On 10th January 2012 a new law was published regarding the exceptional extension of fixed term contracts, as well as the respective regime and method of compensation calculation which is applicable to said contracts.

Already foreseen in the Memorandum of Understanding, Law 3/2012 has approved the exceptional regime under which fixed term contracts that terminate until 30th June 2013 can be exceptionally renewed on two occasions, notwithstanding the current legally established limits (of renewals or total contract duration).

The two extensions can not exceed 18 months in total, and the minimum period for each extension can not be inferior to a sixth of the maximum duration of the fixed term contract or of its real duration (whichever is lower).

Notwithstanding, the contract with all its renewals must terminate until 31st December 2014.

Should, however, the various aforementioned limits be exceeded, the fixed term contract will be automatically converted into a long term contract.

The compensation due to the employee is equally established in this law, as it creates a variable calculation system. The compensation due until the first renewal is calculated in accordance to the regime applicable to the contract on the date it was signed; however, upon the first renewal, the compensation shall be calculated in accordance to the rules in force at the time.

Thus considered, the employee is entitled to a compensation which results from a sum of multiple compensation calculations, varying in accordance to the applicable law.