The labor landscape has undergone notable shifts in recent years, with one change standing out: the rise of permanent contracts following the labor reform that began on January 1, 2022. This trend, pushing into record numbers, has not only given many workers more stability but has also touched the economy in meaningful ways. Data from the Bank of Spain indicate that a surge in these contracts has coincided with an increase in total family spending by as much as 3 billion. Yet the question remains: does a permanent contract guarantee lifelong job security?
The belief in absolute protection tied to indefinite-term contracts dissolves when the various forms of dismissal are examined. A permanent contract undeniably marks progress toward steadier employment, but it does not come without risks.
To begin, it helps to recognize that dismissals for employees on indefinite contracts fall into two broad categories: improper and unfair. Within the broader category of fair dismissals, there are objective dismissals and discipline-based dismissals. What might trigger an objective dismissal? Potential factors include the worker’s incompetence, their difficulty adapting to evolving conditions or technologies, or economic, technical, and organizational reasons. On the other hand, disciplinary dismissals arise from breaches of the contract, such as repeated and unjustified absences or ongoing lateness.
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But that’s not the entire picture. Those on permanent contracts should also be aware that they can be affected by collective redundancies, or ERE. These decisions, typically driven by economic, technical, or organizational reasons, can lead to the simultaneous loss of employment for many workers.
In many cases, ending a contract may involve compensation and, of course, a severance settlement. The overarching takeaway is clear: a worker may end up unemployed. Only in certain situations, such as unfair dismissals, can a court compel the employer to reinstate the employee.
Ultimately, while a permanent contract offers greater security and has proven beneficial to the economy, it is not a universal pass guaranteeing lifetime employment. This distinction matters. Workers should be informed about the different types of redundancies and fully understand the terms of their permanent contracts to navigate the evolving job market with confidence.