Employment Lawyer for Companies in Madrid: Defence and Prevention in Spain's Most Complex Labour Market

Employment law practice in Madrid operates within Spain's largest concentration of Social Courts (Juzgados de lo Social) and the highest inspection activity of the Labour Inspectorate (ITSS) in the country. Companies based in Madrid are subject to the Workers' Statute (Estatuto de los Trabajadores, Royal Legislative Decree 2/2015), applicable collective bargaining agreements — many of which are Madrid-specific or sector-specific with national scope — and the regulatory requirements of the Madrid Community for certain employment obligations. Collective redundancy procedures (ERE — Expediente de Regulación de Empleo) must be notified to the Madrid Employment Authority (Servicio Público de Empleo Estatal) and follow the procedure established by Royal Decree 1483/2012, with strict formal requirements and consultation periods.

Why employment law in Madrid requires specialisation in its judicial and inspection environment

Madrid is Spain’s largest labour market. With more than 3.5 million workers in the Comunidad de Madrid, the capital’s Labour Inspectorate carries out more control actions than any other province in the country. The Madrid Social Courts — more than 30 specialist courts — resolve tens of thousands of proceedings each year, with established case law that conditions the outcome of every dispute.

For companies, this means that labour risks in Madrid are systematic and predictable — if you know where to look. The most common inspection triggers are well-known: absence of working hours records, failure to monitor subcontractors’ compliance with employment regulations, irregular apprenticeship and training contracts, false self-employment arrangements, and remote working without a compliant written agreement under Law 10/2021. An employment lawyer with Madrid experience knows these inspection patterns and can anticipate them before they are activated.

Our Madrid employment team: prevention, negotiation and judicial defence

Our employment law team in Madrid operates on two simultaneous levels: prevention and defence. On the preventive level, we audit the company’s employment structure and regularise the elements most exposed to the Labour Inspectorate. On the reactive level — when a dismissal claim, inspection file, or collective dispute has already arisen — we defend with rigour and knowledge of the specific criteria of the Madrid Social Courts and the Superior Court of Justice of the Comunidad de Madrid.

On labour compliance, we coordinate with our data protection and criminal compliance teams to ensure the company has all employment-related compliance fronts covered: working hours records, anti-harassment protocol, whistleblowing channel, and remote work policy.

Employment bodies and authorities in Madrid that every company must know

• Labour Inspectorate (ITSS) in Madrid: Spain’s most active inspection unit. Actions can begin ex officio, on employee or union complaint, or following a collective dispute.
• SMAC: the mandatory conciliation body for most individual disputes. The company’s position at SMAC conditions the litigation strategy.
• Madrid Social Courts: over 30 specialist courts, with established case law on dismissal nullity, documentary evidence assessment, and procedural timescales.
• Madrid Superior Court of Justice (TSJ): second instance in social matters for the Comunidad de Madrid, with relevant case law on collective redundancies and trade union rights.
• Directorate-General of Labour: national labour authority for EREs affecting workers in more than one region.

What our employment advisory for businesses in Madrid includes

Hiring and workforce structure: contract drafting and review, hiring modalities, temporary-to-permanent conversions, flexible remuneration models, and equality plans.

ERE and ERTE: programme design, consultation period, causal documentation, negotiation with employee representatives, and notification to the labour authority.

Individual dismissals: pre-dismissal advice, dismissal letter, SMAC attendance, and defence before the Social Courts.

Labour Inspectorate: responses to information requests and infringement records, administrative defence before the Government Sub-Delegation, and judicial proceedings before Administrative Courts.

Collective relations: company-level collective bargaining, union election management, information and consultation rights, and collective disputes.

Contact our Madrid employment team for an initial diagnostic meeting at no cost. We will identify your company’s main employment risks and propose the most efficient coverage model. You can reach us through our Madrid office or directly from here.

Employment Compliance in Madrid: Labour Inspectorate Activity and Key Risks

The Labour Inspectorate (Inspección de Trabajo y Seguridad Social) has significantly intensified its control activity over recent years. For companies headquartered or with significant operations in Madrid, the principal risk areas include: undeclared or underreported employment relationships (particularly in service-sector and outsourcing contexts), non-compliance with equal pay obligations under Royal Decree 902/2020, irregular use of fixed-term contracts (especially since the 2022 Labour Reform tightened the conditions for temporary hiring), and failures in occupational health and safety documentation.

The 2022 Labour Reform (Royal Decree-Law 32/2021) fundamentally reshaped the Spanish temporary employment framework. The two general temporary contracts (obra y servicio determinados and eventual por circunstancias de la producción) were replaced by a restructured system that dramatically limits the circumstances in which fixed-term employment is lawful. Non-compliant use of temporary contracts beyond the permitted causes or durations now results in automatic permanent contract status. Companies with Madrid workforces that have not fully audited their contract portfolio against the reformed framework are carrying significant reclassification exposure.

