The Spanish Supreme Court has settled one of the most common doubts in labour law: what matters is not the base salary, but the total annual remuneration. The Court puts an end to the confusion between base salary and the minimum wage (SMI) and clarifies how compliance with the legal minimum should be calculated. A collective agreement does not breach the law even if it sets a base salary below the SMI, provided that the employee ultimately receives more than the annual minimum.
In recent months, there has been some confusion around this issue. Many companies were wondering whether having a base salary below the Interprofessional Minimum Wage (SMI) in their collective agreement could constitute a breach of the law.
This is not a minor concern: almost all collective agreements are drafted with pay tables that are reviewed annually, and with successive increases to the SMI, it is easy for certain professional categories to fall short.
The Supreme Court has therefore sought to clarify the matter. And its answer, far from complicating things, brings a dose of common sense. According to Judgment 556/2025, dated 5 June, there is no problem with the base salary being below the SMI if, at the end of the year, once all pay components are added together, the employee earns more than the legal minimum.
This ruling stems from a dispute concerning the 2023 Textile and Garment Industry Collective Agreement. The Ministry of Labour considered that some job categories had base salaries below the SMI and decided to challenge it. The National High Court ruled against the Ministry, which then appealed to the Supreme Court.
The Supreme Court has once again confirmed what it had already stated in 2022: the comparison should not be made between the base salary and the SMI, but with the total annual salary. This includes extra payments, attendance bonuses, seniority, productivity incentives, and any other salary supplements.
In short, what matters is what the employee ultimately receives over the course of the year, not how that amount is broken down on the payslip.
Remember…
The base salary does not need to match the SMI, as long as the total annual remuneration exceeds the legal minimum.
Collective agreements may maintain categories with base salaries below the SMI, because the SMI does not replace collective bargaining; it simply guarantees a minimum annual threshold.
What is essential is the existence of a clause ensuring that, even if supplements are variable, the final annual result never falls below the SMI.
It is advisable to review payrolls as a whole, not just the base salary. Sometimes a small error in supplements or extra payments can affect the final outcome.
Following this ruling, some companies are considering automatically raising all base salaries to the SMI level “to be on the safe side”. This is not necessary. Doing so may disrupt the internal structure of the collective agreement, create inequalities between categories, and increase costs without any legal obligation. Before making decisions, review the total annual amounts. If the sum of fixed items and supplements exceeds the SMI, you are compliant with the law. If not, it will be time to make adjustments—but with proper judgment.
You may contact this professional advisory firm for any questions or clarifications you may have on this matter.
For further information, please consult Labour Advisory.
If you found this article interesting, please share it on social media—thank you!
