Did you know that there is a legal mechanism that allows for temporary contracts due to production circumstances? This modality responds to specific business needs and is regulated by Spanish labor legislation.
For its correct implementation it is crucial to understand when it can be used, what its limitations are and what rights workers have under this modality.
If you are interested in this type of contract, continue reading our article, where you can learn everything you need to know about its implementation, its requirements, duration, benefits and challenges, both for employers and workers. Are you ready?
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Main characteristics of the temporary contract due to circumstances of production
The temporary contract due to circumstances of production is one of the most commonly used labor arrangements in Spain. Its main objective is to provide companies with a legal tool that allows them to cope with specific and unpredictable increases in activity without the need to formalize permanent contracts.
This contract is especially useful for companies facing seasonal work peaks, extraordinary orders or eventual circumstances that require a reinforcement of the workforce. However, it cannot be used fraudulently to cover structural or permanent positions in a company, since its purpose is to respond to transitory needs and not to a recurrent and stable activity.
This type of contract is regulated by the Workers’ Statute, which establishes the conditions under which it can be applied and its limitations to avoid abuse of temporary employment. The regulations seek to balance business flexibility with the protection of workers’ rights.
Situations in which it can be used
The temporary contract due to production circumstances can be used in two main scenarios:
Occasional and unpredictable increase in activity
This type of contract is justified when a company experiences a sudden increase in workload that cannot be managed with the usual workforce. Example: A logistics company that receives an unexpected volume of orders due to an unplanned discount campaign.
In this case, temporary hiring is a valid solution, as it allows the company to meet demand without having to permanently modify the personnel structure.
Situations of foreseeable high demand but of limited duration
There are times when a company knows it will need more staff, but only for a certain period of time. Example: In the commerce sector, hiring increases during sales, Christmas or Black Friday.
In these cases, even if the need is foreseeable, it is still temporary and does not justify a permanent contract.
Duration and limits of the temporary contract due to production circumstances
One of the key aspects of this type of contract is its duration, as the legislation establishes specific limits to prevent companies from using temporary contracts abusively or fraudulently.
According to the Workers’ Statute, a temporary contract due to production circumstances can have a maximum duration of six months within a period of twelve months. However, some collective agreements can extend this limit to a maximum of one year if the activity of the sector justifies it.
There are currently regulations governing the concatenation of temporary contracts. These measures are aimed at preventing workers from being chained to successive fixed-term contracts without ever acquiring job stability.
Consequences of non-compliance with duration limits
If a company keeps a worker on successive temporary contracts without respecting the legal limits, the contract can automatically become indefinite. This happens in the following cases:
- The maximum duration limit is exceeded without legal justification.
- The worker has been employed for more than 18 months in a period of 24 months with temporary contracts in the same company or business group, even if it is in different jobs.
- The contract does not correctly specify the cause justifying the temporary contract.
If the contract is automatically converted into a permanent one, the worker acquires the same rights as any permanent employee of the company, including job stability, severance pay and seniority.
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Rights of workers with temporary contracts due to production circumstances
Despite their temporary nature, workers hired under this modality have labor rights equivalent to those of a permanent contract in many aspects. Spanish law establishes that temporary workers must receive the same conditions in terms of salary, working hours, breaks and job security.
In other words, a company cannot pay a temporary worker less for doing the same job as a permanent worker, nor deny them access to employment benefits such as holidays, paid leave or unemployment benefits.
Compensation at the end of the contract
When a temporary contract due to production circumstances comes to an end, the worker is entitled to financial compensation to make up for the lack of continuity in employment.
The compensation is calculated as 12 days’ salary for each year worked.
If the worker has been employed for less than a year, the compensation is calculated proportionally. This compensation seeks to balance the job instability that this type of contract entails and to guarantee that the worker is not left unprotected after the end of the contract.
Benefits for companies with this type of contract
Companies that use the temporary contract due to production circumstances can benefit from several strategic and economic advantages.
- Flexibility in hiring: This type of contract allows companies to adjust their workforce in an agile way according to market fluctuations. If the demand for labor suddenly increases, the company can hire additional workers without having to make long-term commitments.
- Reduction of labor costs: Temporary contracts tend to involve fewer costs for companies compared to permanent contracts. Although the temporary worker is entitled to compensation at the end of their contract, the company avoids expenses associated with long-term job stability, such as severance pay or additional benefits.
- Opportunity to evaluate workers: For many companies, temporary contracts serve as a kind of extended trial period. During the contract, they can evaluate the worker’s performance and integration into the team before making the decision to offer them a permanent contract.
Challenges for workers
Although temporary contracts can be a gateway to the labor market, they also present significant disadvantages for employees.
- Job uncertainty: One of the main drawbacks of this type of contract is the lack of stability. Temporary workers can face difficulties in planning their financial and professional future, as they do not know whether their contract will be renewed or whether they will find another job at the end of the contract period.
- Less access to long-term benefits: Workers with temporary contracts tend to have fewer opportunities for internal promotion, training and stability within the company. In addition, they may not have access to certain employment benefits such as bonuses, promotions or incentives that are granted to employees with permanent contracts.
- Possibility of corporate abuse: In some cases, companies may use temporary contracts fraudulently, chaining together successive short-term contracts to avoid hiring on a permanent basis. This goes against labor regulations and can result in sanctions for the company and greater job insecurity for the worker.
Alternatives to the temporary contract due to production circumstances
Although the temporary contract due to production circumstances is a valid option for specific situations, in some cases there may be alternatives that are more beneficial for employers and workers.
Excessive use of temporary contracts often generates instability and legal problems for companies. To avoid these situations, it is advisable to consider other types of contracts that offer greater legal and employment security.
Below, we analyze some of the most common alternatives.
Fixed-term contract with seasonal work
The fixed-term contract with seasonal work is an excellent alternative for companies that have recurring employment needs at certain times of the year.
Unlike a temporary contract, a fixed-term contract does not end when the seasonal activity ends, but rather the worker maintains their employment relationship with the company and is called upon to return in the following season.
Part-time contract
Another option for companies that require personnel on a continuous basis but without the need for a full-time position is the part-time contract.
The advantages of this type of contract are:
- It allows the company to cover labor needs without assuming a full working day.
- It is ideal for sectors with daily or weekly fluctuations in workload.
- It provides greater stability for the worker compared to a temporary contract.
Subcontracting or outsourcing of services
In some sectors, it may be more convenient to outsource certain functions instead of resorting to repetitive temporary hiring.
This option can reduce administrative costs and legal responsibilities for the contracting company.
Temporary contract due to production circumstances
The temporary contract due to production circumstances is a useful tool in human resources management in Spain, as it allows companies to adapt to fluctuations in workload without making long-term commitments. However, it must be applied within legal limits to avoid abuse and guarantee workers’ rights.
If you are an employer and need to hire under this modality, make sure you comply with current regulations and use this contract only in the cases permitted by law.
If you are a worker with a temporary contract, find out about your rights to avoid situations of job insecurity and abuse by the company.
Do you have questions about how to apply or better understand the temporary contract due to production circumstances? Consult with our team of labor law experts and make sure you make informed decisions.
Do you want a expert consultation? Contact us and we will help you.
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.