Collective Dismissals and Restructuring: Madrid Considerations

For workforce restructuring that meets the ERE thresholds (affecting 10 or more workers in companies with fewer than 100 employees, or at least 10% of the workforce in larger companies), the consultation period with worker representatives and the documentation presented to the SEPE and the labour authority must meet strict procedural requirements. In Madrid, the relevant authority for EREs affecting workers in more than one autonomous community is the Directorate-General of Labour (Dirección General de Trabajo), which applies the most demanding interpretive standards in Spain.

The consultation period — minimum 15 days for companies with fewer than 50 workers, 30 days for larger companies — requires a documented causal justification (economic, technical, organisational, or productive), a proposed timetable for dismissals, economic criteria for selecting the affected workers, and details of the compensation offered. The position taken in the consultation period conditions any subsequent judicial challenge: a poorly documented ERE procedure is a litigation liability that will be expensive to defend. We design ERE processes from the first strategic assessment through to the authority notification and the individual dismissal letters.

Equality Plans and Pay Transparency Obligations

Under Royal Decree 902/2020, companies with 50 or more workers are required to register a pay audit with the SEPE, conduct periodic pay gap analysis, and take corrective measures where unjustified gender pay gaps are identified. Equality plans are obligatory for companies with 50 or more employees, with specific requirements on content, consultation process, and monitoring mechanisms.

The LISOS (Law on Social Infractions and Sanctions) sanctions for equality plan non-compliance range from EUR 751 to EUR 225,018 for the most serious violations. Labour Inspectorate scrutiny in this area has increased substantially: equality plan inspections are now a routine part of labour authority activity in Madrid. We design, register, and maintain equality plans and pay audits that withstand inspectorate scrutiny.

Company Size Segmentation for Madrid Employment Law

Autónomos and microenterprises (fewer than 10 employees): the principal employment law risk for small businesses in Madrid is misclassification — false self-employment (falsos autónomos) arrangements that the Labour Inspectorate is specifically targeting. A contractor relationship that in substance has the characteristics of employment (regular hours, economic dependence, workplace integration) will be reclassified as employment, generating back-payment of social security contributions, employment rights, and LISOS sanctions. We advise on compliant contracting structures before the relationship is established.

SMEs (10-100 employees): the full range of employment law obligations apply — working hours records (mandatory since 2019 under RDL 8/2019), equality plans (mandatory for companies with 50+ employees), whistleblowing channels (mandatory since Law 2/2023), and annual pay gap audits. Labour Inspectorate activity at SMEs focuses on these compliance obligations, and the gap between the legally required standard and typical SME practice is the primary source of sanctions.

Medium and large companies (100+ employees): these companies face the most complex employment law environment. Collective bargaining with trade unions, works council information and consultation rights (Art. 64 TRLET), ERTE procedures, and collective redundancy (ERE) procedures are the principal areas of legal risk. For companies above the ERE thresholds, the consultation period management and the authority notification are the decisive moments where legal advice makes the difference between a compliant procedure and a challenged one.

Worked Example: ERE at a Madrid Logistics Company

A Madrid-based logistics platform (320 employees, EUR 28 million revenue) needed to reduce its workforce by 45 employees following the loss of its largest client contract. The ERE threshold (10% of workforce) was met; a formal collective redundancy procedure was required.

BMC’s employment team managed the process:

• Preliminary legal assessment: confirmed economic cause (demonstrable revenue reduction of 35% over six months), identified the affected job categories and selection criteria (objective performance-based criteria, avoiding any discrimination risk).
• Works council notification and formal consultation period (30 days): structured negotiation with the union representatives, reaching agreement on a compensation package (30 days per year of service, above the statutory 20 days) in exchange for union acceptance of the redundancies without opposition.
• SEPE authority notification filed simultaneously with the consultation period start.
• Individual dismissal letters issued on day 31, with personal settlement offers at the agreed compensation rate.
• SMAC conciliation: 38 of 45 employees accepted the settlement at SMAC; 7 proceeded to Social Court.
• Social Court outcome: 5 of 7 judicial challenges dismissed; 2 settled with a modest improvement to the compensation offer.
• Total timeline from first legal advice to final dismissal letter: 52 days. No null dismissal declarations.

Remote Work and the Digital Employment Landscape

The Law on Remote Work (Law 10/2021) created a specific regulatory framework for remote and hybrid working in Spain. Companies with workers who spend more than 30% of their working time remotely must have a written remote work agreement that covers working time distribution, reimbursement of expenses (equipment, connectivity, consumables), the company’s right to exercise management control, and occupational health and safety obligations for the remote workplace.

Madrid companies that adopted remote working during the COVID-19 period without formalising agreements under Law 10/2021 are carrying latent Labour Inspectorate exposure: LISOS sanctions for non-compliance with remote work formalisation requirements range from EUR 751 to EUR 7,500 per worker affected. The regularisation programme — comprehensive contracts review, remote work agreements for eligible workers, and expense reimbursement policy implementation — is one of our most frequent recurring mandates for Madrid-based technology and professional services companies.

