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The collective agreement that governs your workforce: understand it and negotiate from strength

How collective agreements work in Spain: hierarchy of agreements, company-level vs sector agreements, ultra-actividad, inaplicacion (opt-out), and negotiation strategy for employers after the 2021 labour reform.

The problem

The collective agreement (convenio colectivo) is the most direct external regulator of a company's labour costs and competitiveness. Yet many employers in Spain have only a superficial understanding of the collective agreement that applies to them: they know they are bound by a sector agreement but do not know which specific provisions are legally mandatory versus negotiable, whether they could negotiate a company-level agreement with better-adapted conditions, or what legal mechanisms exist to temporarily opt out of a sector agreement when the company faces genuine economic difficulties. The 2021 labour reform changed the rules of collective bargaining significantly — eliminating indefinite ultra-actividad (the continued application of an expired agreement), clarifying company-level agreement priority in key areas, and modifying the inaplicacion (opt-out) mechanism — but many employers are still operating with a mental model of the pre-reform framework.

Our solution

BMC's [employment law](/en/legal/employment-law) team advises companies across the full spectrum of collective bargaining issues: identifying and correctly interpreting the applicable agreement, assessing whether a company-level agreement is feasible and desirable, managing the negotiation process with employee representatives, and handling inaplicacion applications where a sector agreement has become economically unsustainable. We also represent companies before the labour inspectorate and employment tribunals when collective agreement compliance is challenged.

Process

How we do it

1

Applicable agreement identification and audit

We determine which collective agreement applies to your company (based on your CNAE sector code and actual business activity), compare its provisions against what your company currently applies, and identify any discrepancies that create legal risk. We also assess whether the current agreement is the most appropriate one or whether the company's activity could justify a different applicable framework.

2

Company-level agreement feasibility assessment

Where the company has employee representatives (works council or employee delegates) and sufficient workforce, we assess which matters a company-level agreement could address more advantageously than the sector agreement. Since the 2021 reform, company-level agreements have priority over sector agreements in key areas including pay levels, working hours, shift patterns, and certain working conditions.

3

Negotiation and agreement drafting

We assist the company throughout the negotiation process with employee representatives: preparing the initial proposal, developing a negotiation strategy, attending all negotiation sessions, and drafting the agreed text. We register the agreement with the relevant Labour Authority upon conclusion.

4

Ongoing management and dispute resolution

We advise on the interpretation of agreement provisions in specific factual situations, represent the company before the Joint Commission (Comision Paritaria) of the applicable agreement, and provide defence in labour inspectorate proceedings or employment tribunal claims related to collective agreement compliance. We coordinate with our [labour compliance](/en/legal/labor-compliance) team for ongoing payroll and HR compliance monitoring.

1 year
Ultra-actividad limit after 2021 reform
15%
Revenue decline that can support an inaplicacion application
Priority
Company agreements hold over sector agreements in pay and hours

We had been applying the regional metal sector agreement without fully understanding which clauses were mandatory and which were open to improvement. BMC analysed the agreement, identified flexibility we had not been using, and negotiated a company-level agreement that gave us the flexible working-time arrangements our operations needed. No additional cost, significantly better productivity.

Michael Hurst Operations Director, Manufacturing company, Alicante

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How the collective bargaining system works in Spain

Spain’s labour law operates with a layered hierarchy of norms. At the top sits the Workers’ Statute (Estatuto de los Trabajadores), which sets the minimum standards that no agreement or contract can undercut. Collective agreements then set the specific conditions — pay, hours, categories, benefits — applicable to workers in a given sector or company. Individual employment contracts can improve on the agreement but cannot fall below it.

Spain has thousands of registered collective agreements covering different sectors, regions, and levels. A manufacturing company in Valencia might be governed by the national metal sector agreement for working hours, the provincial metal agreement for salary supplements, and a company agreement for certain additional benefits. Understanding which agreement takes precedence in which matter — and where the company has room to negotiate better terms — requires specialist knowledge.

