The Supreme Court upholds a pay cut of up to 24% that only touches what is earned above the collective agreement

Judgment 790/2026, of 6 October, of the Social Chamber of the Supreme Court confirms the validity of a substantial modification of working conditions with which a private air traffic control company cut, with a cap of 24.1% of the reference gross salary, the items its workforce earned above the collective agreement, according to the analysis published by Cuestiones Laborales. The ruling dismisses the appeal of two trade unions and confirms the National Court judgment that had upheld the measure.

The case reached the High Court against a conflictive background: the sectoral agreement covering air traffic controllers had been terminated since 2021 and, amid the negotiating deadlock, the economic conditions for 2023 to 2026 had been submitted to arbitration whose award of July 2024 set the remuneration. The company challenged the award without success - the courts rejected its claim because a single company integrated into an employers' association cannot challenge an award with the force of a collective agreement - and in January 2025 it opened a collective substantial-modification procedure alleging declining revenues, rising costs, losses in 2024 and insolvency risk in 2025.

What the company decided

The measure, effective from 1 April 2025, had two components. The first, a progressive tiered pay cut for controlling staff and other groups, affecting exclusively what was earned above the agreement: variable remuneration, allowances created or improved by the company and other above-agreement items. The cut could not exceed 24.1% of the reference gross salary, the agreement amounts remained untouched and conditional pay-recovery mechanisms were included. The second, a performance-evaluation system for the progression of controlling staff from 1 June 2025, which the agreement already provided for.

The company calculated savings of around 495,000 euros in salaries and 115,000 in social-security contributions; the expert put it at around 450,000 euros a year.

The doctrine the Supreme Court confirms

Article 41 of the Workers' Statute allows the salary amount to be modified when economic, technical, organisational or production grounds concur, understood as those relating to competitiveness, productivity or the technical or work organisation. The Chamber recalls its doctrine consolidated since the 2012 reform: the company does not have to prove that the measure will prevent a negative trend or improve its situation; that relationship suffices. Courts do not assess whether the decision is advisable, but check two things: that the ground genuinely exists and that there is a reasonable fit between the ground and the measure.

In the case, the National Court took the losses as proven with the annual accounts, the report and an expert opinion, and the unions failed to rebut it. Nor did the bid to impose an enhanced burden of proof on the company succeed.

Neither fraud of law nor abuse of right

The unions argued that the company was using the substantial modification to avoid paying what the award required and to circumvent the succession of the agreement. The Supreme Court rejects this with several arguments: the measure pursues a legitimate purpose - facing an economic situation that compromises the company and employment - and is valid even if that situation stems partly from poor management; the losses are not explained solely by the debts arising from the award and from old workplace agreements; the accusation of social dumping was not proven; and challenging the award and later adopting a substantial modification are legal avenues that do not exclude each other. The judgment recalls that fraud of law and abuse of right are not presumed: they must be proven by whoever alleges them.

Good faith in the consultation period

Good-faith negotiation is the key piece of the consultation period, and the Chamber recalls when it is breached: if the company conceals basic information, if it supplies only a report prepared by itself without accounting support or if it maintains an immovable position to the end. In the examined case, the National Court had found good faith even though part of the documentation could only be consulted on site, and the Supreme Court shares that conclusion. The proven facts describe a genuine consultation period: six meetings with offers and counteroffers; delivery of the audited accounts, the report and the expert opinions, with answers to the questions raised; availability - without copies, given their confidential nature - of strategic documents such as the business plan and the reports sent to the regulator; an explanation of why the provisional January statements were not delivered, as they were not yet available; and a modification of the company's proposal accepting part of what the workers' representation asked for. The judgment states the rule clearly: that there was no agreement does not mean there was no negotiation, because there is a duty to negotiate, not to agree.

The performance evaluation is not a substantial modification

Finally, the Chamber dismisses the contention that implementing the performance-evaluation system constituted an autonomous substantial modification. The sectoral agreement already required a positive performance evaluation to move up a level and provided that each company would establish its own system with objective criteria. Implementing it was therefore applying what had been agreed, not modifying it. The Supreme Court cites its consolidated doctrine: what is agreed with the workforce's representation falls outside article 41.

The boundary with opting out of the agreement

The judgment also draws a boundary relevant to practice. The company expressly left the amounts fixed by the agreement outside the cut. This is no minor detail: to pay below what is agreed in a collective agreement, the article 41 procedure is not enough; it is necessary to resort to the non-application mechanism of article 82.3 of the Statute, as article 41.6 recalls. Confusing the two avenues is one of the most frequent and most damaging mistakes in designing these measures.

Value for labour practice

The judgment offers a complete pattern of how to litigate a remuneration-related substantial modification: an economic ground documented with accounting and expert support, a design limited to above-agreement items with a cap and recovery mechanisms, and a consultation period with sufficient information. For company advisers, it confirms that selective measures on what was agreed outside the agreement withstand judicial scrutiny better than cuts to agreed items. For workers' representation, it underlines the need to rebut with evidence - not presumptions - the reality of the ground or the existence of fraud: if the proven facts at trial do not record bad faith, the appeal will require fighting that assessment with documents, not just allegations. And for the people affected, the practical consequence is twofold: if the measure is annulled, the unpaid salary can be claimed; if it is declared justified, as in this case, the cut stands, without prejudice to the affected person's option to consider the compensated termination that article 41 itself contemplates.

Judgment 790/2026 joins, in short, the line consolidating the framework of the 2012 reform: judicial control of the substantial modification centred on the reality of the ground and the proportionality of the measure, with little intrusion into the advisability of the business decision. The appealing unions have the complete doctrine in the text of the ruling, accessible through the CENDOJ, and the commented analysis comes from Cuestiones Laborales.

The Supreme Court's recent activity in social and administrative-litigation matters also includes the unification of doctrine on the professional career in publicly-concerted healthcare, while the Civil Chamber warns against mass litigation over defaulter registries. In the law-firm labour market, moves such as Natalia Gomez de Enterria joining ILIA/ETL Global confirm the area's dynamism.

Frequently asked questions

What does STS 790/2026 decide?

It confirms the validity of a collective substantial modification with which an air traffic control company cut, with a cap of 24.1% of gross salary, the above-agreement items of its workforce, dismissing the union appeal.

What does article 41 of the Workers' Statute require?

Genuine economic, technical, organisational or production grounds, and a reasonable fit between the ground and the measure. It does not require proving that the measure will improve the company's situation.

Can a company cut what an arbitration award sets?

The Supreme Court concludes that challenging the award and later adopting a substantial modification are compatible legal avenues, and that there was no fraud because the measure had a proven legitimate economic purpose.

When is there bad faith in the consultation period?

When the company conceals basic information, supplies only its own documentation without accounting support or maintains an immovable position, according to the doctrine recalled in the judgment.

Was the performance evaluation a substantial modification?

No, according to the judgment: the system was already provided for in the agreement, so its implementation does not constitute an autonomous substantial modification.

Sources

• Cuestiones Laborales, "El Supremo avala una rebaja de hasta el 24 % del sueldo que solo toca lo que se cobra por encima del convenio" (judgment 790/2026, of 6 October), updated 7 November 2026, consulted 10 November 2026.

Analysis prepared on the cited doctrinal commentary; the full text of STS 790/2026 has not been consulted directly.