In recent weeks, relevant updates have been introduced in labor regulations affecting replacement contracts, labor inspection controls, and subcontrating.
These changes have a direct impact on companies’ regulatory compliance and their exposure to potential penalties. Therefore, it is essential for organizations to review their internal procedures and anticipate the risks that these measures may entail.
Below is a summary of the key labor-related developments from the past month.
Replacement contracts: risk of automatic conversion to permanent employment
The RED News Bulletin 09/2025 introduced a significant change: replacement contracts that are not terminated or modified when the reason for substitution ends will be automatically converted into permanent contracts.
This serves as a clear warning for companies: it is not enough for the situation that triggered the replacement to come to an end—active management of the communication through the RED System is required.
Main Risks:
- Unforeseen labor costs if the contract becomes permanent.
- Potential legal claims in the event of an unjustified termination.
- Administrative sanctions if the Social Security authorities detect a lack of notification.
Recommendations:
- Review all ongoing replacement contracts.
- To Implement an internal protocol for managing contract expirations and termination notifications.
- To train the HR team on the correct use of the RED System.
New Strategic Plan of the Labor Inspectorate 2025–2027
The Government has approved the new action plan of the Labor Inspectorate, which prioritizes the monitoring of:
- Temporary employment and the use of permanent seasonal contracts.
- Working time records and compliance with overtime regulations.
- Pay equity and equality plans.
- Occupational risk prevention in sectors with higher accident rates.
In this regard, and from an implementation standpoint, an increase in the number of inspections and in the level of documentary scrutiny is expected. The inspection activities will be supported by technological tools that cross-reference data on employment contracts, social security contributions, and working hours in real time.
Recommendations:
- Conduct internal preventive audits of employment and working-time records.
- Keep all labor, occupational risk prevention, and equality documentation up to date.
- Train middle managers and HR personnel to respond effectively during an inspection.
Subcontracting: joint liability under scrutiny
Recent regulatory updates and judicial criteria are strengthening the joint liability of the principal company with respect to the labor and social security obligations of its contractors and subcontractors.
Although the focus has been on the subcontracting register in the construction sector, this trend also extends to other industries that rely on outsourcing or external service providers.
The main risks include wage or social security claims arising from subcontractors’ unpaid obligations, sanctions from the Labor Inspectorate due to insufficient document control, and reputational damage if the company becomes associated with labor noncompliance within its supply chain.
Recommendations:
- Establish supplier approval protocols: verification of Social Security registration, occupational risk prevention compliance, and financial solvency.
- Include compliance guarantee and audit right clauses in contracts.
- Maintain a documentary record of all verifications performed.
These three developments serve as a reminder that labor compliance requires anticipation and continuous internal oversight. At LEIALTA, we help companies reviewing their hiring practices, prepare preventive audits, and design subcontractor control protocols that minimize legal and financial risks. Because anticipating problems is the best way to protect your business and avoid penalties.
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