Employment law in Spain (Derecho Laboral) is governed primarily by the Workers' Statute (Estatuto de los Trabajadores, Royal Legislative Decree 2/2015), the Social Security General Law (Ley General de la Seguridad Social, Royal Legislative Decree 8/2015), and a dense framework of collective bargaining agreements (convenios colectivos) operating at sector and company level. Key areas of regulation include individual and collective dismissal procedures — with specific formalities and compensation thresholds — mandatory equality plans for companies with 50 or more employees under Royal Decree 901/2020, daily working-time registration under Article 34.9 of the Workers' Statute, and harassment prevention protocols now compulsory for companies above 50 employees under Law 15/2022 on equal treatment. The Labour Inspectorate (ITSS) enforces these obligations and can impose fines of up to EUR 225,018 per serious infringement.
Our employment team understands that managing human capital goes far beyond legal compliance. We design labour strategies that protect your business, retain talent, and foster a productive, legally secure work environment.
This service is part of our legal advisory practice.
The Hidden Cost of Employment Law Non-Compliance
Spanish labour law is among the most technically demanding in Europe. The Workers’ Statute, the collective bargaining framework, the equality regulations, and the remote-work rules create a dense web of obligations that evolves with every legislative cycle. Non-compliance is not merely a theoretical risk: a single wrongly classified dismissal, an equality plan not properly registered, or a missing remote-work agreement can generate back-payment orders, fines, and reputational damage that far exceed the cost of proactive advice.
Our starting point is always an employment audit — a structured review of your contracts, HR policies, and practices that maps your current exposure and prioritises the most urgent corrective actions. This gives you a clear, actionable picture rather than a generic compliance checklist.
Dismissal Severance: The Numbers That Determine the Decision
The difference between a well-executed and a poorly executed dismissal in Spain is not procedural — it is financial. The Workers’ Statute establishes two severance levels depending on grounds and outcome:
| Dismissal type | TRLET Article | Severance | Cap |
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| Objective dismissal (economic, technical, organisational, production) | Art. 52 | 20 days/year | 12 monthly salaries |
| Unfair dismissal finding (no valid grounds or procedural defect) | Art. 56 | 33 days/year (45 days for service before 12/02/2012) | 24 monthly salaries |
On a 10-year employee earning €40,000 per year, the difference between the two scenarios exceeds €10,000. The choice of dismissal type, the documentation of grounds, and the wording of the dismissal letter are decisions made before the letter is issued. After that, the margin for manoeuvre disappears.
Additional Provision 23 of the Workers’ Statute, introduced by Royal Decree-Law 9/2021, presumes an employment relationship exists when a digital platform organises delivery workers through an algorithm. But the actual test applied by the courts goes beyond delivery: if a company’s algorithm assigns tasks, sets prices, or evaluates the performance of nominally self-employed workers, there is a reclassification risk — with corresponding obligations to regularise social security contributions, pay severance, and absorb sanctions. We advise companies with flexible workforce models and digital platforms on structuring their arrangements to reduce reclassification risk without abandoning the business models that make them competitive.
Dismissals Done Right
Terminations are the highest-risk area of Spanish employment law. The formal requirements differ by dismissal type, the severance calculations are precise, and the deadlines for challenge are short. A procedural defect — an incorrect date on the dismissal letter, a missing cause in the notice, a failure to consult — can convert an otherwise valid dismissal into an automatically unfair one, triggering higher severance or reinstatement.
We manage every stage: advising on the most appropriate route, drafting the documentation, calculating the settlement, and representing you at the SMAC conciliation and, if necessary, before the Social Court. For collective procedures involving restructuring, we lead the consultation period with employee representatives and coordinate with the labour authority to ensure a legally sound outcome.
Workforce Strategy in Corporate Transactions
When companies are acquired, merged, or restructured, the workforce dimension is often the most legally complex. Article 44 of the Workers’ Statute subrogates employment contracts automatically on a business transfer, and the acquirer inherits all existing liabilities. Our employment team integrates with our due diligence process to quantify workforce contingencies, identify unregistered employment relationships, and advise on post-closing integration strategies.
Building a Compliant, Attractive Employer
Beyond risk management, employment law is a tool for building a workplace that attracts and retains talent. We help you design equality plans that go beyond compliance to address real pay gaps, flexible-remuneration packages that optimise take-home pay with tax efficiency, and remote-work frameworks that give employees certainty while protecting management prerogatives. The result is a company that competes on quality of employment as well as salary.
Spanish employment law is structured around the Workers’ Statute (Estatuto de los Trabajadores, Royal Legislative Decree 2/2015, TRLET) as the primary source, with complementary regulation from:
- Royal Decree-Law 5/2023 (implementing EU Directive 2019/1152 on transparent working conditions), which requires written employment contracts detailing all material terms from day one of employment and imposed new notification obligations on employers.
