Employment - Legislative and case law developments

1. RED system for the automotive sector extended until June 2026

The Spanish Council of Ministers has extended the special employment-support (“RED”) system for the automotive sector until 30 June 2026. The aim is to continue to help workers to retrain and transition to new roles in response to structural changes in the sector. To be eligible, companies must have previously used a furlough scheme (ERTE) and be part of the relevant National Classification of Economic Activities (CNAE) sector and its value chain. They must also commit to maintaining employment and prohibiting redundancies or ETOP measures with respect to the affected workers for the following two years.

2. New system for subsidies and training from February 2026

Royal Decree 1189/2025, in force since 1 February 2026, has reformed the system for employment-related subsidies and training. It maintains the direct award of grants under the Agricultural Employment Promotion Programme and introduces financial aid for attendance at training courses for specific groups. It also reinforces the deadlines, oversight mechanisms and documentation requirements linked to contribution rebates, as well as ensuring the continuity of the Joint Sectoral Committees during the transition period.

3. Overview of Royal Decree-Law 16/2025: pension revaluation, social security contributions and employment protection

Royal Decree-Law 16/2025 introduces urgent measures relating to pensions, public benefits, social security and employment for 2026. It sets a maximum monthly public pension of €3,359.60 and a general revaluation of 2.7%. It also extends the application of the 2025 statutory minimum wage and limits objective dismissals linked to increased energy costs if the employer has received public aid.

4. Dismissal for post-hire incapacity unfair without proof of prior reasonable adjustments

The Supreme Court has confirmed that a medical report declaring a worker “unfit for work” does not, in itself, constitute grounds for dismissal for post-hire incapacity. Based on the CJEU case law and Directive 2000/78/EC, the employment contract cannot be automatically terminated unless the company proves that it has made reasonable adjustments, offered an alternative suitable position or demonstrated that such measures would place an undue burden on the company. The medical report must specify the worker’s functional limitations and how they affect their role. As there was no evidence that the employer had made any efforts to implement reasonable adjustments or offer alternative roles, the dismissal was deemed unfair.

5. End of wage-setting priority: company agreement salary tables must be aligned with state-wide collective bargaining agreements

After Royal Decree-Law 32/2021 removed company-level wage-setting priority, the Supreme Court has ruled that sectoral collective bargaining agreements now prevail in this respect. Transitional provision six of Royal Decree-Law 32/2021 establishes that this applies to previous collective bargaining agreements once they expire or until 31 December 2022, at the latest. In the case at hand, the Supreme Court ruled that the salary tables in the company agreement were null because they did not align with those in the state-wide collective bargaining agreement for security companies. The reason for this is that they were published after the state agreement came into force and they were not considered collective bargaining agreements outside the statutory framework.

6. Dual pay scale excluding newly hired air traffic controllers from transitional personal job-adaptation allowance declared void

The Supreme Court has ruled that a non-offsettable temporary personal wage supplement is null because it is reserved only for certain senior controllers only and excludes new hires, despite all of them carrying out the same work. The National Court approved the supplement on the basis that it compensated for the increase in working hours imposed by Law 9/2010.

However, the Supreme Court has rejected this reasoning, finding no genuine link between the supplement and the increased working hours, which affected all controllers in the same way. The court clarified that differences in remuneration cannot be justified by the date on which workers join the company unless there are objective and reasonable grounds for doing so.

The court further held that the agreement artificially created inequality by reducing the existing job-related supplement and replacing it with an equivalent payment available only to certain workers. The court therefore recognised the right of all air traffic controllers to receive the supplement on equal terms.

7. Inadequate risk assessment during breastfeeding constitutes sex-based discrimination

The Supreme Court has ruled that if a worker is breastfeeding, an adequate risk assessment must be carried out. The company and the mutual insurance company are responsible for proving the absence of risk when this assessment does not specifically identify the risks associated with exposure to chemical agents. In accordance with CJEU case law (specifically, case C-531/15, Otero Ramos), the court applied a strict precautionary principle and reversed the burden of proof, since an inadequate assessment constitutes direct sex-based discrimination. The mutual insurance company’s risk assessment did not meet the legal requirements: it was carried out by unqualified staff, it failed to identify the specific cytostatic drugs, it omitted measurements and failed to justify why the preventive measures were effective. The Supreme Court upheld the appeal and recognised the worker’s right to suspend her contract due to risk during breastfeeding, as well as her right to payment of the corresponding benefit.

8. Voluntary off-schedule medical transport services qualify as overtime

The Supreme Court has ruled that work carried out outside the scheduled hours by medical transport workers who voluntarily agree to provide services at special events constitutes overtime. The court rejected the argument that these hours could be deferred until the annual overtime time is calculated or compensated through an availability bonus, as this would contradict both the work schedule and the collective bargaining agreement. The court clarified that its nature as voluntary is a defining feature of the overtime regime, not of ordinary working time. Accordingly, all hours worked for the same employer must be calculated together and compensated in accordance with the collective bargaining agreement, primarily through time off in lieu and, where this is not possible, through financial compensation within the established time limits.

9. An absence-related disciplinary “month” runs from date to date rather than by calendar month

The Supreme Court has ruled that when a collective agreement penalises absences that take place “in a month”, this period should be calculated continuously from the first absence, rather than by reference to  calendar months. This interpretation is based on article 5 of the Civil Code and established case law on absenteeism. It ensures that absences at the end of one month and beginning of the next are not overlooked.

The court also refused to apply the in dubio pro operario principle, holding that the meaning of the collective bargaining agreement is clear from both its literal wording and its context. On this basis, the court concluded that the employee committed a serious offence and that disciplinary dismissal was therefore justified.