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Spain: Update on Incapacity Terminations and Working Time Rules

By - - Terminations, Working time

There are two important changes employers should be aware of:

  • Incapacity terminations – effective from May 1st, 2025.
  • Working time and Rights to disconnect – draft bill needing parliamentary approval.
Incapacity Terminations

Rule changes came in effect on May 1st 2025:

The automatic employer right to terminate an employment due to the severe, absolute or total permanent incapacity of the employee is removed, except in circumstances where:

  • making adjustments needed to allow the employment to continue would place a significant burden on the employer;
  • there is no other position available which would be compatible;  
  • a new position is proposed, but the employee rejects it.  

Once notified of a declaration of incapacity, the employee has 10 calendar days to indicate in writing their willingness to continue the employment. 

The employer has a maximum of 3 months from the declaration of incapacity to make reasonable adjustments or change the job description.

If the adjustments would place excessive burden on the employer or there is no compatible new position, the company will have the same period to notify the employee in writing of termination, stating the reasons.    

What is “excessive burden” will be judged based on the adjustment cost against the size, resources, business situation, turnover of the employer and any public aid available.  

Companies with fewer than 25 employees can treat adjustment costs as an excessive burden when those costs would exceed the greater of (1) applicable compensation for unfair dismissal of that employee; or (2) six months’ of their salary.

Working Time and the Right to Disconnect – one to watch

The draft bill before parliament:

  • reduces standard working hours from 40 hours to 37.5 per week, without any salary reduction;
  • requires the implementation by December 31st, 2025 of digital timekeeping systems, enabling employees directly to record their working hours in real time.  The Labour Inspectorate is to have direct access to employers’ working time recording systems.
  • provides an unwaivable right to digital disconnection outside working hours, so that employees will not be obliged to respond to work emails, messages or calls outside their designated working hours – employers will need to have clear policies and procedures to ensure this right is respected.           

This is a high level general update only. Legal advice should be obtained on specific circumstances.
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