Significant Changes in Spanish Labor Laws and Justice System Set to Take Effect

In a series of significant developments, Spain is poised to implement several key changes in its labor laws and justice system, impacting both employers and employees, particularly relevant for expats living and working in the country.

New Legislation on Public Justice Service Efficiency

On January 3, 2025, Organic Law 1/2025, aimed at enhancing the efficiency of the Public Justice Service, was published. This law will come into force on April 3, 2025, and introduces substantial amendments to the Spanish judicial system. One of the critical aspects of this law is the modification of the Workers' Statute (Estatuto de los Trabajadores)[1].

Changes to the Workers' Statute

The new legislation clarifies and expands the conditions under which an employee can request the termination of their employment contract due to non-payment or continuous delays in salary. Specifically, an employee can seek termination if:

• The payment is made more than 15 days after the established date.
• The employee is owed three full monthly payments of salary within a year.
• There are delays in salary payments for six months, even if these delays are not consecutive.

Additionally, the law corrects a technical error in the Parity Law and reinstates the null dismissal cases for employees who have requested or are taking paid leave or adjustments in working hours under specific articles of the Workers' Statute[1].

Minimum Wage and Social Security Updates

Another significant development is the extension of the minimum wage from 2024 to 2025, as outlined in Royal Decree-Law 9/2024, published on December 24, 2024. This decree came into force on December 25, 2024.

Minimum Wage Adjustments

The minimum wage for 2025 will be determined through negotiations between the Ministry of Employment and social agents, with the new rate applying retroactively from January 1, 2025. Until the General State Budget is approved, the minimum contribution bases will be adjusted based on the increase in the minimum wage plus one-sixth, while the maximum bases will be adjusted by the pension revaluation percentage plus a fixed increase of 1.2 percentage points[1].

Intergenerational Equity Mechanism and Solidarity Contribution

The Intergenerational Equity Mechanism will increase from 0.70% in 2024 to 0.80% in 2025, with 0.67% to be paid by the company and 0.13% by the employee. Furthermore, a new 'solidarity contribution' will be introduced for employees whose salaries exceed the maximum contribution base set by Social Security, which for 2025 will be €4,909 per month or €58,908 per year after a 4% revaluation from 2024[1].

Supreme Court Ruling on Unfair Dismissal Compensation

In a recent ruling on December 19, 2024, the Social Chamber of the Spanish Supreme Court clarified that the statutory severance pay for unfair dismissal cannot be increased in court beyond the legally established amount. This ruling aligns with the provisions of the Workers' Statute and the International Labour Organization (ILO) Convention 158, ensuring legal certainty and uniformity in compensation for unfair dismissals[1].

These changes underscore the ongoing efforts to refine and modernize Spain's labor laws and judicial processes, providing clearer guidelines and protections for both employees and employers. As these new regulations come into effect, it is crucial for expats and businesses in Spain to stay informed and adapt to these significant legal updates.