Employment Newsletter March
Legislative Updates
1. Royal Decree-Law 7/2026 of 20 March, approving the Comprehensive Plan for the Response to the Crisis in the Middle East
On 22 March, Royal Decree-Law 7/2026 of 20 March, published in the Official State Gazette (BOE) on 21 March 2026, came into force. It incorporates labour measures relevant to companies receiving public aid in the context of the current international crisis:
- A restriction is imposed on redundancies linked to this situation. Specifically, companies receiving direct aid may not terminate contracts on grounds of force majeure or for economic, technical, organisational or production-related reasons linked to the crisis until 30 June 2026.
Failure to comply with this prohibition will not only result in the obligation to repay the aid received, but will also lead to the dismissal being declared null and void. This restriction also applies to permanent-seasonal workers and cooperatives. - The deadlines for the negotiation and implementation of sustainable commuting plans have been brought forward. Consequently, the timeframe for their preparation has been reduced from 24 to 12 months, affecting workplaces with more than 200 employees (or 100 per shift). Failure to comply with this obligation may also result in the repayment of direct aid received.
Case law
1. The SSGT is not obliged to automatically sign the special agreement for those over 55 in the event of dismissal if the company does not initiate it and the worker does not request it within the deadline
Judgment of the Supreme Court, Labour Chamber, No. 207/2026, of 25 February 2026
The employee, aged over 55, whose employment relationship was terminated as part of a collective redundancy, sought a declaration of the right to sign the special contribution agreement for those aged over 55, with the company, the National Social Security Institute and the Social Security General Treasury (“SSGT”) jointly and severally liable for the payment of contributions.
The Social Chamber of the Supreme Court (“SC”) concludes that the obligation to apply for the agreement lies primarily with the company and, secondarily, with the employee within 6 months of the dismissal. The SSGT has no obligation other than to enter into the agreement when requested to do so, and cannot be held liable for the company’s failure to comply or for the employee’s failure to apply.
2. The employee is not obliged to repay the salary-related sums received under the post-contractual non-competition clause if that clause was declared null and void
Judgment of the Supreme Court, Labour Chamber, No. 195/2026, of 25 February 2026
The issue is whether a 24-month post-contractual non-competition clause, which provided that any salary increase above the collective agreement would be considered compensation for that non-competition agreement, is valid and whether the employee would have to repay those amounts for having breached the agreement.
The SC concludes that the employee is not required to repay the amount paid because the sums paid in excess of the collective agreement wage were of a salary nature and not compensatory (since the clause linked the non-competition compensation directly to the salary during the term of the contract, without treating it as a separate and compensatory item). Therefore, no amount may be deducted from the salary corresponding to the provision of services as compensation for breach of the agreement.
3. Clauses allowing the withdrawal of the bonus from employees who have been sanctioned and its discretionary reduction without objective criteria are void
Judgment of the Supreme Court, Labour Chamber, No. 165/2026, of 17 February 2026
The claimant challenged two clauses in the incentive schemes unilaterally established by the company: (i) the clause that deprived employees of their bonus if they had been sanctioned for serious or very serious misconduct during the accrual period; and (ii) the clause that allowed the Area Manager to reduce the bonus by up to 15% (or more in exceptional cases). The Labour Chamber of the National High Court (“NHC”) declared both clauses null and void.
The SC endorses the NHC’s reasoning and (i) classifies the first clause as a disguised financial penalty, by depriving the employee of remuneration already accrued as a result of a disciplinary sanction, without contractual grounds or an appropriate procedure; and (ii) with regard to the second clause, concludes that the magnitude of the incentive cannot be left to the employer’s discretion without objective criteria, as this violates the principle of pay transparency.
