Employment - Legislative and case law developments

1. Royal Decree 633/2025 on the new 2025–28 Employment Strategy approved

The Council of Ministers has approved Royal Decree 633/2025 of 15 July on the new Employment Policy Strategy, which came into force on 17 July 2025. This regulation establishes the framework that will guide employment policies and labour intermediation mechanisms in Spain for the next four years. With its entry into force, the previous 2021–24 Strategy is repealed.

2. Supreme Court rejects higher compensation awards for unfair dismissals

The  Supreme Court has ruled that courts cannot increase the compensation for unfair dismissal provided in article 56.1 of the Workers’ Statute by taking into account the specific circumstances of the case. Otherwise, this would constitute a violation of Article 10 of ILO Convention 158 or Article 24 of the revised European Social Charter, which only state that compensation must be adequate.

3. Workers on reduced hours are entitled to receive the full global shift supplement

The Supreme Court has confirmed that non-salary distance supplements must be paid in full to workers on reduced hours for family or work-life balance reasons. These amounts cannot be reduced in proportion to the time worked.

4. Unilaterally imposing weekend work is void, despite it being contractually agreed

The Supreme Court has ruled that changing the working week from Monday to Friday to Monday to Sunday is a substantial modification of working conditions because the workers had been working from Monday to Friday for years. It must therefore be processed in accordance with the procedure set out in article 41 of the Workers’ Statute, even if it was agreed in the contract.  The company’s unilateral decision to change the working week is thus null and void.

5. Collective dismissals not invalidated by failing to give six months' notice of workplace closure

The National Court has ruled that failing to provide six months’ notice of workplace closure does not invalidate collective dismissals, setting an important precedent for the management of collective dismissals within business groups.

6. Companies that have furloughed staff can pay dividends from previous years’ reserves

The National Court has ruled that the prohibition to pay dividends after furloughing staff only applies to profits from the same financial year and not reserves from previous years. The Court therefore rejected the Social Security Authority’s criterion that dividends from previous financial years could be distributed under the applicable rule.

7. Collective agreements and sectoral agreements enhance LGTBI protocols and promote workplace equality

The new sectoral collective agreements include anti-discrimination and anti-harassment protocols based on sexual orientation and gender identity, which cover investigation procedures. This is because companies must guarantee inclusive work environments, safeguard the confidentiality of individuals who report incidents and protect them against reprisals. The agreements ensure equal family rights, regardless of sexual orientation, and impose penalties for discriminatory comments. Mandatory equality plans have also been reinforced, and sectoral observatories have been established to monitor these measures.