Understanding Spain’s 2021 Labor Reform and Its Impact on Workers
Impermanence has long shaped Spain’s labor market and the safety, wellbeing, and progress of large projects. Yet despite this persistence, the reform marks a turning point. In 2021, Spain signed 19.3 million contracts, with a striking 89 percent of them being temporary. Permanent contracts stood at 2.1 million. Following the government’s December 2021 job reform, permanent agreements rose by five percentage points, moving from 70 percent to 75 percent of total affiliates, based on Social Security data. Even as the timetable settled on March 31, new contract models began to take effect, enabling businesses to adapt to changing needs. The question remains: how will these changes affect workers and the unemployed?
Under the reform, workers tied to chained or successive temporary contracts could see clearer boundaries. A two‑year window now caps chain contracts with the same employer at one and a half years; beyond that, the arrangement can become permanent. The rule also applies where temporary roles are filled by different individuals. A senior figure in the National Association of Labor Workers notes that some workers may attain a permanent contract sooner than expected under this new framework.
A major feature of the reform is the elimination of the employment and service contract, which had accounted for about 40 percent of temporary contracts. It was often misused, and the Supreme Court had already constrained its use. Now, workers who are kept on through changes in their contract receive formal notice from their employer. Industry experts warn that this could obscure certain employment relationships. A scholar from a leading university emphasizes that the reform strengthens the status of discontinuous fixed contracts, which are well suited to truly seasonal work such as hospitality, restoration, or ski resorts. A professor notes that such arrangements may offer greater stability for workers who typically face unpredictable schedules, though they require clear guidance from collective agreements regarding hours, methods of work, and holidays. There is also concern that firms may attempt to preserve worker seniority by classifying roles as permanent, even if they are effectively temporary in nature.
For the unemployed facing temporary contracts, two new categories help distinguish the nature of the engagement: contracts tied to production conditions and substitution contracts. In the production‑related category, an employee remains in the position for up to six months, with the potential to extend to a year under the terms of the collective agreement if the reasons are unforeseeable. If the production is foreseen, the period can be limited to 90 days. A further change allows a short overlap of up to 15 days between the new worker and the replaced employee, enabling a smoother transfer of information about the role and responsibilities.
Recruitment through staffing agencies also undergoes a shift. Traditional temporary postings will still exist, but agencies will increasingly offer permanent and non‑permanent contracts, broadening the opportunities for workers to secure longer‑term employment through these intermediaries.
Students who wish to study while working will gain greater flexibility, extending eligibility to age 30 rather than 25. The education contract can span from three months to two years, as explained by a scholar. A second contract has been introduced to facilitate professional practice for those who already hold a training credential. These provisions aim to improve access to education for young people and reduce bureaucracy, with experts noting that such contracts have historically been underutilized. For construction workers, a new fixed contract is introduced, and once a project ends, the employer must offer relocation to a different role or provide reskilling for a new position if needed.
Penalties for noncompliant companies have risen. Previously, penalties were common but often minor; under the reform, fines can range from 1,000 to 10,000 euros per worker for fraudulent practices, according to observers familiar with the enforcement landscape.
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