Royal Decree 723/2026: Companies Must Inform Employees About the Use of Algorithms in Employment Decisions

The Council of Ministers approved Royal Decree 723/2026 on 8 September 2026. It was published in the Official State Gazette the following day and will enter into force on 5 October 2026. The regulation partially transposes Directive (EU) 2019/1152 on transparent and predictable working conditions and develops Article 8.5 of the Employees’ Statute.

Royal Decree 723/2026 fully repeals and replaces Royal Decree 1659/1998, which until now regulated information on the essential elements of employment contracts. The reform significantly expands the information that must be provided and introduces, as its main new feature, the obligation to inform employees about the existence of algorithmic or automated decision-making systems.

This does not mean that algorithmic information is an entirely new issue in Spanish law. However, it does mean that it is now expressly incorporated into the catalogue of essential employment terms that companies must communicate in writing to each employee.

What Essential Information Does the Royal Decree Expand?

The new Article 3 of Royal Decree 723/2026 significantly expands the minimum information that companies must provide in writing before the employment relationship begins.

The most relevant changes include:

• Basic salary and each salary supplement separately, including payment frequency, payment method and, where applicable, the method for calculating variable remuneration.
• The duration and distribution of working hours, including cases of irregular distribution and the notice periods applicable to changes.
• The duration and conditions of the probationary period, including the respective obligations of the company and employee.
• The right to training provided by the company.
• The procedure for terminating the employment contract and the applicable notice periods.
• The applicable collective bargaining agreement, identified by its code and publication date.
• The Social Security contribution system and any voluntary improvements to social protection.
• The existence and content of the equality plan, sexual harassment protocol and, where applicable, measures for the effective equality of LGTBI people.

This obligation applies to employment relationships lasting more than four weeks and is additional to, rather than a replacement for, the existing requirements concerning the written formalisation of employment contracts.

The Major New Development: Information About Algorithms and Artificial Intelligence

Article 3.2(k) of Royal Decree 723/2026 introduces an obligation with significant practical implications: companies must inform employees about the existence of algorithmic or automated decision-making systems.

This information cannot be limited to stating that the system exists. It must include the system’s guidelines, criteria and operating rules where it is used to make decisions concerning:

• The duration and distribution of working hours.
• The allocation of tasks.
• The determination of salaries.
• Career progression.
• The place of work.
• The termination of the employment contract.

The obligation does not apply to every algorithm or software programme used by a company in its day-to-day operations. It is limited to systems that are actually used to make decisions affecting these employment conditions.

How Does This Fit With Article 64.4(d) of the Employees’ Statute and the “Rider Law”?

This individual right to information does not arise in isolation. Since 2021, Article 64.4(d) of the Employees’ Statute, introduced by Royal Decree-Law 9/2021, has required companies to inform employee representatives about the parameters, rules and instructions of algorithms or artificial intelligence systems that affect working conditions and access to and maintenance of employment, including profiling.

Royal Decree 723/2026 creates an individual right to information that is distinct from the collective right of employee representatives. Both will coexist and, in practice, companies should ensure that the information provided to each employee is consistent with the information already provided to employee representatives.

In addition, Article 22 of the GDPR concerning automated individual decision-making continues to apply in parallel.

Deadlines for Applying Royal Decree 723/2026

Royal Decree 723/2026 establishes different scenarios depending on when the employment relationship begins.

For employment contracts entered into from 5 October 2026, the information must be provided before the employment relationship begins.

For employment relationships already in force on that date, the transitional provision establishes that the company must provide the information requested by the employee within 30 working days of receiving the request, provided that the information is not already in the employee’s possession.

Any subsequent modification to the information provided must be communicated in writing as soon as possible and, at the latest, on the same day on which the change takes effect.

In addition, the Ministry of Labour and Social Economy, through SEPE, must make an information document template available to companies and employees within a maximum period of twenty days from publication of the regulation. The absence of this official template does not exempt companies from complying with the information obligation using the means already available to them.

Practical Impact for Companies

Royal Decree 723/2026 requires companies to carry out a comprehensive review of the employment contract templates and information documents currently provided to employees.

Companies using automated recruitment tools, systems for allocating shifts or tasks, performance assessment algorithms, software-based variable remuneration systems or decision-support systems for promotions or dismissals should first determine whether those systems fall within Article 3.2(k).

Once identified, companies will need to document their guidelines, criteria and operating rules in terms that are understandable to employees, rather than solely in technical terms.

Companies should also anticipate the volume of requests that may be received from their existing workforce once the regulation enters into force and prepare an internal procedure allowing them to respond within the 30-working-day deadline.

Impact on Human Resources

For Human Resources departments, Royal Decree 723/2026 moves algorithmic information from the field of collective bargaining into the individual employment relationship.

It is no longer sufficient to have informed employee representatives. HR departments will need to be able to demonstrate, on an individual basis, that the information obligation has been fulfilled whenever relevant algorithmic systems affect employment conditions.

This requires close coordination between HR, technology teams or external providers operating these tools, and the legal department or data protection officer, particularly regarding Article 22 of the GDPR.

Good Practices Following Royal Decree 723/2026

Before 5 October 2026, companies should:

First, create an inventory of the algorithmic or artificial intelligence tools involved in decisions concerning working hours, tasks, salary, promotion, geographical mobility or termination of the employment contract.

Second, review and update employment contract templates and prepare the information document setting out the essential employment terms, comparing it with the official template once SEPE publishes it.

Third, design a standard procedure for responding to information requests from the existing workforce, with defined deadlines and responsibilities.

Fourth, coordinate individual information with the information already provided to employee representatives under Article 64.4(d) of the Employees’ Statute.

Finally, review how these systems fit within data protection legislation and assess whether a data protection impact assessment is required.

The Key Legal Point: Royal Decree 723/2026

Royal Decree 723/2026 does not create substantive regulation of the use of algorithms within companies. What it does is strengthen transparency: employees have the right to know, in detail, when an automated system intervenes in decisions affecting their employment relationship and under which rules it operates.

This obligation is additional to, and does not replace, the information rights of employee representatives and the individual rights established under the GDPR.

For companies, the challenge is therefore not only regulatory but also organisational: identifying their own algorithmic systems, documenting them and being in a position to explain them in writing before the regulation enters into force.

At Suárez de Vivero, we advise companies and Human Resources departments on adapting employment contract templates, complying with employment and algorithmic information obligations, and coordinating these requirements with data protection legislation.

Frequently Asked Questions About Royal Decree 723/2026