Labor and Employment | Third Quarter 2025

In this newsletter, we highlight the main labor developments for the third quarter of 2025. This includes (i) the extension of parental leave for childbirth; (ii) the publication of the Strategic Plan of the Labor and Social Security Inspectorate for 2025–2027; (iii) the important rulings on severance pay adequacy; (iv) approval of equality plans; (v) dividend distribution, digital disconnection and the use of algorithms in the business environment; and (vi) the failure of parliament to process the reform reducing the maximum length of the ordinary working day, and the continuity of the project to modify the working hours register. 

Please read our summary, which we have specially designed to facilitate strategic decision making at your company. 

Contract suspension for childbirth

• On July 31, 2025, Royal Decree Law 9/2025 of July 29, 2025, extending birth and childcare leave ("RDL 9/2025") entered into force. It extended the length of parental leave, increasing the general period by three additional weeks—19 weeks for two-parent families and 32 weeks for single-parent families—and with partial retroactive application to causal events occurring from August 2, 2024.  RDL 9/2025 has already been ratified in the lower house of the Spanish parliament. More details. 

New Strategic Plan of the Labor and Social Security Inspectorate

• On September 12, 2025, the Official Gazette of the Spanish State published the new Strategic Plan of the Labor and Social Security Inspectorate (ITSS), 2025–2027, which will guide ITSS members over the next three years. Its cornerstones focus on controlling the use of temporary contracts, permanent seasonal contracts and collective bargaining. It also gives relevance to digitalization, big data and strengthens the inspectorate. More details. 

Severance pay 

• In its judgment of July 16, 2025 (number 736/2025,), the Labor Division of the Supreme Court declared that the amount of compensation for unfair dismissal established in article 56 Workers Statute is appropriate and in line with the ILO Convention 158 and the revised European Social Charter.

Absenteeism 

• The increase in absenteeism is a challenge for companies. One of the tools used to incentivize attendance at work is the variable remuneration scheme. However, Act 15/2022, of July 12 on comprehensive measures for equal treatment and non-discrimination and court rulings have significantly raised the bar for designing these incentives, obliging companies to review their policies to avoid discrimination and legal and reputational risks. 

Equality plans 

• The failure of labor unions to respond to a company’s request to negotiate an equality plan does not automatically enable the company to unilaterally approve the plan. Only in exceptional and substantiated situations of negotiation deadlock could this approval be justified, and always provisionally. This was declared in the recent ruling of the Labor Division of the Supreme Court of May 7, 2025 (number 388/2025). More details. 

Dividend distribution 

• The ruling of the Spanish Court of Appeals of June 11, 2025 (appeal 12/2025, Judicial Review Division) on the scope of the prohibition on dividend distribution in companies that have benefited from exemptions from social security contributions based on COVID-related temporary redundancy plans (“COVID ERTE”), declared that it is possible to distribute reserves from previous years, because they are not attributed to the results from the financial year in which the COVID ERTE was applied.

Digital disconnection, algorithmic information and data protection  

• Regarding digital disconnection, court rulings reinforced workers’ rights to not be obliged to respond to work-related communications outside of working hours, and also to not receive them. More details.
• Regarding the obligation to provide information on the use of algorithms to workers’ legal representatives, as established in article 64.4 Workers Statute, the Court of Appeals in its ruling of July 4, 2025 (number 101/2025, Labor Division), declared that this information should be provided to labor union representatives in relation to a tool for managing breaks, because it contained an algorithm and influenced decisions affecting working conditions.
• In a consultation on the use of biometric systems in the Civil Guard, the Spanish Data Protection Agency (“AEPD”) pointed out its position on biometric data processing for security purposes in the public sector. The AEPD acknowledged that there are sectors in which legal authorization for the use of biometrics can derive from regulations with the force of law other than labor legislation, which could be interpreted as a certain degree of flexibility on the use of biometrics. 

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