is intermittent or seasonal but expected to recur. The worker is a permanent employee but only works during the active periods. Between periods, the worker is in a situation of “inactivity” (inactividad) and may claim unemployment benefit if they have sufficient contribution days.

This contract replaced the old seasonal temporary contract (contrato eventual por circunstancias de la producción for seasonal needs) for most repeating patterns of demand.

Part-Time Permanent Contract (Contrato Indefinido a Tiempo Parcial)

A permanent contract specifying reduced working hours below the full-time hours in the applicable collective agreement or the ET. Part-time work in Spain is strictly regulated:

• Employees may not work overtime (with narrow exceptions).
• Voluntary complementary hours (horas complementarias) may be agreed in a written annex, subject to limits.
• Part-time contracts must specify the daily, weekly, monthly, or annual distribution of hours with reasonable precision.

Formalities and Registration

Written Contract

While oral contracts are legally valid for permanent employment, written contracts are strongly recommended and required for certain types (fixed-discontinuous, part-time). In practice, all employment contracts should be in writing.

SEPE Registration

All employment contracts must be registered with SEPE (the public employment service) within 10 calendar days of the contract’s start date through the CONTRAT@ system. The employer files the contract electronically; failure to register is a labour infraction.

Social Security Affiliation

Before the worker’s first day, the employer must complete the alta (registration) of the employee with Social Security through the Sistema RED. The registration must take place on or before the first day of work — even before, if required. Unregistered employees working “en negro” expose the employer to back-payment of all unpaid contributions, penalties, and potential criminal liability for Social Security fraud.

Communication to the Collective Agreement Authority

In some sectors, the collective agreement requires additional notifications to bipartite sector bodies. Always verify the applicable convenio colectivo.

Trial Period (Período de Prueba)

A trial period may be agreed in writing. Maximum durations under the ET:

During the trial period, either party may terminate the contract without cause, without notice, and without severance payment. Once the trial period expires, full protection applies and dismissal requires either objective or disciplinary grounds with proper procedure.

Note: if a worker is hired permanently after a previous temporary contract at the same company performing substantially the same functions, a new trial period for those same functions is generally invalid.

Employer Obligations Under a Permanent Contract

Information Obligation

Since the transposition of the EU Transparent and Predictable Working Conditions Directive (RD 1011/2021), employers must provide employees with a written information document specifying, among other things:

• The applicable collective agreement
• Working hours and schedule
• Applicable salary
• Job category and functions
• Notice periods for termination

This must be provided within the first month of employment at the latest.

Payslip (Nómina)

Monthly payslips must be issued, containing all legally required information (gross salary, supplements, deductions for Social Security and IRPF, net pay).

Social Security Contributions

The employer pays approximately 30.5% of the employee’s gross salary as Social Security contributions, in addition to deducting the employee’s share (~6.47%) and transmitting it to the TGSS.

Annual Leave

A minimum of 30 calendar days (or 22 working days) of paid annual leave, unless the collective agreement provides more. Leave is to be agreed between employer and worker.

Termination of a Permanent Contract

Permanent contracts can only be terminated on specific legal grounds:

• Disciplinary dismissal: For serious and culpable worker misconduct (Article 54 ET).
• Objective dismissal: For individual reasons including inadequacy, absenteeism, or economic/technical/organisational/productive causes affecting fewer workers than the collective dismissal threshold (Article 52 ET).
• Collective dismissal (ERE): When objective economic/technical/organisational/productive grounds affect a number of workers exceeding the statutory collective thresholds.
• Mutual agreement or worker resignation: No severance required.
• Worker abandonment: Constructive dismissal claims may arise.

Without a valid legal ground, a termination is declared unfair (improcedente), entitling the worker to choose between reinstatement or enhanced severance (33 days per year of service, capped at 24 months).

Incentives for Permanent Hiring

Social Security bonus incentives (bonificaciones) are available for certain permanent hirings:

• Young people at risk of social exclusion
• Long-term unemployed
• Workers over 52 years old
• Persons with disabilities (33%+)
• Beneficiaries of the minimum income benefit (Ingreso Mínimo Vital)

These bonuses reduce the employer’s monthly Social Security contribution. Specific amounts and conditions change regularly; always verify the current regulations before planning recruitment.

Frequently Asked Questions

Is a permanent contract compulsory in all cases? Yes, as a default. Temporary contracts are only valid if the legal requirements for a specific temporary contract type are met. Failing to meet those requirements means the contract is presumed permanent.

Can we terminate a permanent contract during the trial period with no consequences? Yes. During a validly agreed trial period, either party may terminate with no notice required and no severance obligation. The same worker cannot be subjected to a new trial period for the same functions if they were previously employed by the same employer on a temporary basis.

What is the difference between a permanent and a fixed-discontinuous contract? Both are permanent contracts. The fixed-discontinuous contract is used where the work is not continuous but returns periodically (seasonal spikes, annual campaign periods). The worker is permanently employed but only active during the operative periods.

Are there any costs associated with transitioning from temporary to permanent contracts? Transitioning (“converting”) temporary workers to permanent status triggers registration of a new contract type and may affect applicable Social Security bonus eligibility. It does not generate immediate severance costs — seniority accrues continuously from the original hire date.

What notice period applies when a permanent employee resigns? The ET requires workers to give notice as specified in the collective agreement (typically 15–30 days for most categories). Failure to give proper notice allows the employer to deduct equivalent days from the final settlement (finiquito).

Related Resources

• Service: Employment Contracts and HR Advisory
• Glossary: Severance Pay and Final Settlement in Spain — what a permanent employee is owed on termination
• Glossary: Collective Agreement in Spain — sector convenios that modify permanent contract conditions
• Case study: Multinational Employment Defence — permanent contract reclassification dispute resolved