Termination of Employment Contracts in Spain

1. Grounds for Termination (List)

The Spanish Labor Code lists the following as main grounds:

  1. Mutual consent of the parties;
  2. Grounds established in the contract;
  3. Expiration of the contract term or end of the specific job;
  4. Employee resignation;
  5. Death or permanent illness;
  6. Retirement of employee;
  7. Employer’s death, retirement or permanent illness;
  8. Force majeur that makes it impossible to continue rendering services;
  9. Collective dismissal based on objective grounds;
  10. Employee’s voluntary departure based on breach of contract by employer;
  11. Dismissal of employee; and
  12. Employee’s desire to cease work as a result of that she suffered gender violence.

2. Collective Dismissals

Terminations based on economic, technical organizational or productivity grounds are deemed collective when:

  1. Ten (10) workers are affected in companies with less than one hundred (100) workers.
  2. At least 10% of the employees are affected within a period of ninety (90) days in companies that have between one hundred (100) and three hundred (300) workers.
  3. Thirty (30) workers in companies with three hundred (300) or more workers.

3. Individual Dismissal

Termination can be based on objective grounds or disciplinary grounds. However, labour courts are so restrictive in accepting dismissal based on business grounds, this procedure is very seldom used, unless the grounds are absolutely clear (e.g., bankruptcy).

4. Severance Payment

Objective dismissal: a tax-free payment in the amount of twenty (20) days’ salary per year of service, up to twelve (12) months’ salary. If the dismissal is not correctly proven in Court, the employee will be entitled to the severance explained below for unfair dismissals.

Disciplinary dismissal: if the dismissal is proven in Court the employee is entitled to no severance. If the dismissal in deemed unfair by the Judge or acknowledged as unfair by the Company before the Conciliation Chamber or the Judge, the relevant tax-free severance is thirty three (33) days’ salary per year of service up to twenty four (24) months’ pay.

5. Options for Employee

Workers can accept or challenge the termination decision within twenty (20) days of notification.

6. Unfair Dismissal

Among other reasons, dismissals will be deemed unfair if the grounds are not serious enough or not sufficiently evidenced by the employer.

7. Void Dismissal

Dismissals are void, if the termination is discriminatory or involves protected employees (e.g., on maternity leave, employees representative), in which case the employee is entitled to reinstatement. An infringement of the employee’s fundamental rights constitutes a void dismissal.

For more information on these articles or any other issues involving labour and employment matters in Spain, please contact Bufete Suárez de Vivero, S.L.
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