The Supreme Court (TS) has issued a key ruling that changes the way companies are required to draw up employee salary receipts. From this pronouncement, it is no longer enough for a payroll to be a simple list of numbers and concepts; a level of breakdown is now required to ensure full understanding of each amount paid.
What should include a worker's payroll according to the Supreme Court?
The recent court ruling places the focus on the worker’s right to know exactly what he is charging and why. The TS recalls that payroll is a basic information document and therefore must strictly comply with the principles of clarity and transparency.
Specifically, companies are required to clarify and break down in detail the following elements:
- Variable salary concepts: Commissions, incentives or bonuses by objective.
- Delays: Amounts for previous months (e.g. for retroactive application of a convention).
- Incidences: Overtime, nighttime, turnicity or any other exceptional situation that alters the base salary.
The legal framework: Article 29.1 of the Workers' Statute
This requirement is not arbitrary. The Supreme Court bases its decision on the labour legislation in force in Spain, based on two fundamental pillars:
- Article 29.1 (third paragraph) of the Workers' Statute: It regulates the settlement and payment of the salary through the delivery of an individual and supporting receipt.
- The Ministerial Order of 27 December 1994: That approves the official model of individual salary receipt and governs the formal payroll requirements.
The key to the judgment: Information versus simple enumeration
The most disruptive point of this judicial pronouncement is that the problem is not usually the omission of concepts, but the opacity in their calculation.
Why is it insufficient to list concepts and amounts?
So far, many organisations were merely reflecting a concept (e.g. ‘Productivity plus’) together with a closed figure (e.g. ‘€250’). This practice is insufficient.
In order to comply with legality, the document must allow the worker:
- Understand the origin: Know the formula, percentage or mathematical criterion that results in that amount.
- Verify the correction: Have the tools necessary to verify, by itself or through its legal representatives, that the company has not made an error in the calculation of its variables or delays.
The expert’s assessment: what does this judgment mean in everyday life?
Víctor María González Muñoz, Director of the Afianza Legal area of work, analyzes the real impact of this resolution on companies and professionals:
“The Supreme Court has just put its finger on a sore that the sector has been carrying for years: a payroll may be complete and, even so, unreadable. The ruling does not reproach the lack of wage concepts, but that the sheet merely aligns items and figures without explaining where they come from. Variables, delays or any incidence whose calculation is not evident should appear disaggregated so that the worker understands the amount and can verify if it is well done.
It should be recalled that the Supreme invents nothing new: the requirement of clarity was already in article 29.1 of the Workers' Statute and in the Order of 27 December 1994. What the sentence does is to demand that it be truly enforced.
It seems to me a sensible resolution, no matter how uncomfortable for many companies. For years we have worked with payroll models designed to liquidate correctly, which is not the same as for them to be understood. And transparency is not a formal ornament: it is just what allows us to detect an error before it ends up in a claim or in court. Those who process payrolls now have a concrete task: to review how we present variable concepts and assume that listing is not enough anymore. To calculate well was always mandatory; to explain the calculation, it is also from now on.»
Avoid misunderstandings with your employees and possible penalties from the Labour Inspectorate. The Afianza experts review and adapt your salary receipts models to ensure maximum transparency in variable concepts and delays. Ensure the legal compliance of your business with our labor experts.
Find out more about Victor
