Company Requirements of the Youth Contract in Spain

The youth contract is a temporary contract that can improve the hiring of young people especially by small and medium businesses and freelancers. Only unemployed people less than 30 years old who have less than three months or no work experience will be able to enter into this contract. It will be sufficient to indicate acquisition of a first professional experience as justification for the temporary nature of the youth contract. The reason for its temporary nature will remain justified without risk of the contract being considered permanent. There are a series of requirements and incentives linked to this type of contract, which are mentioned below.

  • Companies, including self-employed and freelance workers.
  • Companies, including self-employed workers, should not have made, in the six months prior to making the contract, improper termination decisions.
  • The level of work reached with the transformation of the temporary contract into a permanent contract should be maintained for at least 12 months. In the case of incompletion of this obligation, the incentives must be repaid.
  • There is no breach of the obligation of maintaining employment when the contract is terminated for properly declared objective reasons or disciplinary dismissal, resignation, death, retirement, permanent and total incapacity or absolute or great disability of the worker, the expiration of the time agreed or the fulfillment of the work or service discussed in the contract, or for termination during the trial period.

Bonuses or incentives

The main advantages of this contract do not lie in the bonuses in contributions to the Spanish Social Security System, but in the temporary nature that permits its creation. However, this contract is linked to bonuses in business contributions to the Social Security System whenever it becomes permanent (once the minimum period of three months has passed since its creation).

If the contract becomes permanent following the minimum three-month period after its creation, with a working day of at least 50% to a comparable full time employee, workers will have the right to a 500 euros per year bonus for 3 years in employers´ contributions to the Social Security System. If the contract is made by a woman, the bonus for the conversion will be 700 euros per year.

In the case of workers with this type of contract and working for companies through a temporary agency, these workers will have the right to an identical bonus when , without the solution of continuity the worker enters into a permanent contract, provided that a minimum of three months has passed since the creation of the initial contract.

For the application of the benefits, the company should maintain the work level reached with the transformation of the contract for at least twelve months. In the event of incompletion of this obligation, the benefits must be repaid.

This article is not considered as legal advice

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