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How does Organic Law 1/2025 impact the employment sphere?
Continuing the trend set in the previous year, the beginning of 2025 has brought with it significant developments in the field of labor law. Within this context of ongoing transformation, Organic Law 1/2025, of January 2, on measures concerning the efficiency of the Public Justice Service, emerges as a key milestone. It was published in the Official State Gazette (BOE) on January 3, 2025, and came into force on April 3.
Although primarily aimed at improving judicial efficiency, the scope of this law extends beyond procedural matters, with noteworthy substantive changes in labor law. These changes have direct implications for employer-employee relations, reinforcing employee protections and introducing new obligations for companies.
At the procedural level, the law introduces significant reforms such as the reorganization of judicial offices, new requirements for early and digital submission of evidence, and changes to the appeal process before the Supreme Court. However, this article focuses on the substantive implications that directly affect day-to-day business operations.
Reintroduction of objective nullity in working time adjustments and leave under Organic Law 1/2025
One of the most relevant and anticipated changes is the reintroduction of “objective nullity” grounds for dismissal, which had been eliminated by the enactment of Organic Law 2/2024, on gender parity and balanced representation of women and men.
Two situations, previously left without legal protection, are once again covered under Article 53.4.b) of the Workers’ Statute, establishing the automatic nullity of dismissal when no justified cause is proven in the following cases:
When the employee has requested an adjustment to working hours, schedule, or the method of providing services for reasons related to work-life balance, such as care for a child, spouse, registered partner, or family members up to the second degree of kinship or cohabitants who cannot care for themselves. (art. 34.8 WS)
When the employee has exercised the five-day paid leave for accident, serious illness, hospitalization, or surgical intervention or relatives up to the second degree of kinship or affinity, or cohabitants requiring direct and effective care. (art. 37.3.b WS)
This special protection guarantees that if the dismissal is found unlawful, it cannot be merely classified as unfair, but must instead be declared automatically null and void.
This modification restores legal certainty that had been weakened by the previous reform, ensuring that dismissals are not driven by the exercise of reconciliation rights. For companies, this change necessitates greater caution when considering dismissals involving any of the circumstances listed in Article 53.4 WS.
Contract termination with severance due to unpaid wages under Organic Law 1/2025
Another noteworthy aspect of Organic Law 1/2025 is the introduction of objective criteria for assessing the entitlement to contract termination with severance due to unpaid wages (art. 50.1.b WS). Until now, the assessment of serious contractual breaches by employers relied on case law criteria, such as the severity of the conduct or the amount owed.
With the new wording, Article 50.1.b) WS expressly defines the following objective thresholds:
Late salary payment: A delay is deemed to exist when payment is made more than 15 days after the due date. If such delays occur on six occasions, even if not consecutively, they will be considered serious.
Serious non-payment of wages: Defined as the employer owing three full months of salary within the same year, regardless of whether they are consecutive.
If either of these conditions is met, the employee will be entitled to terminate the contract with severance as for unfair dismissal and access unemployment benefits. This removes the need for courts to assess whether a “just cause” exists—an otherwise abstract and subjective evaluation.
However, the law includes a safeguard clause: “without prejudice to other circumstances that the judge or court may consider just cause for these purposes,” meaning that in cases of clear and egregious breaches, courts may still allow employees to terminate the contract with compensation. This indicates that simply avoiding the objective thresholds will not prevent a termination ruling in cases of fraudulent conduct.
New powers for the labor inspectorate
The reform also grants new powers to labor inspectors, allowing them to take part in conciliation, mediation, and arbitration processes—including in contexts of strikes or collective labor disputes—as provided for in collective bargaining agreements or interprofessional agreements, provided these activities are not of a permanent nature.
This represents a qualitative shift in the inspectorate’s role, evolving from a purely supervisory function to one actively involved in out-of-court dispute resolution.
This new legal framework encourages companies to rethink their conflict management strategies and to promote internal mechanisms for resolution that anticipate or prevent litigation.
Exceptions to the tax exemption of severance payments: express regulation in Article 7.e) of the Personal Income Tax Law (LIRPF)
Lastly, Organic Law 1/2025 reinforces legal certainty regarding the tax treatment of severance payments, by expressly incorporating into Article 7.e) of the LIRPF the established doctrine of the General Directorate of Taxes. According to this doctrine, only severance payments formalized through the appropriate administrative body—such as labor mediation, conciliation, or arbitration services—or agreed upon in court are exempt from taxation, and only within the legally established limits.
As a result, severance agreements made outside institutional channels are expressly excluded from tax exemption. This clear regulation is key to resolving a matter that has long caused uncertainty.
In conclusion, labor law continues to evolve toward a more regulated and employee-protective model, in which business decisions require increased legal scrutiny and support. Reforms such as this one have a direct impact on key operational areas.
In such a dynamic environment, keeping internal policies and procedures up to date is essential to avoid legal risks and ensure compliance.
In this scenario, having access to specialized legal advice becomes a strategic necessity.
Do you need advice? Access our area related to the impact of LO 1/2025 in the labor field: