The two men worked as drivers for the Chief of Staff of the Education Council of the central Spanish region. They received text messages in February 2013 informing them that they should go to their boss's office the following morning to sign dismissal papers.
When they did so, the chief verbally confirmed the termination of the men's employment.
Castille-La Mancha's supreme court ruled on Monday that the dismissal was unfair. It stated that the manner of dismissal was not in accordance with Article 55.1 of Spain's Workers' Statute and noted, "Communication of any type of contract termination should be done in writing, explaining the reasons for the termination and the effective date".
According to Spanish daily Público, the government was offered a choice of re-employing the men under the same conditions as their previous contract, plus missing wages from the intervening period, or paying compensation.
It chose the second option and must now compensate the men with sums of €68,924 and €49,523 respectively, plus €500 each in costs.
It is another political blow for the President of Castilla-La Mancha, María Dolores de Cospedal, who is also second-in-command of the country's ruling Popular Party (PP).
Last year she was summoned to appear in court after former PP treasurer, Luis Bárcenas, told a judge investigating a long-running corruption scandal that he had personally handed Cospedal two under-the-table payments. Cospedal denied the accusation.
In April the Castilla-La Mancha supreme court also ordered her government to reinstate 672 public sector workers who had been sacked in 2012.