What is the notice period in Spain?
The statutory minimum notice period for objective dismissals is 15 business days, and unless the employment agreement provides a longer notice period, no notice is required for disciplinary dismissals. Payment can be made in lieu of serving notice.
Is unused leave paid out at the time of termination?
In cases of termination, any unused annual leave is paid out as compensation. This payment will be made through the final salary liquidation (“finiquito”).
What are the routes of termination in Spain?
- Unjustified (Disciplinary) Dismissal
- Employee’s actions must be both serious and willful.
- At least 1 or 2 warning letters are required before proceeding with a disciplinary (reasoned) dismissal.
- Employee must be notified in writing, stating cause and date of dismissal. No notice is required for this type of dismissals.
- Justified Dismissal (Objective): It must be justified based on economic, productive, organisational or technical grounds.
In Spain, we cannot terminate an employee through the signing of a Mutual Termination Agreement (MTA).
What is the severance payment in Spain?
Severance pay in Spain depends on the employee’s seniority and salary, but the type of termination is also a factor:
- For objective dismissals, 20 days’ wages per year of service (up to 12 months total salary) of severance is due.
- For justified disciplinary dismissals, no severance is due.
- In case the dismissal is considered unfair, the employer is required to pay up to 33 days of salary per year of service for those employment contracts subscribed after February, 2012. For those employment contracts subscribed before February, 2012, the severance for unfair dismissal will be calculated based on 45 days of salary per year of service for services rendered before February, 2012, and 33 days of salary for services rendered after February, 2012.
Severance pay is calculated on an employee’s salary, which includes wage payments, commissions, bonuses, overtime, extra pay, etc. Non-wage contributions such as health benefits and payments made to social security are not included.
What is the timeline for termination payments?
The employee’s final salary liquidation (“finiquito”) shall be paid following the termination date. In cases of redundancy/objective terminations, severance payment should be paid at the same time the letter of termination is delivered.
What are other termination considerations?
Please note that some employees are protected from dismissal:
- Employees on parental leave (up to 12 months after the birth of the child);
- Employees on “ordinary” sick leave;
- Pregnant employees; and
- Employees who have the status of legal representative of the employee, among others.