Working Time and the 37.5-Hour Week Reform

The proposed working time reduction to a 37.5-hour maximum working week (currently at legislative stage as of April 2026) will represent the most significant change to Spanish employment law since the 2022 Labour Reform if enacted. For Madrid companies, particularly in sectors where working time management is complex (hospitality, retail, manufacturing), the reform will require:

• Revision of all collective bargaining agreements and company-level working time arrangements.
• Revision of salary structures to ensure that the hourly rate implications of reduced working time comply with collective agreement minimum rates.
• Review of job categories where overtime working is customary, to ensure compliance with the new maximum.
• Update of working hours records to reflect the new maximum and any sector-specific adaptations.

We are tracking the legislative progress of the 37.5-hour reform and advising Madrid clients on transition planning to ensure that when the reform comes into force, companies can implement it without disruption to operations or labour relations.

Common Mistakes We Fix in Madrid Employment Practice

1. Not maintaining compliant working hours records. RDL 8/2019 made working hours records mandatory for all workers, regardless of their contract type or seniority. The record must be accurate, maintained daily, and accessible to workers and the Labour Inspectorate at any time. Many Madrid companies have implemented a record-keeping system but have not ensured it meets the specific ITSS requirements for content and accessibility. An inspection finding of non-compliant records generates LISOS sanctions of EUR 751-7,500 per affected worker.

2. Using fixed-term contracts beyond the permitted causes after the 2022 Labour Reform. The restructured temporary contract framework introduced by RDL 32/2021 (in force from 31 March 2022) limits fixed-term employment to two specific causes: production circumstances (permanent but irregular workload peaks) and contract or task replacement. Workers on fixed-term contracts for causes that do not correspond to the permitted grounds, or for durations exceeding the limits, are automatically permanent. Madrid companies that have not fully audited their contract portfolio against the reformed framework are carrying reclassification risk.

3. Conducting collective dismissals without proper causal documentation. The economic, technical, organisational, or productive cause must be documented with specific and current evidence — not general statements about market conditions. Labour Inspectorate reviews of ERE procedures in Madrid scrutinise the causal documentation closely; a poorly documented economic cause is the most frequent basis for union challenges that result in the ERE being declared null.

4. Not registering equality plans and pay audits with the SEPE. Equality plans must be registered in the REGCON registry (Registro y Depósito de Convenios Colectivos, Acuerdos Colectivos y Planes de Igualdad) to be valid. Non-registered plans do not fulfil the legal obligation, even if their content is adequate. Labour Inspectorate checks confirm REGCON registration as the first step in equality plan inspections.

5. Assuming that senior managers and directors have the same employment rights as other workers. The alta dirección regime (Real Decreto 1382/1985) applies to workers whose activity is directly governed by the board or top management organ with high autonomy. Alta dirección workers have a different severance regime, different working time rules, and different procedural rights. Misclassifying a senior employee as a worker under the TRLET when they should be under the alta dirección regime — or vice versa — creates employment law exposure at the moment of termination.

Geographic Coverage: Madrid Courts and Authorities

Our employment practice in Madrid operates before the full range of Madrid employment authorities and judicial bodies:

• SMAC (Servicio de Mediación, Arbitraje y Conciliación) — mandatory pre-litigation conciliation for individual dismissal and other disputes.
• Madrid Social Courts (1 to 37) — first instance for individual disputes.
• Madrid Superior Court of Justice (TSJ) — second instance and unification of doctrine.
• ITSS Madrid — Labour Inspectorate; we manage inspection responses and administrative appeals before the Government Sub-Delegation.
• SEPE — ERTE and ERE notifications and authorisations.
• National Court (Audiencia Nacional) — collective disputes and challenges to nationally applicable collective bargaining agreements.

For companies with operations across multiple autonomous communities, we coordinate employment matters across jurisdictions from our Madrid headquarters, working with regional employment specialists where the specific autonomy’s employment regulations differ from the national framework.

How We Work

Our Madrid employment law practice operates on a retainer and per-matter basis, adapted to the company’s employment law risk profile and volume.

Ongoing compliance retainer: monthly or quarterly employment law advisory covering contract portfolio reviews, collective bargaining agreement monitoring, regulatory update briefings, and proactive risk identification. Designed for companies with 30+ employees and active employment law activity.

Matter-by-matter advisory: for companies with lower advisory frequency, we provide per-matter fixed-fee services for individual dismissals (pre-dismissal advice, letter drafting, SMAC attendance) and specific compliance projects (equality plan, working hours record system, remote work agreements).

Litigation mandate: when a dispute has escalated to Social Court, we represent the company from SMAC conciliation through first instance and, if necessary, appeal to the Madrid TSJ. Our litigation team has specific experience in the most complex dispute categories before the Madrid Social Courts: dismissal nullity, mass redundancy challenges, and collective disputes.

ERE/ERTE project mandate: fixed-fee project engagements covering the complete ERE or ERTE procedure from first legal analysis through authority notification and individual dismissal management.

Initial diagnostic consultations are available at no cost for companies that have received a Labour Inspectorate notification, an unfair dismissal claim, or a collective dispute notification and need an immediate assessment of their position and options.