The permanent contract for entrepreneurs in Spain

Labour laws in Spain regulate various fiscal bonuses and incentives for entrepreneurs and SMEs that sign a permanent contract with their employees. The permanent contract for entrepreneurs aims to ensure that entrepreneurs and SMEs hire employees for an indefinite term, with a series of bonuses in terms of social security, fiscal incentives, and a test period of one year.

Characteristics of the permanent contract for entrepreneurs

This contract will be available until the unemployment rate in Spain falls below 15%:

  • It is aimed at companies that have less than 50 employees at the time of contracting
  • It is made for an unlimited duration.
  • It can be applied to full time or part time work
  • It will include a test period of one year (unless the employee previously performed the same functions in the company)

Obligations of the company

  • The company must maintain the employee’s contract for at least three years from the inception of the contract and must maintain the employment rate at the level decided in the contract to support entrepreneurs for at least one year after the inception of the contract. In the event of a breach of these obligations, the company must refund the benefits received
  • The contract is not deemed breached if it is terminated for objective reasons or disciplinary dismissal, when deemed appropriate, by resignation, death, retirement or total disability, severe disability of the employee, or the expiration of the contract period or complete performance of the work or service under the contract.

Exceptions

  • A company cannot conclude this contract if in the past six months the company adopted unfair termination decisions on employment contracts. The limitation affects all termination decisions made after Law 3/2012 came into force
  • Similarly, the provisions set out in section one of the first chapter of Law 43/2006 are applicable, except for Articles 2.7 and 6.2.

Advantages of the permanent contract for entrepreneurs

  • Possibility of a one-year trial period: subsequently, there are a series of fiscal incentives and bonuses linked to the contract
  • Fiscal incentives: the amount will depend on the employee’s age or the employee’s previous situation (unemployment benefit recipient, etc.)
  • Fiscal bonuses: companies can benefit from the company’s contributions to Social Security for three years for unemployed workers registered with the Spanish Employment Office. The amount of the fiscal bonuses will depend on the age of the employee. These bonuses can be accumulated with other public grants provided for the same goal. In case of a part-time contract, bonuses will be proportional to working day listed in the contract.

This article is not considered as legal advice

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