Spain's Labor Ministry has approved an agreement between Telefonica and unions to cut up to 6,500 jobs through 2013 to reduce costs at the Spanish telecoms giant.
Telefonica and the unions agreed to the cuts in June. In Spain, mass layoffs require government approval.
Workers leaving will get 68 percent of their salary until they reach retirement age.
Telefonica will also pay euro350 million ($500 million) into a government fund that aims to find jobs for older workers, to offset jobless benefits the government will pay to those leaving Telefonica.
News reports said the average age of those taking early retirement is 53, with at least 15 years of seniority at the firm.