4. It is discriminatory to exclude periods of sick leave for common illness from the minimum length of service required to qualify for the bonus
Judgment of the Supreme Court, Labour Chamber, No. 159/2026, of 12 February 2026
Three clauses of the collective agreement are challenged: (i) the clause allowing the company to postpone parental leave by invoking the centre’s activities in general terms; (ii) the clause excluding periods of temporary incapacity due to common illness exceeding thirty days from the calculation for the accrual of the performance-related bonus; and (iii) the clause attributing to the inter-centre committee the powers of consultation and negotiation in centres without unitary representation.
The SC partially upholds the appeal and declares null and void: (i) the exclusion of periods of temporary incapacity due to common illness from the calculation to meet the minimum length of service constitutes direct discrimination on the grounds of illness; and (ii) the provision requiring the intervention of the inter-centre committee in centres without unitary representation, because when the measure affects a single workplace without unitary representation, it is the employees of that centre themselves who must decide on their representation.
5. A parent other than the biological mother is not entitled to paternity leave in the event of intrauterine foetal death
Judgment of the Supreme Court, Social Chamber, No. 155/2026, of 9 February 2026
Following the intrauterine foetal death during an emergency caesarean section at 38 weeks’ gestation, the biological mother was granted the birth and childcare allowance, whilst the non-biological parent was denied it. Both the Social Court and the Chamber of the High Court of Justice (“TSJ”) of Catalonia upheld the father’s claim, considering that there was absolute equality between both parents.
However, the SC upheld the appeal, stating that: (i) given the death of the child before birth, the shared responsibility and work-life balance sought by the other parent’s benefit are rendered meaningless; (ii) Article 26.7 of Royal Decree 295/2009 expressly provides that the allowance may not be granted if the child dies before the start of the leave; and (iii) the right to equality is not infringed, given that the purpose of the allowance for the biological mother is the protection of her health, whereas for the other parent it is the sharing of care responsibilities, and these are not comparable situations.
6. It is not discriminatory to allow non-collectively-agreed staff in positions of responsibility a higher percentage of remote working
Judgment of the Supreme Court, Social Chamber, No. 142/2026, of 5 February 2026
The validity of a company’s remote working policy is under discussion. This policy allowed staff excluded from the collective agreement to work remotely from a location other than their usual place of residence during the summer and Christmas periods, whilst not granting the same option to staff covered by the agreement.
The SC concludes that there are objective circumstances justifying the distinction: staff not covered by the collective agreement are governed by private contracts, perform critical duties involving greater responsibility, and work on a full-time basis with full availability, which reasonably justifies compensation for their greater sacrifice.
7. The mere refusal of the specific working hours requested by an employee does not constitute an indication of discrimination on grounds of sex or a violation of fundamental rights
Judgment of the Supreme Court, Labour Chamber, No. 130/2026, of 4 February 2026
An employee working reduced hours due to caring responsibilities requested a further reduction to 20 hours per week and a fixed morning shift from Monday to Friday, eliminating Saturday work. The company accepted the reduction but refused the specific working hours, citing Article 37.7 of Royal Legislative Decree 2/2015 of 23 October, approving the consolidated text of the Workers’ Statute ("WS"), the collective agreement and organisational reasons. The Labour Court recognised the right to a fixed schedule without finding any violation of fundamental rights, but the HCJ of Galicia ordered the company to pay compensation for indirect discrimination on the grounds of sex.
The SC upheld the company’s appeal, arguing that: (i) the mere refusal to specify the working hours, provided the reasons are stated, does not in itself constitute a violation of the right to non-discrimination; (ii) the company had already granted a previous reduction in working hours; and (iii) it put forward plausible organisational reasons and made a new proposal to the employee, demonstrating that the organisational reasons were not linked to a discriminatory factor. All of this demonstrates that the reasons for the refusal were linked to organisational requirements and not connected to a discriminatory factor.
8. Invalidity of the company’s practice of imposing additional requirements for justifying sick leave not provided for in the collective agreement
Judgment of the Supreme Court, Labour Chamber, No. 116/2026, of 3 February 2026
The validity of a company practice is discussed which required, for the purpose of taking paid leave for medical treatment at private centres, a medical certificate attesting that the service was included in the public health system’s portfolio and that it could not be carried out outside working hours.
