What Types of Employment Contracts Exist and Their Characteristics?

One of the characteristics that define the labor system is flexibility when it comes to formalizing an agreement between the employer and the worker to carry out an activity, depending on the nature of the position and the time spent. 

Whether we are going to attend a job interview or in the process of incorporating a new employee into the company, it is essential to know the types of employment contracts that currently exist and when one or the other should be applied. 

Example of a model employment contract

The employment contract establishes the rights and obligations of each of the parties and the mutual consent of the commercial relationship, and the objective of said relationship. 

Suppose you need to know the characteristics of a contract. In that case, the SEPE (State Public Employment Service) website provides the labor contract model in PDF format for each agreement type. 

Indefinite contract

The indefinite employment contract is formalized without a time limitation regarding the period of performance of the activity. This agreement is established when specific stability in production is assumed and, therefore, an end date is not stipulated. It can set a trial period of up to six months, and, depending on the needs of the business, it can be signed as an indefinite part-time contract. 

Among its advantages are the employee’s peace of mind and the tax incentives that the employer can benefit from. 

Temporal agreement

Temporary contracts are those that are signed for a specified period. They must be formalized in writing, although it may be verbal when the duration is less than four weeks and a full day. In addition, it can be fixed full or part-time, extended through a written statement, or converted into a permanent contract. It can be given in different types. 

Types of temporary contracts

• Contract for work and service: the temporary contract for work and service is concluded to carry out work or provide a specific service. Thus, the agreement cannot last longer than the activity for which the worker has been hired, and he cannot perform other functions than those stipulated in his contract. 
• Replacement contract for sick leave: the replacement or interim contract is a type of temporary contract used to replace a worker who has the right to reserve his job. It must always be formalized in writing and must specify the nature of the contract and identify the replaced worker.  
• Contracts for the first youth job: it is a temporary contract that can favor the hiring of young people, especially by SMEs and the self-employed. It can only be celebrated with unemployed young people under thirty years of age who do not have work experience. As a justification for the temporary status, “acquisition of a first work experience” must be indicated. 
• Bonus contract for workers in a situation of social exclusion: the purpose of this agreement is to hire a subsidy for workers in a situation of social exclusion. The complimentary social services will accredit the vulnerable character. The duration of these contracts can be stipulated indefinitely, temporarily, and both whole and part-time. 
• Replacement contract for partial retirement: a replacement contract is signed in a company to replace a worker who has requested partial retirement, given that they have not yet reached the ordinary retirement age, currently set at sixty-five years and six months. In other words, the worker goes to work part-time and receives both the retirement pension and the salary for the work he performs. 

Training and apprenticeship contract

The training and apprenticeship contract is aimed at workers’ professional qualification, and this modality is established in which paid work activity in a company alternates with training within the educational system. It can be held with workers between the ages of sixteen and twenty-five or under thirty as long as the unemployment rate does not fall below 15%. 

Training contract

Unlike the previous one, this contract is aimed at those who have already finished their studies and have a university degree, higher intermediate vocational training, or equivalent. What is sought with this type of hiring is for the employee to develop the appropriate professional practice for the level of studies completed. 

Types of termination of the employment contract

When we want to end the employment relationship, regardless of which party requests it, we ask to terminate the employment contract. That is sick leave and termination of the contract. Next, we are going to see the most common types of termination of employment contracts. 

Extinction during the trial period

Although during the term of the contract, the worker will have the rights and obligations of an employee in the workforce, in this mode, there is no compensation whatsoever when the employment relationship ends unless there is a violation of fundamental rights. 

Mutual agreement

The termination of the employment contract by mutual agreement is an agreement reached by the company and the worker to terminate the employment relationship maintained so far. Being something voluntary, the conditions of such termination depend on what the parties establish, respect for the date, possible compensation, etc., since the law does not establish anything in this regard. 

Temporary or work and service contracts

In the case of temporary or work and service contracts, when the duration of the contract exceeds one year, both the company and the worker should give fifteen days’ notice of their wish to end the employment relationship. If one of the parties does not comply with this premise, they will have to pay the corresponding compensation. If the contract has a shorter duration, it will not be necessary. 

Resignation of the worker

Sometimes a worker wants to quit his job voluntarily. Since it is not necessary to state any cause to put it into effect, the essential requirement for resignation is that the worker communicates with a fifteen-day notice of his willingness to leave the company. If this notice does not occur, the company is entitled to demand compensation for damages. 

Substantial changes in working conditions and termination due to geographical mobility.

Following the provisions of article 41 of the Workers’ Statute, the company has the right to modify the conditions of the workers whenever there are objective economic, technical, organizational, or production causes. Suppose the modification entails detriment to the worker. In that case, they may choose to terminate the contract, receiving compensation of twenty days’ salary per year of service, with a maximum of nine monthly gross salary payments. 

Whether it’s an employment contract or a government contract, it is always recommended to get consultancy before proceeding with any step.