Spain's labour laws have long been recognized for their strong worker protections, covering fair wages, job security, and working conditions. However, significant changes are coming in 2025, aimed at modernizing the workforce and improving employee well-being. This article outlines Spain’s current labour framework, challenges in the job market, and the upcoming reforms.

Current Labour Laws in Spain

Spain has a well-established legal framework that safeguards workers' rights. The Constitution and the Estatuto de los Trabajadores (Workers’ Statute) establish fundamental labour principles, including:

1. Minimum Wage (SMI): For 2024, Spain’s minimum wage stands at €15,876 per year for full-time employees.
2. Working Hours: The standard workweek is 40 hours, with overtime capped at 80 hours annually.
3. Paid Leave: Employees are entitled to 30 calendar days of paid vacation, excluding public holidays.
4. Social Security Contributions: Employers and employees contribute to Spain’s social security system, which funds pensions, healthcare, and other benefits.

Despite these protections, Spain faces challenges such as high youth unemployment, job market instability, and widespread use of temporary contracts.

Major Labour Reforms in 2025

A series of reforms set to take effect in 2025 aim to enhance job security, improve work-life balance, and ensure fairer financial contributions to social security. Below are the key updates:

1. Minimum Wage Increase

To improve workers’ purchasing power and reduce income inequality, the Spanish government will increase the minimum wage by 5% in 2025.

2. Shorter Workweek

For the first time in over 40 years, Spain will reduce its standard workweek from 40 to 37.5 hours. The objective is to promote work-life balance, reduce stress, and enhance employee satisfaction, while maintaining productivity.

3. Digital Time Tracking

A new regulation will mandate digital time tracking for all companies, replacing manual systems. This change aims to ensure transparency and compliance with labour laws, reducing disputes over working hours.

4. Social Security Contribution Adjustments

Reforms in 2025 will modify Social Security contributions, particularly affecting high earners. Two major changes include:

Solidarity Tax

A new Solidarity Tax will apply to employees earning above €59,034 per year. This progressive tax will only affect earnings exceeding the maximum contribution base and is designed to strengthen the Social Security system without providing additional benefits.

Solidarity Tax Contribution Rates (2025–2045):

1. 2025: 0.92% for earnings up to 10% above the maximum base, 1.00% for earnings between 10%-50% above, and 1.17% for earnings beyond that.
2. Rates will progressively increase until 2045.

Intergenerational Equity Mechanism (MEI)

The MEI will gradually increase the minimum contribution rate to ensure the sustainability of Spain’s pension system. By 2029, the contribution rate will reach 1.2%, equally split between employers and employees.

5. Proposed Changes to Severance Pay

A proposed reform aims to increase severance pay for unfair dismissals, particularly for long-tenured employees. The goal is to make dismissals more costly for employers, encouraging greater job stability. However, this proposal is still under discussion and awaits final approval.

Conclusion

Spain’s 2025 labour law reforms reflect a major shift towards enhanced worker rights, fairer wages, and a more balanced work environment. Employers should prepare for these changes by adjusting HR policies, implementing digital time-tracking systems, and reassessing financial contributions to Social Security. As further details emerge, businesses and employees alike should stay informed to ensure compliance with the new regulations.