The SC concludes that this practice is invalid because the literal wording of the agreement does not allow for the inference of different control mechanisms depending on whether the healthcare centre is public or private. Furthermore, it notes that the private doctor is under no obligation to issue such a statement (which is of a legal, not medical, nature) and that the information sought forms part of the medical records, constituting particularly sensitive personal data in accordance with Article 9(1) of the General Data Protection Regulation 2016/679 ("GDPR"), and that the company cannot access data contained in medical records.
9. The five-day hospitalisation leave cannot commence after discharge from hospital
Judgment of the National High Court, Labour Chamber, No. 32/2026, of 19 February 2026
By means of a collective dispute claim, the claimant trade union challenged the company’s interpretation of leave for hospitalisation under Article 37(3)(b) of the WS, requesting: (i) the right of workers to continue to take leave following hospital discharge until the family member is medically discharged; and (ii) the right to commence taking leave following hospital discharge where the need for home care persists.
The NHC states that: (i) the five-day leave does not cease upon hospital discharge if this is not accompanied by medical discharge, since hospital discharge cannot automatically be equated with recovery or with the cessation of the need for care; and (ii) it cannot be taken after hospital discharge (even if the need for care persists). The NHC concludes that neither Article 37.3(b) of the WS nor the collective agreement provides for an independent post-hospital care leave unrelated to hospitalisation as the triggering event.
10. Disciplinary dismissal of a sales manager on temporary sick leave upheld on grounds of proven voluntary underperformance and lack of effective commitment, as established by a private investigator’s report
Judgment of the High Court of Justice of Cantabria, Labour Chamber, No. 180/2026, of 27 February 2026
A company dismisses a sales manager on disciplinary grounds for insubordination, breach of contractual good faith and continuous and voluntary decline in performance. The HCJ of Cantabria examines whether the dismissal is void because the employee was on temporary sick leave at the time of dismissal (due to primary essential hypertension).
The HCJ of Cantabria ruled out the invalidity of the dismissal on grounds of health-related discrimination, given that: (i) the company demonstrated that the employee’s performance had been significantly below the agreed level for twelve months (turnover of just €91,519, when the turnover target was €2.5 million over 18 months) and that the employee had not been carrying out work outside the home, as evidenced by a report from a private investigator; and (ii) there was a voluntary and continuous decline in performance, repeated failure to comply with reporting requirements and a breach of contractual good faith, which demonstrated that the dismissal was not related to his temporary incapacity.
11. A 24-hour period to submit representations in a disciplinary dismissal is insufficient
Judgment of the High Court of Justice of Asturias, Labour Chamber, No. 70/2026, of 27 January 2026
The claimant was dismissed on disciplinary grounds for breach of contractual good faith after playing the Falange anthem over the establishment’s loudspeakers during his shift, an incident recorded by a customer and which went viral on TikTok. The company granted him a 24-hour period to submit a defence in accordance with Article 7 of ILO Convention No. 158, after which it proceeded with the dismissal.
The HCJ of Asturias dismissed the appeal and upheld the ruling of unfair dismissal handed down at first instance. Applying the doctrine of the SC, it notes that Article 7 of ILO Convention 158 is directly applicable and requires that the worker be given a genuine and effective opportunity to defend themselves prior to dismissal. It concludes that the 24-hour period is inadequate to fulfil the purpose of the prior hearing, as it does not allow the worker to prepare their defence in a genuine and effective manner.
12. The use of a facial recognition system without consent infringes the right to one’s own image and entitles the employee to termination of the contract with compensation on the grounds of serious breaches by the employer
Judgment of the High Court of Justice of Galicia, Labour Chamber, No. 144/2026, of 15 January 2026
The following were challenged: (i) the installation of a facial recognition clocking-in system without the consent of the employees; and (ii) repeated delays in the payment of wages for over a year, with a claim for termination with compensation under Article 50 of the WS. The Social Court found that the rights to privacy and personal image had been infringed, but dismissed the claim for termination.
