Employment Contracts Will Have to Explain Much More

There are regulatory changes that require the complete overhaul of procedures, and others that, at first glance, seem merely documentary. The new Royal Decree 723/2026 might appear to fall into the latter category, but it's important to look beyond that. The new regulation significantly expands what a company must explain in writing to its employees and, moreover, brings forward the deadline for doing so.

When a company hires someone, much of the employment relationship seems to be resolved with the signing of the contract. Position, salary, working hours, duration, and little else.

From October 5, 2026, this process will need to be examined more closely.

Royal Decree 723/2026, of September 9 (published in the Official State Gazette on September 15), considerably expands the information that companies must provide regarding working conditions and replaces the regulations that had been in effect since 1998.

This does not necessarily mean that all companies will have to create entirely new contracts. If the required information already appears in the contract given to the employee, it doesn't need to be repeated in another document. The problem arises when data is missing. In that case, it must also be provided in writing.

Which employment relationships are affected?

Generally, the new information obligations will apply to employment relationships lasting more than four weeks.

The regulation also contains specific provisions for certain special employment relationships, public employees, and, in considerable detail, for fishermen and seafarers.

For most companies, however, the change will be most noticeable in standard employment contracts.

And here's an important point: it's not enough for the conditions to exist or be known internally. Certain matters will have to be communicated to the employee in writing.

What will need to be explained from now on?

The list is quite extensive. In addition to identifying the parties and specifying the start date of the employment relationship, it will be necessary to provide information on the usual workplace, the duties and professional classification, and, if the contract is temporary, the specific reason justifying its temporary nature and its relation to the expected duration.

The level of detail required regarding salary is also increased. It will not always be sufficient to indicate a lump sum payment. The base salary and any supplements must be identified separately, indicating their frequency and method of payment.

If there are variable components, it will also be necessary to explain how they are calculated and what criteria determine the employee's entitlement to receive them.

This point may be particularly relevant for companies that regularly use incentives, commissions, bonuses, or performance-based compensation systems.

The work schedule will also need to be explained more clearly.

The new regulations require greater precision regarding working time. Information must include the duration and distribution of daily, weekly, and annual working hours, night work or shift work (if applicable), the procedures used to modify schedules or shifts, and agreements regarding overtime and its compensation.

Information must also be provided about vacation time and the established procedure for determining when it is taken.

The issue becomes even more specific when the company uses an irregular work schedule. In these cases, information must be provided about the system used, the hours and days that can be taken as a reference, and the minimum notice periods before the start or cancellation of a task.

For fixed-term seasonal workers, periods of activity and inactivity must be indicated, or, when these cannot yet be known precisely, an estimate thereof.

Probationary period, training, and termination of employment

There is more information that, until now, could be presented rather briefly and that now takes on greater importance.

If a probationary period exists, its duration and conditions must be specified. Information regarding the right to training provided by the company must also be provided.

And the obligation to provide information is not limited to the start of the employment relationship. The documentation must also include information on the procedure applicable to termination of the contract and the corresponding notice periods.

Furthermore, the applicable collective bargaining agreement must be correctly identified, including details such as its code, publication date, validity period, and, where applicable, its extended validity status.

Equality Plans, Harassment, and LGBTQ+ Measures

The information provided to employees also extends to certain internal company policies. Where applicable, they must be informed of the existence and identification of the equality plan, as well as the company's work-life balance policy, if one exists.

Information must also be provided on the protocol against sexual harassment and harassment based on sex, and on the set of measures and resources aimed at achieving real and effective equality for LGBTQ+ individuals, when the company has them in place.

This will require reviewing not only contract templates but also the documentation typically provided when a new employee joins the workforce.

Does the company use algorithms or artificial intelligence to make decisions?

This is probably one of the most noteworthy changes. The Royal Decree expressly incorporates the obligation to inform employees about the existence of algorithmic or automated decision-making systems when they are used to decide on certain working conditions.

It is not simply a matter of communicating the existence of a computer tool.

The information must also cover the guidelines, criteria, and operating rules of these systems when they are involved in decisions related to working hours, task assignment, salaries, career advancement, workplace, or contract termination.

For example, a company that uses an automated system to schedule shifts, assign specific tasks, or influence productivity decisions will need to verify whether it falls under this obligation.

This is therefore a good time for Human Resources to know exactly which technological tools it uses and, above all, what decisions each one actually makes.

It is not enough to simply provide information at any time.

Another practical change concerns deadlines. Generally, the information must be provided before the employment relationship begins.

It can be delivered in paper or electronic format. If the digital format is used, the employee must be able to access, store, and print the information, and the company must keep proof of transmission or receipt.

Furthermore, if any of the conditions that must be reported change, this must be communicated as soon as possible and, at the latest, on the same day the change takes effect.

This suggests reviewing some internal procedures. Having a perfect template won't be very useful if a change in working hours, duties, or conditions is communicated late or not properly documented.

What happens to employees who are already employed?

The entry into force of the regulation does not automatically require companies to immediately provide a new document to all staff.

For employment relationships already in effect on October 5, 2026, employees may request any information required by the new regulations that they do not yet possess.

When this occurs, the company will have 30 business days from receipt of the request to provide it.

This is an important distinction. We are not necessarily talking about automatically redoing all existing contracts.

However, it does seem advisable to review the documentation currently held by staff and be prepared to respond if a request is received.

There will be official templates, but it is not advisable to wait to adapt.

The Ministry of Labor and Social Economy, through the SEPE (State Public Employment Service), has made available to companies and employees, since October 1, 2026, an information document template to facilitate compliance with these obligations. VIEW SAMPLE

What do we recommend reviewing before October 5th?

In practice, it doesn't seem necessary to turn every contract into an endless document. The important thing is to check if all the required information is covered between the contract and the supplementary documentation provided to the employee.

It's especially important to review contract templates, clauses regarding variable compensation, work schedules and shifts, probationary periods, onboarding procedures, information on internal policies, and the use of automated HR tools.

It's also worth checking how the delivery of this documentation is currently documented. Sending a file by email can suffice, but the company must be able to keep a record of its transmission or receipt, and the document must be accessible, storable, and printable.

Our firm recommends carrying out this check before the next round of hires and adapting employment documentation to the new requirements, avoiding having to address any deficiencies once the employment relationship has already begun.