Labor and Employment | Third quarter 2026

In this newsletter, we highlight the main labor and employment developments corresponding to the third quarter of 2026:

• Royal Decree 723/2026 reinforces employers’ obligations to provide information to employees before the employment relationship starts.
• Act 4/2026—which enters into force on October 23, 2026—amends the Workers Statute (“WS”), the General Act on the rights of persons with disabilities (the “General Disability Act”), and the Dependency Act in relation to disability, dependency and work-life balance.
• Key court rulings from the third quarter of 2026 regarding working time, remuneration, and termination of employment agreements.
• Potential future developments include the approval of the Royal Decree on pay transparency, which amends Royal Decree 902/2020 and partially transposes Directive (EU) 2023/970.

New information obligations

• Royal Decree 723/2026 of September 9, 2026 (“RD 723/2026”), published in the Official Gazette of the Spanish State (“BOE”) on September 15, 2026, partially transposes Directive (EU) 2019/1152 on transparent and predictable working conditions, and repeals Royal Decree 1659/1998 in its entirety. It entered into force on October 5, 2026, and applies to all employers and employees with employment relationships lasting over four weeks.
• The development with the greatest practical impact is that the information required must be provided prior to starting the employment relationship (rather than within a two-month period as under the previous regulation). Any modifications must be communicated in writing before the change takes effect or, at the latest, on its effective date. For certain matters, the information can be provided by referring to legislation or the applicable collective bargaining agreement.
• Information that must be disclosed:
• Breakdown of salary: including base salary and each salary supplement—stated separately—and variable remuneration. The calculation method and eligibility criteria must also be stated.
• Working time arrangements.
• Probationary period: its specific duration and reciprocal obligations; any extension beyond the six-month limit in the agreement must be justified.
• Algorithmic systems involved in decisions on working hours, task allocation, salary and dismissal.
• Applicable collective bargaining agreement, equality plan, harassment protocol, LGBTI+ measures, dismissal procedures and notice periods, and grounds for temporary contracts.
• For existing employment relationships, the employer has 30 days following the employee’s request to provide this information.
• Information can be provided on paper or electronically, and the employer must keep proof of transmission or receipt. The State Public Employment Service has published a template employment contract on its website that can be used as a reference for employers when providing the required information. It needs to be reviewed and completed in line with the circumstances of each employment relationship to ensure full compliance with the information obligations.
• Failure to provide information is considered a minor infringement (article 6.4 of the Spanish Labor Infringements and Sanctions Act) and will result in fines of €70 to €750. Repeat offenses and widespread non-compliance increase the associated risk. Any discrepancy between the employment terms set out in the information document and those applied in practice could be used as evidence in support of the employee’s claims.
• Hiring processes must be reviewed and adapted to these new obligations. For more information, see RD 723/2026: new employer information obligations in Spain

Act 4/2026: disability, dependency and work-life balance

• Act 4/2026, of October 1 (published in the BOE on October 3), introduces changes to the WS and amends Royal Legislative Decree 1/2013 (General Disability Act) and Act 39/2006 (Dependency Act), in accordance with article 49 of the Spanish Constitution. This act will enter into force on October 23, 2026.
• These are the main developments: 
• Reduced working hours (article 37.6 WS): employees’ right to reduce working hours for caring for a son or daughter (till 18, 23, 26 years of age) who has cancer or another serious illness has been extended to adoptive parents. When a child has a severe disability or severe dependence and needs continuous care, the right can continue beyond that age as long as the need for care remains duly substantiated and the employee and child continue to live together.
• In these cases, both parents can exercise the right simultaneously, dividing the reduction between them proportionately, regardless of their marital status and provided that the combined reduction does not exceed 100% of the working day. Employers can no longer restrict simultaneous use where both parents work for the same company.
• Failure by the employer to make reasonable adjustments for the employee is considered discrimination, and the employer’s obligation extends to employees who provide care for family members. Discrimination by association is also expressly recognized, in line with the Court of Justice of the European Union’s doctrine.
• The primary caregiver (as defined in article 4 bis of Act 39/2006) is granted a distinct status as a priority group under employment policies and is entitled to specific work-life balance rights.
• New disability assessment framework (article 4.2 of Royal Legislative Decree 1/2013): certain officially recognized levels of dependency are deemed equivalent, for legal purposes, to specified degrees of disability. This may affect compliance with the 2% quota for the employment of persons with disabilities under article 42 of Royal Legislative Decree 1/2013.
• Before the regulation enters into force, employers should review internal procedures for requesting workplace adjustments and reduced working hours, as well as their equality plans.

