Termination of employment in Spain

Updated: Nov 29, 2021

Do you really know the rules if you are dismissed by your Spanish Company?

Let me give you some advice…


Termination of employment occurs when a party to the employment relationship considers that there is no need to continue the employment contract. It is usually governed by Labor law.


In Spain, the termination can occur for different reasons. The notification of the dismissal must be written minimum 15 days before. This rule is not mandatory for interim contracts or probation periods.

You are entitled to receive a compensation. You can sometimes get your job back and you will receive all the salaries unpaid from the date of your dismissal. It is essential that the employer specifies the real reasons for the termination in a document called carta de despido. It must include figures of the company to be sure that your rights are respected, such as the annual accounting proving losses or the number of clients orders during last years to know if there is a decrease.

During the coronavirus pandemic, employees have the same rights!

The termination will be different depending on the type of the contract.



The dismissal usually occurs when the company suffers from a bad economic situation and the employer must dismiss employees to keep his business = it is called redundancy. The company must send a redundancy letter to the employee at least 30 days before the dismissal.

One thing to know is that the company must allow the employee to leave the office at least 6 hours a week to look for another job.

The employer needs to follow a process.

  • Explain the worrying economic situation of the company, that is it making losses, it is going to be into the red, and there is a persistent decline of incomes. Thus, a decreasing profit comparing with the previous year is not enough to demonstrate a bad economic situation.

  • Prove that the economic problems affect the number of employees and that the reduction of the workforce is a necessity.

  • Ensure that there is not another measure which could be less restrictive, such as assigning the employee to another position in which he is more efficient.

Moreover, a redundancy can be expressed if:

  • the company will close

  • there is less work or available position

  • the company changes its location

  • a particular role is no longer useful

  • there is a reorganization of the workforce and some workers do not have the competences to perform new jobs.

The process usually takes 2 weeks or more (4-6 weeks).



Fair reasons for dismissal


1. Misconduct

  • The employee acts again the company policy

  • He breaks the relationship of trust with his employer, for example when the employee speaks informally to his employers and this behavior persists.

  • He steals something from the company,

  • He has a racist behavior and is responsible for harassment,

  • He takes time off without permission

  • He has repeated or unjustified absences.

2. The capability of the worker: if he has a long-term illness as cancer and he is not efficient. Some rules need to be respected by the employer:

  • The worker needs to be helped in the procedure

  • Give time to the employee to recover

  • Ask the worker’s opinion regarding the situation

  • Understands the employee’s conditions such as special treatment.

  • Think about other options before terminating him (assigning him to other roles, offering him a part-time contract, flexible schedule…)


3. The worker’s performance: If the employee’s skills or quality of work is insufficient for the job, he can be dismissed.

4. The expiry of a fixed term contract

5. Temporary employee can be dismissed to allow the former employee to get his job back.

6. An employee who disagrees to change his terms and conditions of work.

7. A significant conflict of interests can also lead to the termination.


The employer must inform the employee by writing the reasons and the date of the termination. If the employee is a member of a trade union, the employer needs to decide with the union delegates.

Regarding the trial periods, the employer can terminate a worker during the trial period without informing him before or providing severance payment.



The legal procedure


The worker has 20 working days from the notification to appeal against the dismissal.

A mediation is planned around 3 weeks after the claim where all the parties are expected to assist to reach an agreement. The former worker must be present, otherwise the claim is considered as invalid. If both parties can’t reach an agreement, the claim will continue before the Court.

A severance will be mandatory if the dismissal is considered as unfair. This compensation will be higher, 33 days paid per year worked instead of 20 days paid per year worked when the dismissal is fair.

The employee is entitled to receive pay back, get his job back and may even receive damages.



Unfair reasons for dismissal


  • Sexual harassment or a hostile work environment: it negatively affects the work environment. Employees are forced to resign because there is not any measure against this problem. If an employee has been fired because of this reason, he can sue and receive compensation for monetary damages and emotional pain.


