What changes with the minimum wage: companies will not be able to cover the increase with bonuses

At G. Elías y Muñoz Lawyers, we would like to discuss a development in this article that is quite important for many workers: the prohibition on absorbing increases in the minimum wage (SMI) through bonuses. This could mean a pay rise for many workers. Vicente García Elías, managing partner of the firm and an expert labour lawyer, analyses this issue and its consequences.

What do current regulations say about the absorption of bonuses by the minimum wage?

The minimum wage is regulated by Article 27 of the Workers' Statute, which establishes the following:

• The minimum wage is set by the Government, after consultation with the most representative trade unions and business associations.
• It is established annually and several factors are taken into account:
  o Consumer Price Index (CPI).
  o Average national productivity achieved.
  o Increase in the share of labour in national income.
  o Global economic situation.
• A six-monthly review may be carried out if the CPI forecasts are not met.
• The review of the SMI shall not affect its structure or amount when these, as a whole and calculated annually, are higher than the SMI.
• The SMI is unattachable.

What is the minimum wage in 2026?

The minimum wage in 2026 was regulated by Royal Decree 126/2026 of 18 February and established the following:

• The minimum wage for any activity in agriculture, industry or services, without distinction based on the sex or age of workers, is set at €40.70 per day or €1,221 per month, depending on whether the wage is set on a daily or monthly basis.
• The SMI only considers remuneration in cash and does not consider remuneration in kind.
• The wage refers to the legal working day for each activity and does not include, in the case of daily wages, the proportional part of Sundays and public holidays.
• If a shorter working day is worked, the SMI will be calculated on a pro rata basis.

What types of salary supplements are there?

Salary supplements are financial payments that appear on the payslip and are added to the base salary. They are divided into three groups:

• Personal supplements. The most common is seniority pay, which is received by the employee based on their length of service in the company as part of the same professional group. Other fairly common personal supplements relate to specific training related to the activity to be performed by the employee, language skills or experience.
• Supplements related to the work performed. This group includes bonuses such as:
  o Night work. This compensates for work performed between 10 p.m. and 6 a.m.
  o Productivity. In this case, the objectives achieved by the employee are taken into account.
  o Residence. This is paid when the employee has to travel to another location.
  o Hazardous work. In this case, compensation is paid for work that involves a risk, for example, a person who works exposed to high noise levels or extreme temperatures.
  o Shift work. In this case, compensation is paid for working rotating shifts.
• Situational or performance bonuses. These are bonuses that compensate workers for achieving a certain result.

What does it mean that the increase in the minimum wage is absorbed by supplements?

Until now, many companies applied what is known as ‘minimum wage absorption’. This means the following, as illustrated by the following example:

If an employee of an IT company earns a basic monthly salary of €1,100, plus a commission of €121 per month for achieving certain monthly and annual targets. Under the current regulations, the company could make the total salary plus commission absorb the minimum wage so that the total salary was equal to the minimum wage.

What does the new regulation say?

The Royal Decree drawn up by the Government regulates the rules for applying the SMI and, basically, what it does is prohibit the increase in the SMI from being absorbed by certain supplements and establishes the following:

• The setting of the daily or monthly SMI established each year shall not affect the structure or amount of salaries when these, as an annual total, exceed the SMI. In this case, the compensation and absorption rules regulated in the Royal Decree shall apply, unless others are established through collective bargaining.
• If the salary received by the worker is equal to or higher than the SMI for a full-time position on an annual basis, the SMI is understood to be compensated by the employee's salary. To this end, all financial payments received by the worker under their employment contract, individual agreements with the company or collective bargaining agreements are taken into account, calculated on an annual basis and for full-time work, excluding the following supplements:
  o Those relating to the conditions in which the work is carried out, for example, bonuses for night work, hazardous work, shift work, arduous work or availability.
  o Those relating to the worker's conditions such as seniority, training or residence.
  o Those relating to the quantity or quality of work received for achieving results or performance, such as incentives, bonuses or commissions.
  o Other supplements that collective agreements establish as non-compensable.
• To determine whether compensation or absorption applies, non-salary payments are not taken into account.

Example of how absorption works under the new regulation on the application of the minimum wage

An employee of a façade cleaning company earns a base salary of €1,000 per month and a hazard allowance of €210. This base salary would be below the 2026 minimum wage, but the company cannot apply the hazard allowance to cover the increase in the minimum wage; instead, it must increase the base salary. Thus, the base salary should be equal to the minimum wage of €1,221, and the hazard allowance of €210 will be added.

As we have seen, this is an important change for workers whose base salary is below this year's minimum wage. If you think this applies to you, contact our team of labour lawyers and we will analyse your case.