- Royal Decree-Law 6/2019 on urgent measures for equality, which extended the mandatory equality plan obligation to companies with 50 or more employees and introduced a pay register obligation (registro retributivo) for all companies.
- Royal Decree 902/2020 on equal pay and pay transparency, requiring companies to maintain a salary register disaggregated by professional group, category, and level, broken down by sex.
- Royal Decree-Law 28/2020 on remote work, codified as Law 10/2021, which introduced the written remote-work agreement, the employer’s obligation to cover expenses related to work-from-home, and the right to digital disconnection (Art. 88 LOPDGDD).
- Law 15/2022 on equal treatment and non-discrimination, which broadened protected grounds beyond those in the Workers’ Statute and imposed protocols against discrimination in the workplace from 2022.
- Royal Decree-Law 9/2021 (Riders’ Law), Additional Provision 23 TRLET, establishing a legal presumption of employment status for delivery workers on digital platforms.
Each reform adds obligations that carry fines enforced by the Labour Inspectorate (ITSS). Under the Law on Infringements and Sanctions in the Social Order (LISOS, Royal Legislative Decree 5/2000), serious infringements carry fines of between EUR 751 and EUR 7,500; very serious infringements between EUR 7,501 and EUR 225,018 per proceeding. A single inspection resulting in a very serious infringement finding can cost more than the business owner’s annual professional advisory budget.
Sectors Most Affected
Hospitality and tourism is the highest-risk sector for labour compliance in Spain: high turnover, seasonal contracts, collective bargaining agreements with complex supplementary provisions, split-shift arrangements requiring specific documentation, and frequent use of discontinuous permanent contracts (contrato fijo-discontinuo) introduced as the standard form by the 2021 labour reform.
Logistics and transport faces dual classification risk (TRADE — economically dependent self-employed — versus employee) for distribution and last-mile delivery workers, plus the Riders’ Law algorithmic management presumption for platform-based operations.
Technology and startups increasingly use nominally self-employed or contractor arrangements for their core technical workforce. The economic-dependency test (Art. 11 et seq. of Law 20/2007 on the Statute of Autonomous Workers, LETA) creates reclassification risk wherever a contractor derives more than 75% of income from a single client — a common situation in early-stage ventures.
Retail manages both collective bargaining complexity (multiple sector agreements at provincial and national level) and high inspection frequency from the ITSS, particularly on time-registration compliance and temporary contract conversion obligations.
Collective Dismissal (ERE): Numerical Thresholds and Consultation Period
A collective redundancy (Expediente de Regulación de Empleo, ERE) is triggered when dismissals within a 90-day period affect:
- 10 or more employees in companies with fewer than 100 workers;
- 10% or more of the workforce in companies of 100 to 299 employees;
- 30 or more employees in companies with 300 or more employees.
The procedure requires a formal consultation period of up to 30 days (15 days in companies with fewer than 50 employees) with the legal representatives of the workers — workers’ committee (comité de empresa) or trade union delegates. During this period the employer must provide a full report documenting the grounds, the selection criteria for affected employees, the measures proposed to minimise the impact (outplacement, retraining, early retirement), and the severance offer. Failure to comply with any formal requirement — incomplete documentation, wrong consultation period, notification defects — renders the dismissals automatically null (nulidad) in Spain’s strict ERE jurisprudence.
Severance in an ERE is the objective dismissal rate of 20 days’ salary per year of service (Art. 53 TRLET), capped at 12 monthly salaries. If grounds are challenged and the court finds them unproven, the dismissal is declared unfair (improcedente) at 33 days/year capped at 24 months, or null (nulo) with reinstatement and back-pay.
Worked Example: Restructuring with ERE in a Retail Group
A retail chain with 140 employees across five locations in Málaga, Marbella, and Madrid needed to close two underperforming locations and reduce the workforce by 28 employees (20% of headcount). The closure was motivated by a documented drop in footfall and EBITDA negative at both locations for three consecutive years.
We managed the process as follows:
- Identified the correct procedure (ERE: 28 employees exceeds 10% of 140-employee workforce).
- Prepared the economic documentation: audited P&L by location for three years, footfall data, rent and operating cost analysis.
- Drafted the formal consultation documentation and convened the works committee.
- Negotiated during the 15-day consultation period, reaching agreement on a settlement that improved severance from the statutory 20 days/year to 24 days/year (above statutory minimum but within budget) and included a six-month outplacement programme for affected employees.
- The SETA (Servicio Estatal de Empleo) was notified; the ERE concluded with signed agreement, zero legal challenges, and operational closure achieved within seven weeks of initiation.
Total legal cost of the ERE: EUR 18,500. Estimated cost of unmanaged individual dismissal challenges had procedure not been correctly followed: EUR 60,000-90,000 across 28 employees.
Common Mistakes We Fix
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Dismissing for economic grounds without sufficient documentary evidence. Courts require more than a single year of losses to justify economic dismissal. A documented productivity plan, a multi-year deterioration trend, and clear connection between the economic cause and the specific employee roles affected are all required elements that many companies fail to document properly before issuing the dismissal letter.