  • Discrimination: it is unfair to make differences between workers because of their skin color or their religion. This type of discrimination includes making decisions about the recruitment based on stereotypes, excluding some people from certain positions.


  • Disagreements on compensation claims: if the worker claimed compensation after a work accident and has been laid off. This case is considered as unlawful.


  • Breach of family and medical leave: an employee is entitled to get his job back after a leave.


  • Violations on wage and working hours: the employer could give the worker less days annual leave, pay him less or pay his overtime hours less than the amount stated by the Collective labor agreement, not allow the worker to take a break at lunchtime. Those trials based on this reason are complex and sometimes intimidating but there are the most important.

The employee can decide to leave the company, it is a termination by the employee. The employee must inform his employer of his decision 15 days before, but it depends on the employment contract.

He is also entitled to 20 days’ compensation for each year of service if:

  • The employer does not pay on time the total amount of money

  • He changes the working conditions and does not respect the Spanish labor law

  • The employer asks the worker to change his residence after a transfer to a different work location.

If the company is sold, the employment contract is automatically given to the new owner. The employee must be informed by the transfer, the date, the reasons, and the consequences.


If the employer goes bankrupt or is insolvent, there is a protection called ‘insolvency state fund’ (Fogasa) which allow the worker to receive his wage. Part-time and fixed-term contracts can also receive these funds. It includes wages, bonuses, benefits, and financial participation.

A specific Decree (Royal Decree 1382/1985) defined the termination for senior executives. It can be a unilateral decision of the employer without a cause. The executive is entitled to be paid 7 days for each year of service, with a maximum of six months paid. If the dismissal is disciplinary and considered as unfair, the executive will be entitled to receive a severance of 20 days’ pay for each year of service, with a maximum of 12 months’ pay.

Another reason for termination is the mutual agreement. An employer can terminate a worker by mutual consent. It consists in giving a dismissal letter to the employee to receive the severance and unemployment benefits. The employer needs to be careful as this type of termination is considered as fraudulent, even if a lot of employers use it.


Finally, there is the collective dismissal.

It can take place when:

  • it concerns at least 10 employees in companies with less than 100 workers.

  • it concerns at least 10% of the employees in companies having between 100 and 300 employees.

  • it concerns at least 30% of the employees in companies having 300 or more workers

  • it concerns all the workers and that there is minimum 5 workers affected.

If these rules are respected, the company needs to request the Labor Authorities which will verify the situation and try to find other method to solve the workforce situation.

  • The authorities can accept the request: the company must pay the minimum indemnity, 20 days of pay per year of service, with a maximum of 12 months paid.

  • The labor authorities disagree, the employees with indefinite contracts will be paid the indemnity of 33 days paid per year of service with a maximum of 24 months paid.



Specific situations


Certain situations cannot lead to a dismissal, such as:

  • Discrimination

  • Pregnancy: The termination is considered as unfair if it occurs after the date when the employee became pregnant and during the maternity leave.

  • After childbirth

  • Paternity

  • People working fewer hours to care for young children.

Regarding employees who smoke, the law 28/2005 states that it is forbidden to smoke in public and private workplaces. If this rule is not respected, the termination will be lawful.



Retirement


The minimum age for retirement is currently around 65 years old. The country is raising the retirement age which should reach 67 by 2027.

To obtain the minimum pension, the employee must have worked and paid social security contributions for at least 15 years and to have a full pension, the employee must have paid social security contributions for at least 35 years. This number will increase to 38 and a half years by 2027.

If the employee wants to retire early, he will have a penalty on the amount of the pension he will earn and there are some conditions: the worker could retire two years before only if he paid social security contributions for at least 35 years.

However, there are some situations in which the worker could ask for a full pension after 60 years old if he paid enough contributions, for example disabled workers or dangerous jobs.




Author: Annaelle Lopez

Bachelor Degree in Business Administration

Faculty of Economics and Management, Aix-en-Provence, France

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