Labor and Employment | Second quarter 2026

In this newsletter, we highlight the main new developments in labor and employment law (approved or in the approval phase) corresponding to the period between April and June, 2026, and we include a selection of relevant judgments issued by the courts during this period.

Middle East crisis: prohibition on dismissals and other conditions

• Royal Decree-Law 18/2026 of June 29 (Official Gazette of the Spanish State (“BOE”) dated June 30) reinforces the conditions to which the companies benefiting from direct aid in the context of the Comprehensive Response Plan to the Middle East Crisis are subject. This regulation:
• extends until September 30, 2026, the prohibition on dismissals on the grounds of force majeure and on economic, technical, organizational, or production (“ETOP”) grounds related to the crisis (including permanent seasonal workers); and
• converts the obligation for companies to have a sustainable mobility plan under the terms of Act 9/2025 into a condition for keeping the direct aid received in the context of the crisis.

Reform of flexible retirement

• Royal Decree 416/2026 of May 27 (BOE, May 28), repeals the former flexible retirement regime (Royal Decree 1132/2002), replacing it with a new regime that makes more flexible the compatibility between the partial retirement pension and retaining employment whether as an employee or a self-employed person, with the aim of encouraging the voluntary extension of working life.
  This regulation consolidates the legislative trend towards active aging and voluntary permanence in the labor market.

Extension of RED mechanism for automotive industry

• Order PJC/654/2026 of June 29 (BOE, June 30), approved the second extension of the RED sectoral mechanism for the automotive manufacturing sector, keeping it active from July 1 until December 31, 2026.
  Companies benefiting from this mechanism assume reinforced commitments: i) they are prohibited from implementing individual or collective dismissals in relation to the affected workers during the two years from the end of the measures, and (ii) they must attach a retraining plan when filing the application.

New legislative developments in processing

Reform of working hours register

• The Spanish government is expected to approve a royal decree that will develop the obligations regarding recording working hours, following amendment of article 34.9 of the Workers Statute.
  Under the draft Royal Decree implementing the consolidated text of the Workers Statute on working time registration, the register must be exclusively carried out digitally, ensuring the reliability, immutability and traceability of the recorded data, and it is prohibited to use manual systems or paper. The draft Royal Decree extends the content of the register, establishing that both the Labor and Social Security Inspectorate, and the workers and their legal representatives have access to the register in real time. The Labor and Social Security Inspectorate can also do this remotely. Lastly, we highlight that companies must draft a document and record management protocol through consultation with the workers’ legal representatives.

 Draft Royal Decree on pay transparency

• The Spanish government has recently published an initial draft of the draft Royal Decree that will develop the pay transparency obligations, in the framework of the transposition of Directive (EU) 2023/970 of the European Parliament and of the Council of May 10, 2023, whose transposition period expired on June 7, 2026.
  The draft Royal Decree involves an amendment of Royal Decree 902/2020 of October 13, on equal pay for women and men. Of the new developments introduced, we highlight the individual right of workers to request information about the average salary levels for their category or equivalent job position, broken down by gender; the obligation to make available to the whole workforce the objective and neutral gender criteria used to determine salaries and salary levels, as well as the pay progression criteria; the nullity of contractual clauses that prevent workers from revealing or disclosing information about their pay; and the updating of the content of salary audits and of action plans to correct non-justified differences, which must be rectified within two months.

Key case law

Collective redundancy thresholds and geographic mobility (CJEU judgment 04.06.2026, C-907/24)

• The Court of Justice of the European Union or CJEU has declared that terminations of employment contracts due to worker’s refusal to accept a non-mandatory substantial transfer of place of work are included in the concept of “dismissal" and will be counted for the purposes of collective redundancy thresholds. The key factor lies with the mandatory nature and the substantiality of the geographical transfer.

Multi-causal collective redundancy: partial validity (Supreme Court judgment 27.03.2026, no. 335/2026)

• The Spanish Supreme Court (“SC”) has declared that a collective dismissal is in line with the law when there are proven organizational grounds despite the nullity of the economic grounds due to documentary deficiencies (omission of the corporate group’s documents). The nullity arising from a documentary defect exclusively affects grounds where documents are insufficient, without affecting the other grounds invoked.

