Compensation for the dismissal of an employee
The Spanish Workers’ Law stipulates that employers are not allowed to dismiss employees at will for the protection of their employees, and that even if they do, they are required to pay a certain amount of compensation.
What is the compensation for the termination of a permanent worker contract?
According to Article 53 of the Workers Law, the compensation to be paid for the dismissal of a worker is equal to 20 days of the worker’s salary for each year of work. In other words, if the worker has been with the company for 2 years, then he or she will be compensated with 40 days of wages. If it is said that the work is less than one full year, then it is pro-rated.
The maximum compensation that can be received is 12 months’ wages.
For example, if a worker has been with the company for 2 years and the salary is 1,300 Euros for 1 month and the average daily salary is 43,3 Euros, then the total compensation is 1.733 Euros.
Note: This rate is based on pre-tax wages, not after-tax wages. The pre-tax salary can be found in the pay slip.
Note: Compensation for 20 days’ wages is the minimum compensation rate required by law. Some industries and regional labor agreements “(convenio)” may increase this amount.
33 days’ wages for unfair dismissal
The above mentioned cases are limited to those in which the employer can provide objective reasons, such as a decline in business, staffing, etc.
If the boss is not able to give an objective reason for dismissal, i.e. he/she does not like the employee, then he/she can just find a reason for dismissal. In this case, it is considered as “unreasonable dismiss al” and the employee will be compensated with 33 days of salary for each year of service.
In what cases is compensation not required?
Article 53 of the Workers Law states that if the dismissal is due to the worker’s own problems, then no compensation is payable. In other words, if the reason for dismissal is alcoholism, frequent tardiness, reduced ability to work, insulting co-workers, committing a crime, disobeying the boss, etc., no compensation is required.