The HCJ of Galicia states that (i) there was a violation of the right to one’s own image and to the protection of personal data, but not of the right to privacy; (ii) the use of facial biometric data without consent contravenes Articles 6(1) and 9 of the GDPR, as none of the exceptions provided for the processing of sensitive data apply (particularly given that alternative means of recording working hours were available); and (iii) the termination of the employee’s contract with compensation is valid due to continuous delays in the payment of wages for over a year (Article 50(1)(b) of the WS) and a continuous violation of fundamental rights through a facial recognition system maintained despite warnings from the employees’ legal representatives (Article 50(1)(c) of the WS). Consequently, the company is ordered to pay €46,266.90.
Keep an eye on
1. The Council of State has issued an unfavourable opinion on the new time-recording system
The Council of State has issued an unfavourable opinion on the Royal Decree of the Ministry of Labour, which sought to tighten up time recording through the mandatory implementation of an interoperable digital system by the Labour Inspectorate. The advisory body concludes that "the proposed Royal Decree should not be approved", considering that the regulation exceeds its legal mandate and encroaches on the legislative reserve regarding data protection, as well as unduly undermining collective bargaining. The measure, separated from the bill on the reduction of working hours that was rejected in Parliament, sought to combat unpaid overtime by banning methods such as Excel spreadsheets and requiring tamper-proof digital systems.
One of the most critical points of the opinion is the assessment of the economic impact: contrary to the Ministry’s forecast that the cost would be practically zero, the Council of State estimates an initial cost of around 867 million euros for digital licences alone for Spanish companies, particularly SMEs, which account for 95% of the affected productive sector. Furthermore, the body warns that the mass digital registration of 16 million workers would seriously compromise the fundamental rights to privacy and data protection, by establishing control mechanisms lacking the necessary safeguards. This ruling reinforces the position of the CEOE and Cepyme, which had already signalled their intention to challenge the legislation in court should it go ahead.
2. Comments on the draft bill amending the Occupational Risk Prevention Act may be submitted until 8 April
The Government has launched a public consultation and information process, open until 8 April 2026, to receive contributions to the draft bill amending Law 31/1995 on Occupational Risk Prevention, the Workers’ Statute and the Regulations on Prevention Services.
Among the main changes envisaged in the draft bill are: the strengthening of protection against psychosocial, ergonomic and climate change-related risks (including disasters and adverse weather events); the renewal of the principle of adapting work to the individual, with new obligations such as procedures for returning to work following prolonged absences due to health reasons; the integration of gender and age perspectives into preventive management; and the incorporation of protective measures against situations of workplace harassment and violence, in line with ILO Convention 190.
Once the consultation period has ended, the draft bill will continue through the parliamentary process, although its approval is expected to be complex given the current parliamentary situation.
3. EU Inc and the potential for setting up businesses within 48 hours across the European Union
On 18 March 2026, the European Commission presented its proposal for the creation of EU Inc., a new European company form designed to facilitate the establishment and operation of businesses within the single market. Key measures include registration in under 48 hours for less than €100 with no minimum share capital requirements, simplified procedures via a single interface linked to national commercial registers, digital corporate operations by default, and simplified liquidation and insolvency processes allowing founders to ‘restart’ their projects, and the possibility of establishing EU-wide employee share option schemes with a favourable tax regime.
In addition, the Commission has announced that it will continue to analyse the feasibility of allowing 100% cross-border remote working for innovative start-ups and scale-ups within the Union, as part of the forthcoming Fair Labour Mobility Package.
The proposal will now be debated by the European Parliament and the Council, with the Commission’s stated aim of reaching an agreement before the end of 2026.
