(CN) - Spain's attempt to patch over its temporary worker problem unraveled Tuesday, as Europe's top court made clear that countries can't fix job insecurity with a system that keeps people stuck in it.
A child care worker in Madrid spent years cycling through temporary contracts and went to court seeking recognition as a permanent employee. Spain's Supreme Court, unsure whether its system lines up with EU labor rules, asked whether stopgap fixes like capped compensation or a status that is technically open-ended but still not truly permanent are enough.
The Court of Justice of the European Union said no.
EU labor law allows temporary contracts, but not when they are rolled over again and again to fill what are, in reality, permanent jobs. If that happens, countries must step in with remedies that actually deter abuse, not ones that simply soften the impact.
"A measure offering effective and equivalent safeguards for the protection of workers must be capable of being applied in order duly to penalize that misuse and to nullify the consequences of the breach of EU law," the court said.
Spain's system, the judges found, falls short.
Spanish courts have tried to address abusive hiring by shifting workers into a hybrid category, an "indefinite" contract that is still not permanent. On paper, it offers stability. In practice, a job can still end once the position is filled through a formal competitive process.
"The conversion of successive fixed-term contracts into a 'non-permanent employment relationship of indefinite duration' does not prevent the abuse of such contracts from continuing, since the contractual relationship between the parties concerned remains temporary in nature and thus perpetuates the insecurity of the worker concerned," the judges wrote.
Spain also relies on financial compensation when those contracts end, typically capped at 20 days' pay per year worked, up to a maximum.
"Such compensation cannot constitute either proportionate and effective compensation for instances of abuse that exceed a certain duration in terms of years or adequate and full compensation for the damage resulting from such abuse," the judges said.
The court also looked at Spain's recent push to clean up the system, including letting public bodies face liability for abusive hiring and rolling out mass hiring drives to finally fill long-held temporary roles through open competitions.
Judges found that still misses the point. Opening those jobs to everyone, even with some credit for experience, does not undo years of abuse or stop it from happening again.
EU rules start from a straightforward premise: Permanent jobs are the default, and temporary contracts are meant for genuinely short-term needs. They can be used, but not recycled over and over to cover the same long-term roles. Spain's public sector has long blurred that line, with teachers, health care staff and clerical workers often kept on back-to-back temporary contracts for years while doing work that never really ends.
Spain has tried to square that with its constitutional requirement that permanent public jobs be filled through open, merit-based competitions. That is why courts cannot simply turn those workers into full civil servants overnight.
Instead, those workers land in a middle ground. They keep working, with similar pay and conditions, but without true job security and with the risk of being replaced once the position is formally filled.
The EU court's message is that this halfway fix leaves the core problem untouched: The instability remains, even after the abuse has been recognized.
Valerio De Stefano, a labor law professor at Osgoode Hall Law School at York University, said the ruling cuts through the logic behind Spain's approach.
"In my view, the judgment rightly confirms that a remedy based on compensation rather than conversion into an open-ended employment relationship does not meaningfully respond to the logic of preventing abuses," he said, adding that compensation risks turning violations into "a calculable and absorbable cost of doing business."
He noted the ruling reinforces a broader principle: Indefinite employment is not just one option among many, but the baseline. "If abuse of successive fixed-term contracts can be established and yet the worker remains trapped in temporariness, the core rationale of the directive is plainly undermined," he said.
More broadly, he added, the ruling could mark a meaningful shift in how workers are protected. Temporary jobs often come with less stability and bargaining power and fewer workplace rights. The judgment signals that EU law is not meant to tolerate systems normalizing that gap instead of closing it.
The court stopped short of spelling out a single fix, making clear EU law does not require automatic conversion into permanent jobs but does demand something that actually works.
"It is for the national authorities to adopt measures that are not only proportionate, but also are sufficiently effective and act as a sufficient deterrent," the court said.
That leaves Spain with a tight balancing act: Respecting its constitutional hiring rules while finally putting an end to the abuse of temporary contracts.
Lawyers for the worker and representatives of the Spanish authorities did not immediately respond to requests for comment.
The case now goes back to Spain's Supreme Court, which must apply the ruling to the worker's situation. The decision is binding and cannot be appealed, leaving national judges to decide what remedy, if any, finally brings the employment relationship into line with EU law.
Courthouse News reporter Eunseo Hong is based in the Netherlands.
Source: Courthouse News Service