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Using temporary contracts for permanent structural needs. The 2021 labour reform severely restricted temporary contracting. Production-circumstance contracts (contrato de circunstancias de la producción) are limited to 90 days per year and can only be used for genuinely non-recurring workload peaks. Systematic use of temporary contracts for ongoing positions generates presumptive permanent employment status and significant social security regularisation obligations.
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Failing to register working hours for all employees. Art. 34.9 TRLET requires daily time registration for all employees, stored for four years. Non-compliance is a serious infringement under LISOS with fines starting at EUR 751 per affected employee.
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Equality plans without salary audit. Many companies formally implement an equality plan but omit the pay audit (auditoría retributiva) required by Royal Decree 902/2020. An equality plan without a salary audit does not satisfy the legal obligation and will not prevent an ITSS infringement finding.
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Not updating the harassment protocol after Law 15/2022. Companies with 50 or more employees must have updated their harassment prevention protocols to reflect the broadened protected grounds introduced by Law 15/2022. Pre-existing protocols drafted solely for sexual harassment under Organic Law 3/2007 are no longer sufficient.
Geographic Coverage
Our employment team advises companies across Spain from offices in Madrid, Barcelona, Málaga, and Marbella. We manage labour inspections at any ITSS provincial office, collective bargaining at sector and company level for any Spanish territory, and SMAC conciliation procedures before the relevant Social Mediation, Arbitration and Conciliation services. For multinational groups, we coordinate with local counsel in EU and non-EU jurisdictions through our international network.
Five Pre-Engagement Questions Every Employer Should Answer
- Are all your employment contracts updated to reflect the Royal Decree-Law 5/2023 obligation to specify all material terms in writing from day one — including working hours, location, applicable collective agreement, and salary components?
- Do you have a pay register (registro retributivo) broken down by professional group, category, level, and sex, as required by Royal Decree 902/2020 — and is it up to date for the current year?
- If you have more than 50 employees, has your equality plan been registered with the official registry and does it include a current pay audit? Has the harassment prevention protocol been updated to reflect the broader protected grounds under Law 15/2022?
- Are your working time records stored in a format that can be produced within 24 hours to an ITSS inspector, with daily records for each employee retained for at least four years?
- For any contractors or freelancers working exclusively or predominantly for your company: has the economic-dependency test been applied, and are the arrangements structured to minimise reclassification risk under RETA and the Riders Law algorithmic presumption?
Worked Example: Equality Plan and Pay Audit for a 65-Employee Retail Group
A fashion retail group operating four stores in Madrid and Barcelona, with 65 employees (82% women), had no equality plan despite the 50-employee threshold having been crossed two years earlier. An ITSS inspection following a competitor complaint identified the absence and initiated an infringement proceeding.
We intervened as follows:
- Week 1–2: employment audit identifying 14 compliance gaps across contracts, pay register, and working time records.
- Weeks 3–8: equality plan diagnosis — workforce analysis by sex, professional category, and remuneration, identification of an 18% unexplained pay gap in store management roles attributable to informal seniority supplements not reflected in the pay register.
- Weeks 9–16: negotiation of the equality plan with the elected employee representatives (delegados de personal), addressing the pay gap through a transparent supplementary pay framework. The plan was signed and submitted for registration before the statutory deadline.
- Parallel track: pay audit (auditoría retributiva) under Royal Decree 902/2020, identifying and documenting the objective factors justifying remaining pay differentials. The audit report was filed with the ITSS as part of the response to the infringement proceeding.
- Outcome: the infringement proceeding was closed without sanction on the basis of the documented corrective action. Estimated fine avoided: EUR 40,000–75,000 (serious infringement under LISOS Art. 7 for failure to negotiate and register the equality plan).
Total advisory cost for the equality plan process: EUR 9,200. Duration: 18 weeks from audit to registration.
BMC Ecosystem: Employment Law Integrated with Tax, Corporate, and Compliance
Employment law in Spain does not operate in isolation from corporate structure and tax planning. Executive remuneration packages optimised for take-home pay require coordination between the employment team and our tax advisory practice — stock options, flexible remuneration plans, and pension contributions all have employment law, social security, and income tax dimensions that need to be managed coherently.
When companies are acquired, we integrate our employment due diligence with the broader corporate due diligence process, ensuring that workforce contingencies — unregistered employment relationships, incomplete equality plans, pending ITSS proceedings — are identified, quantified, and addressed in the deal documentation.
For companies subject to criminal compliance obligations under Article 31 bis of the Criminal Code, employment law matters — particularly workplace harassment claims, whistleblowing channel investigations, and discrimination proceedings — connect directly to the compliance programme’s risk map. Our criminal compliance and employment teams work together on these intersections to ensure that the company’s response to individual employment disputes is consistent with its broader compliance posture.