Considerations about fixed-term employment contracts

About fixed-term contracts

Before analyzing fixed-term contracts in depth, it must be considered that these types of contracts are exceptional by their very nature. The aforementioned is due because labor legislation seeks to eliminate instability and promotes those that support job stability.

"This is so because our legal-labor system is developed from a social rule of law, whose orientation is aimed at guaranteeing labor and social rights of workers, with a clear vision of reducing instability, synonymous with insecurity for those groups. The promoters of the current labor legislation, without a doubt, were clear that labor instability of workers had to be avoided since it is a factor that threatens the livelihood of families and, therefore, could trigger individual and collective actions that put the peace and stability of the country. In this way, our legal system, in accordance with the purpose of labor law, is not satisfied with the present of the worker but seeks to ensure his future, promoting contracts for an indefinite period"(Resolution 220-2005 of the Second Chamber of the Supreme Court of Justice at 09:45 a.m. on March 30, 2005).

This same premise is developed through sections 26 and 27 of the Labor Code, of which specifically section 26 reads:

"The employment contract may only be stipulated for a specific period in those cases in which its conclusion results from the nature of the service to be provided. If after expiration of its term the causes that gave rise to it and the subject matter of the work subsist, it will be considered as a contract for an indefinite period, as long as it benefits the worker, that in which the nature of the work is permanent.”

From the above, it can be concluded that employment contracts should always be signed for an indefinite period, and only in exceptional situations in which the nature of the service justifies it may they be signed for a fixed term. That is, fixed-term contracts must be only signed in response to situations that necessitate a fixed-term contract out of necessity, for example: replacing a disabled worker, maternity leave, or developing a specific temporary project.

In each of these situations, once the replaced position holder has returned or the temporary project has ended, the reason or need for the hiring ceases to exist. Therefore, the signing of a temporary contract is justified, which in a negative example, does not occur if the reason for hiring persists, that is, if the project continues or if the position holder does not return.

Therefore, in the event of facing a judicial claim in which it is discussed whether the hiring was under a fixed-term or indefinite-term contract, it will be the employer who must demonstrate that the reason for which the worker was hired was temporary, that is, the hiring occurred to execute a specific temporary project or to replace a temporarily vacant position.

It is also essential to take into consideration the duration of the contract, since if extensions are made that extend the validity of the fixed-term contract for more than one year, the figure of the temporary contract is distorted and converted into one for an indefinite period in accordance with ordinal 27 of the Labor Code, which states that:

The employment contract cannot be stipulated for more than one year to the detriment of the worker;(…).

The exception to this rule is when it comes to positions that require specialized technical preparation, in which case a period of up to 5 years may be established.

"That is to say, contrary sensu, it is accepted that the nature of the service provided by the server did not lead to his contracting for a specific period of time, since once the term that had been set for the extensions of said contract had expired, the causes that gave rise to it and the subject matter of the work always subsisted. (This situation is also deduced from the terms of the documents visible on pages 79, 72, 46, 40, 39, 32, 31 and 29). Consequently, since the nature of the work is permanent, the contract must be considered for an indefinite period (article 26 cited). To admit the existence of a term contract, as the appellants claim, would be to infringe the maximum period of one year allowed by section 27 of the Labor Code, go against the principle of continuity of the employment relationship and harm not only to the worker, but to those who depend on him. Nor is there, as the court pointed out, an exceptional case in which, due to the nature of the functions entrusted to the plaintiffs, special technical preparation was required, since their tasks were that of a field inspector (which was not objected to by the appellants), so it could not be said that was within the five-year exception for term contracting provided for in the aforementioned article 27" (Resolution 951-2013 of the Second Chamber of the Supreme Court of Justice of 10: 8 p.m. on August 16, 2013).

Fixed-term contracts can end for 3 reasons:

a) Compliance with the deadline stipulated between the parties. It is the most common form of contract termination; it is regulated in section a) of article 86 of the Labor Code.

b) Serious misconduct on the part of the worker. As in fixed-term contracts, if the worker incurs any offenses established in article 81 of the Labor Code, the employer could terminate the employment relationship without liability.

In both cases, the employer must only pay the Christmas bonus and vacations proportional to the time worked.

c) Early termination.Per the provisions of article 31 of the Labor Code, each party may terminate the fixed-term contract in advance. However, the party that does so must compensate the other for any damages caused.

Likewise, if the employer terminates the employment relationship, he must pay the employee the equivalent of one day's salary for every seven days of continuous work performed; in no case may this sum be less than three days' salary. Furthermore, if the contract has been stipulated for six months or more, the aforementioned additional compensation may never be less than twenty-two days of salary.

It is important to indicate that the terms of notice and layoff should not be cancelled, since these are figures specific to indefinite-term contracts.

At Bufete Godínez y Asociados, we specialize in counseling and advising employers in labor and employment law. If you need any additional information, do not hesitate to contact us by clicking here.


About the Autor

Jairo José  Cerdas

Jairo José Cerdas

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