- The minimum wage rises 3.1%: €1,221 a month in 14 payments, that is, €17,094 a year.
- The rise is retroactive to 1 January, so payslips already issued may need adjusting.
- It is worth reviewing collective agreements and contracts that refer to the minimum wage and how offsetting and absorption operate.
On 17 February 2026 the Council of Ministers approved the increase in the national minimum wage, set out in Royal Decree 126/2026 of 18 February, published in the official gazette on the 19th. The amount is €1,221 a month in 14 payments, €37 more a month, 3.1%, equivalent to €17,094 a year; the daily rate is €40.70. It applies with effect from 1 January 2026.
The special minimums are also updated: €57.82 per legal working day for casual workers on contracts of up to 120 days with the same employer, and €9.55 per hour actually worked for external domestic workers. The Government estimates the measure will benefit some 2.5 million people, says it was agreed with the CCOO and UGT unions in the Social Dialogue Table and recalls that the minimum wage has risen 66% since 2018.
Retroactivity and payroll
As the royal decree entered into force on 20 February but applies from 1 January, employers who paid January and February at the previous amount will have to pay the differences to the people concerned. This is not optional: the minimum amount applies from the start of the year and arrears are enforceable. It is advisable to calculate the difference month by month, include the extra payments in the calculation and record the criterion applied on the payslip or in a note to each person.
The royal decree compares total annual pay with the threshold of €17,094. If the salary already exceeds it, the increase does not require changing it; if it falls below, it must be raised to reach it, and the same applies to private contracts below that amount. That is why it is worth looking at total pay and not just the base salary.
Collective agreements and references
The text also contains a transitional rule: regional or local rules, and private contracts in force, that use the minimum wage as a reference for income or indexation do not adjust automatically to the new amount unless the parties agree; for 2026 they keep the previous amount if nothing else is provided. It is a useful nuance for leases, grants or clauses tied to the minimum wage.
Collective agreements with pay scales close to the minimum are a different matter. There, the lowest categories may fall below the new minimum wage and pay will have to be raised to reach it, with the knock-on effect this can have on the categories immediately above. It is worth reviewing before the next round of negotiations. For small businesses, the effect is also felt in social security contributions, which are calculated on pay, so the total impact is larger than the salary increase.
What to review
A simple review starts by identifying who is paid close to the minimum, calculating the differences since January, checking that the payroll system already applies the new amounts and communicating adjustments to staff. In activities with many casual hires, such as hospitality, agriculture, cleaning or domestic work, updating the per-day or per-hour minimums needs specific attention.
It is also a moment to review contracts with labour-intensive service providers, such as cleaning or security, because the increase may be passed on in the price. And anyone with domestic staff should check that the hourly rate reaches the updated minimum, which for external employment is €9.55. Each company should assess its case with its employment adviser; this note is general information.
A retroactive increase is better managed when it is calculated early and explained clearly.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