Collective redundancy and employment group (SC judgment, 24.04.2026, no. 446/2026)

• The SC has upheld the negotiation of a collective redundancy within an employment group invoked by the company itself, without this constituting a fraudulent debut when there is a prior integration process known to the parties.
• The judgment develops the employment group doctrine: the group declaration is of a permanent nature and has the force of res judicata, meaning that an employment group that does not cover all the companies can exist within the corporate group.

Variable pay and absenteeism: double penalty (SC (en banc) judgment, 29.05.2026, no. 522/2026)

• Variable pay systems cannot apply reductions for absence arising from temporary incapacity, force majeure in relation to family, work-life balance leaves or disciplinary suspension. The proportionality of the time worked is licit if it is accompanied by an equivalent reduction of performance objectives.

Variable pay and work-life balance: indirect discrimination (SC judgment, 24.04.2026, no. 449/2026)

• The SC has declared discriminatory the requirement on pilots with reduced working hours due to legal guardianship to meet the same flight-hour thresholds as pilots working full time, to obtain the variable pay. The thresholds must be adjusted proportionally to the reduction percentage, and the amount must also be paid proportionally.
  The SC consolidates the double test to validate the variable pay policy: access test (adjusting thresholds) and proportionality test (proportional payment).

Attendance bonus: paid leave versus temporary incapacity (SC (en banc) judgment, 28.05.2026, no. 516/2026)

• Statutory paid leave, without exception, gives rise to a minimum remuneration entitlement unwaivable by the collective agreement and includes the attendance bonus. However, during temporary incapacity, the bonus does not accrue proportionally to the absence period, as it is a suspension of the contract. The SC warns that using temporary incapacity as a retention requirement for the bonus is discriminatory under Act 15/2022. 

Paid leave when force majeur (SC judgment, 17.04.2026, no. 416/2026)

• The SC has declared that leave due to force majeur under article 37.9 of the Workers Statute must be paid by law up to a minimum of hours equivalent to four days per year. The reference in the regulation to the collective bargaining agreement operates as an authorization for improving or developing the content of the right, and not for abolishing it.

Contractual subrogation and workforce succession (SC judgment, 22.05.2026, no. 494/2026)

• The SC establishes that, in labor-intensive activities with mandatory contractual subrogation, (i) the liability exemption clauses of the incoming company continue to be effective when it can prove that it has not assumed a significant quantitative or qualitative percentage of the workforce, and (ii) the burden of proof lies with the incoming company.

Concurrence of collective bargaining agreements: priority of sectoral agreement (SC judgment, 16.04.2026, no. 392/2026)

• The SC specifies that the collective bargaining agreement’s priority of application (article 84.1 Workers Statute) is not solely determined by the signature date, but also by the existence of an active sectoral bargaining unit. If the sectoral unit continues through successive agreements, the company-level collective agreement will only have the priority established in article 84.2 of the Workers Statute.

Working hours register, working time and burden of proof (SC judgment, 15.04.202, no. 372/2026 and SC (en banc) judgment, 23.04.2026, no. 444/2026)

• To determine working time, two different scenarios must be considered. When there are established and fixed working hours, the absence of time registers does not automatically shift the burden of proof, and workers must provide proof of overtime. However, in the case of remote working with flexible working hours and no effective employer control, reasonable doubt is resolved in favor of the remote worker, and the work-accident presumption under article 156.3 of the Spanish Social Security Act applies.

Inviolability of registered office against Labor and Social Security Inspectorate entry (SC judgment 14.04.2026, no. 441/2026)

• The SC has established as doctrine that the mere entry of the Labor and Social Security Inspectorate to premises that are both a legal entity’s registered office and a workplace requires prior judicial authorization. There is one exception: in cases in which there is clear physical separation between the registered office and the workplace, and the agents previously inform the legal entity that their action is limited to that area.

For additional information, please contact our Knowledge and Innovation Group lawyers or your regular contact person at Cuatrecasas.