Labor updates for Q3 2026: what your company should review
An intense quarter for labor matters: new information obligations in employment contracts, a far-reaching reform on disability and work-life balance, and several Supreme Court rulings that change criteria on leave, dismissals and settlement agreements. We summarize it without the noise, focusing on what affects your company.
You don’t need to follow the Official State Gazette (BOE) every day: what matters is knowing what has changed, what is already mandatory and what is worth reviewing before an inspection or a claim arrives. Here is the practical summary of the quarter.
New rules: what is already (or almost) in force
Royal Decree 723/2026 — More mandatory information in employment contracts
Transposes the European directive on transparent working conditions. The information must be provided before the employment relationship begins, and any changes must be communicated in writing. It includes a salary breakdown, a schedule overview, the probationary period, the applicable collective agreement and any algorithmic systems affecting the work. Non-compliance is classified as a minor infringement.
Law 4/2026 — Disability, dependency and work-life balance
Reforms the Workers’ Statute and the rules on disability and dependency. It extends reduced working hours for caring for seriously ill children (without the previous age limits), allows both parents to take it at the same time, makes refusing a reasonable accommodation a form of discrimination, and equates degrees of dependency with disability percentages, which affects the 2% reserve quota.
Pay transparency — Reform of Royal Decree 902/2020
Currently being processed to transpose the European pay transparency directive. Not yet approved, but it’s worth starting to prepare your pay register and audit so you aren’t caught late when it is published.
Contributions for collective dismissals of workers over 50
A draft that reviews the financial contributions required from profitable companies carrying out collective dismissals affecting people aged 50 or over. Worth watching if your company is planning restructuring.
We have already covered the first two in detail on the blog: see our analysis of the new mandatory information in employment contracts and of the disability and dependency reform.
Rulings that set the criteria
The Supreme Court issued several rulings this quarter with a direct impact on HR’s day-to-day work:
- Public holiday after vacation. A public holiday immediately following the vacation period cannot be deducted as a vacation day: it keeps its nature as a public holiday.
- Leave to care for relatives. Requiring cohabitation or caregiver status is void. Advance notice and proof of the triggering event and the family relationship are enough; proving abuse is the employer’s burden.
- Changing variable pay. Replacing an incentive scheme with individual targets can be done with information and consultation; collective ones require negotiation. It depends on what the collective agreement says.
- Continuity bonus and absences. Work-life balance leave, temporary incapacity, and union or prenatal leave cannot be subtracted from the calculation; “neutral” leave (moving house, exams, public duty…) can.
- Dismissal and protection against retaliation. An informal disagreement, combined with an immediate dismissal, can be sufficient evidence of retaliation and lead to the dismissal being declared null.
- Settlements and release agreements. For a settlement to truly “close” a matter: clarity and itemization, actual payment, a context separate from the dismissal, free and informed consent, and mutual concessions. It releases only what it expressly mentions.
What to review in your company now
- Your contract templates. Adapt them to the new mandatory information under Royal Decree 723/2026 and provide it before the employment relationship begins.
- Leave and reduced working hours. Review procedures in light of Law 4/2026 and the rulings on care leave.
- The 2% reserve quota. Check how it is affected by equating degrees of dependency with disability percentages.
- Settlements and incentives. Adjust the wording of settlements and the way variable pay is modified according to the Supreme Court’s new criteria.
- Pay transparency. Start preparing your register and audit so you aren’t late when the rule is approved.