The fixed-term contract, direct hit and… sunk?

Days after its publication, there can be no doubt as to the major reaction caused in the media by the judgment handed down by the Court of Justice of the European Union (“CJEU”) on September 14, 2016, given the significant consequences it could entail for the job market and because it confirms the upward trend in the number of references for a preliminary ruling submitted to the CJEU.

Aside from the fact that this trend could itself be subject to major debate, both on quantitative terms (could we be facing an “epidemic” of references for a preliminary ruling?) and from the standpoint of its impact on Spanish legislation and case law precedents (there are numerous opinions regarding possible legislative changes and even its extrapolation to other cases that could be deemed similar), one cannot avoid asking whether the aforesaid judgment could be the first explosion to shake the stability of the current system of fixed-term contracts.

In other words, could the CJEU judgment be said to chart a new course toward the “single contract”?

The CJEU, in its judgment, fundamentally concludes that the differentiated treatment of contract termination compensation is unjustified where the functions discharged by the fixed-term employee are the same as those of indefinite-term employees.

But perhaps the CJEU is overlooking the fact that fixed-term contracts can be terminated on certain grounds (expiration of the agreed term, completion of the work, reinstatement of the replaced worker) which are not applicable to indefinite-term contracts?  Moreover, if the same compensation were paid both to fixed-term employees and to indefinite-term employees in this type of situation, would it not be a case in which identical treatment is given to different situations?

Should the debate not focus on the existence of the ground justifying the fixed-term contract rather than on the similarity of the functions discharged?  In fact, what characterizes a relief contract (the form of contract subject to the judgment) is a need that is unquestionably temporary, i.e., the need to replace a person entitled to reinstatement; it goes without saying that the functions discharged will be those of the replaced employee.

In short, should this denaturalization of the grounds for termination and of the specific purpose of fixed-term contracts be regarded as the first symptom of the sinking of this type of contract?  At least it causes one to question the true limits between the forms of contract, and marks the sighting (whether or not a mirage) of the “single contract” on the employment horizon.

Clara Herreros

Garrigues Labor and Employment Department