Key court rulings

Working time, leave, vacation and public holidays

• Public holidays falling immediately after vacation cannot be counted as vacation (Spanish Supreme Court judgment of April 27, 2026, no. 450/2026)
  The Spanish Supreme Court (“SC”) ruled against company practices that treat every day up to the employee’s actual return to work as a vacation day. So, if a vacation period was directly followed by a public holiday, this was deducted from the employee’s vacation entitlement. The SC ruled that a public holiday retains its status even if it immediately follows a vacation period.
• Leave to care for family members: employers cannot demand evidence that employees live with relatives nor that they are primary caregivers (SC judgment of April 15, 2026, no. 373/2026)
  For the purpose of taking leave under article 37.3(b) of the WS, the company practice of requiring the employee to provide evidence of living with the family member or acting as their caregiver, in addition to providing evidence of the triggering event, is null and void. The SC considers that Spanish legislation provides more extensive protection than Directive (EU) 2019/1158 regarding work-life balance for parents and carers. Employees are required only to give prior notice and justification of the circumstances giving rise to the leave and the relevant family relationship. The concept of care must be interpreted broadly, with the sole limitation being abuse of rights, which the employer must prove.

 Remuneration

• Unilateral changes to variable remuneration based on individual objectives (SC judgment of July 7, 2026, no. 633/2026)
  The SC upheld a change to an incentive scheme following information and consultation with employee representatives. This was because the applicable collective bargaining agreement distinguished between individual objectives (which only required information and consultation with representatives), and collective objectives (which required negotiation and agreement with representatives). Since the changes only affected individual objectives, the employer only had to inform and consult the representatives. Had the agreement not made this distinction, the outcome could have been different, in which case articles 41.6 and 82.3 of the WS would have applied.

• Attendance bonus and absences included in the calculation (SC judgment of June 16, 2026, no. 547/2026)
  A company collective bargaining agreement awarded an attendance bonus for uninterrupted attendance. The employer excluded paid leave, contract suspensions and temporary incapacity (“TI”) from the calculation. In a plenary session, the SC held that the following cannot adversely affect the bonus: (i) work-life balance leave (for a family member’s hospitalization, force majeure, parental leave and breastfeeding), as this would be indirect gender-based discrimination; (ii) TI, regardless of cause, as this would be direct discrimination on grounds of illness (Act 15/2022); (iii) suspensions under article 48.4–8 of the WS; (iv) trade union leave; and (v) prenatal leave. However, absences due to certain leave entitlements can still be treated as days not worked, including leave for marriage or civil partnership registration, bereavement, relocation, compliance with a mandatory public duty, examinations, and inability to access the workplace.

Termination of employment

• Protection against retaliation and an informal objection to increased working hours (SC judgment of June 23, 2026, no. 562/2026)
  An employee had a disagreement during a conversation with her employer about extending her working week to Saturdays. Six days later, the employer dismissed her but recognized that the dismissal lacked legal grounds and was unfair.
  The SC declared the dismissal null because the disagreement, together with the fact that she was dismissed so soon afterwards, was enough to suggest that the dismissal may have been retaliation, and the employer could not prove otherwise. Although the SC defined the circumstances as exceptional, the judgment confirms that the protection against retaliation can extend to objections or complaints that have not been formally raised.
• Final settlement agreement signed on the day of dismissal (SC judgment of June 10, 2026, no. 532/2026)
  On the same day as the disciplinary dismissal, the employer and the employee signed a settlement agreement acknowledging that the dismissal was unfair and providing for compensation of €20,000, compared with the approximately €64,000 that would have been payable under the law. The agreement was to be ratified in conciliation proceedings, but the employee refused to do so.
  Although the SC dismissed the appeal on procedural grounds, it took the opportunity to clarify when final settlement agreements are legally binding. The SC reiterated that, for such agreements to validly waive future claims, several conditions must be met: the agreement must clearly identify and break down the amounts and claims covered; payment must have been made or unequivocally promised; the agreement should be entered into separately from the dismissal itself; the employee’s consent must be free and informed; and both parties must make concessions. In addition, the agreement only covers those claims that are expressly identified in its terms.

Potential future developments

• Pay transparency
  The draft Royal Decree amending Royal Decree 902/2020 of October 13 on equal pay for women and men, which partially transposes Directive (EU) 2023/970 on pay transparency, was open for public consultation until August 24, 2026. The deadline to transpose this directive was June 7, 2026.
  The general election called for November 29 does not prevent the Royal Decree from being adopted, as the government retains its full powers until then. The fact that the transposition deadline expired on June 7, 2026, may increase the likelihood of adoption.
• Public Treasury contributions, self-employment and unemployment protection
  A public consultation was also opened from October 5 to 16 on the draft Royal Decree amending Act 20/2007 of July 11, on the Self-Employed WS; Royal Decree 625/1985 of April 2, implementing Act 31/1984 of August 2, on unemployment protection; and Royal Decree 1484/2012 of October 29, on the financial contributions payable by profitable companies carrying out collective dismissals affecting employees aged 50 or over.

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