Labor Obligations and Sanctions: Is Your Company Prepared?

In today’s work environment, companies must adhere to extensive regulations to properly manage their employees and avoid legal issues. Failing to meet labor obligations can result in severe consequences—not just financial but also reputational and operational. Implementing a Labor Compliance system is key to identifying and preventing these risks.

In this post, we outline the labor obligations you must fulfill and the penalties you can avoid by implementing a proper compliance system.

 

What Are the Key Labor Obligations?

Companies have various responsibilities that impact their relationships with employees and their overall legal standing. Below are the most critical labor obligations:

Workday Time Tracking

The workday time tracking system is mandatory for all companies in Spain, regardless of their size or industry, and applies to all employees, regardless of their category or professional group.

A new law under review will require companies to adopt digital systems for workday time tracking, eliminating paper records. These systems must be accessible to employees, labor inspections, and unions, ensuring greater transparency and control over working hours.

Workplace Harassment Prevention

Companies must implement prevention and action procedures to address workplace harassment, whether sexual or any other form of discrimination in the workplace. This includes:

✔️​ A harassment prevention protocol
✔️ ​Confidential reporting channels
✔️ ​Clear action procedures
✔️ ​Employee awareness and training programs

Additionally, companies must ensure victims receive adequate support, and appropriate sanctions are applied against misconduct.

Equal Pay

Companies must ensure gender pay equality, avoiding discrimination in salaries based on gender. This requires maintaining a Remuneration Registration Tool that details salaries by job category and gender, allowing for the detection of inequalities. This obligation is in line with pay transparency principles and the equal pay for equal work concept.

Workplace Health & Safety Regulations

Businesses must comply with occupational risk prevention regulations to guarantee a safe and healthy work environment. This includes:

✔️ Identifying and assessing risks
✔️ Implementing preventive measures
✔️ Training employees in workplace safety
✔️ Providing the necessary protective equipment

Additionally, companies must guarantee employees’ right to digital disconnection outside of working hours.

What Other Labor Obligations Must Companies Fulfill?

In addition to the key obligations, companies must comply with additional requirements to ensure fairness, inclusion, and employee well-being:

🔹 Data Protection – Businesses must comply with Spain’s Organic Law 3/2018 on Data Protection, covering employee, customer, and partner data.

🔹 Social Security Contributions – Companies must register employees and contribute to Spain’s Social Security system, ensuring access to healthcare, pensions, and temporary disability benefits.

🔹 Remote Work Agreement – Businesses must formally agree with remote employees on work schedules, use of technological resources, compensation for remote work expenses, security and health measures.

🔹 Equality Plans & LGBTQ+ Protocols – Companies with 50+ employees must: implement an Equality Plan to promote equal opportunities and adopt measures against LGBTQ+ discrimination in the workplace.

🔹 Hiring People with Disabilities – Companies with 50+ employees must reserve at least 2% of their workforce for employees with disabilities or justify alternative measures.

 

What Are the Most Common Penalties for Labor Non-Compliance?

Failing to meet labor regulations can lead to severe financial and legal consequences. Spain’s Law on Infractions and Sanctions in the Social Order (LISOS) defines violations and applicable penalties. Some common infractions include:

🔸 Fines for lack of workday time tracking or pay register – Up to €7,500 per violation
🔸 Sanctions for workplace harassment (sexual or otherwise) – Up to €225,018
🔸 Penalties for occupational risk prevention violations – Up to €983,736
🔸 Compensation for violating digital disconnection rights (e.g., sending emails outside work hours) – €300
🔸 Compensation for violating data protection rights (e.g., sharing personal data without consent) – €700
🔸 Fines for hiring employees without Social Security registration – Up to €10,000
🔸 Fines for employing unauthorized foreign workers – Up to €225,018
🔸 Sanctions for violating LGBTQ+ employee rights – Up to €150,000

Beyond financial penalties, non-compliance can severely damage a company’s reputation, impacting business relationships and internal team trust.

⚠️ Need guidance on labor compliance? At Adlanter, our team of labor compliance experts can help you implement a full compliance system to protect your business and avoid unexpected sanctions.

📞 Contact us today or schedule a consultation with one of our advisors!