Company-level agreements: the strategic opportunity

The 2021 labour reform (Real Decreto-ley 32/2021) confirmed and strengthened the priority of company-level collective agreements over sector agreements in several key areas. This creates a genuine strategic option for companies that want to design their own employment framework rather than being bound by a sector agreement negotiated for an industry average that may bear little resemblance to their actual situation.

Negotiating a company-level agreement requires the existence of employee representatives (a works council or employee delegates), a genuine willingness to bargain on both sides, and a structured negotiation process that follows the formal requirements of the Workers’ Statute. The result, when properly negotiated, can be an agreement that:

  • Provides annual working-hours flexibility that the sector agreement does not allow
  • Structures pay in a way that rewards performance and aligns with the company’s remuneration philosophy
  • Creates a classification system that reflects the company’s actual job families rather than the sector’s generic categories
  • Includes social benefits (health insurance, pension contributions, meal allowances) structured to maximise value for employees while remaining competitive in cost for the employer

The inaplicacion mechanism: when the sector agreement becomes unsustainable

For companies facing genuine economic difficulties, the inaplicacion mechanism of Article 82.3 of the Workers’ Statute provides a legal route to temporarily disapply the sector agreement’s pay provisions (and certain other conditions) while the company recovers. This is not a way to avoid collective bargaining obligations — it is a formal legal process that requires documentation of the economic grounds, negotiation with employee representatives, and compliance with a defined duration.

The most common ground is a sustained revenue decline: two consecutive quarters with revenue at least 15% below the corresponding quarters of the previous year. With this documented, the company opens a negotiation with employee representatives for a temporary departure from the sector agreement’s conditions. If an agreement is reached, it is registered with the Labour Authority. If not, either party can request arbitration by the National Consultative Committee.

BMC coordinates inaplicacion proceedings with the company’s broader restructuring strategy, including coordination with our employment law litigation team and our people services team for HR implementation.

FAQ

Frequently asked questions

In Spain, sector-level collective agreements apply automatically and erga omnes (to all companies in the sector) once they are officially registered. Your company does not need to have signed the agreement — it applies by virtue of your business activity (CNAE code) and, for regional agreements, your geographic location. If your company has mixed activities, the agreement governing the primary activity generally applies, though there are cases where different departments are covered by different agreements. This determination requires case-by-case legal analysis.
Ultra-actividad is the period during which an expired collective agreement continues to apply while its successor is being negotiated. Before the 2021 labour reform, ultra-actividad could be indefinite if the parties did not agree otherwise. The 2021 reform set a general default limit of one year from the formal denunciation of the agreement: if no new agreement is reached within that year, the higher-level sector or national agreement takes over. This change has created more urgency in collective bargaining negotiations and has strengthened the hand of whichever party has the most to gain from the higher-level agreement.
Inaplicacion, also known as descuelgue, is the mechanism under Article 82.3 of the Workers' Statute that allows a company to temporarily disapply certain provisions of the applicable collective agreement when its economic situation makes compliance unsustainable. The conditions that can be disapplied include salary levels, working hours and schedules, shift rotation systems, and certain working conditions. The process requires either agreement with employee representatives or, if no agreement is reached, a referral to the National Consultative Committee on Collective Agreements. Economic grounds (a sustained revenue decline of 15% or more over two consecutive quarters) are the most common basis.
No. Spanish labour law operates on a minimum standards principle: the individual employment contract cannot set terms less favourable to the employee than those established in the applicable collective agreement. Any contractual clause that falls below the agreement's minimum is automatically replaced by the relevant agreement provision. The contract can always improve on the agreement — higher pay, shorter hours, additional benefits — but cannot go below it. A company-level agreement can, in certain matters, establish different conditions from the sector agreement, but the interaction between the two requires careful legal analysis.
A company-level agreement allows the company to tailor working conditions to its specific operational reality rather than being bound by provisions negotiated for a heterogeneous sector. The 2021 reform confirmed priority for company agreements over sector agreements in areas including: pay levels and pay structure, annual working hours and their distribution, shift patterns and scheduling, classification systems and functional mobility, and social benefits. Companies in sectors where the sector agreement is rigid or inflexible often find that a company-level agreement — even with equivalent or slightly improved total remuneration — provides the operational flexibility that makes the business significantly more competitive.

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