Grounds for Termination
In Spain, the following are grounds for termination: Mutual consent of the parties; Grounds established in the contract; Expiration of the contract term or end of the specific job; Employee resignation; Death or permanent illness; Retirement of employee; Employer’s death, retirement or permanent illness; Force majeure that makes it impossible to continue rendering services; Collective dismissal based on objective grounds; Employee’s voluntary departure based on breach of contract by employer; Dismissal of employee.
Terminations based on economic, technical organisational or productivity grounds are deemed collective based on the number of workers in the company and the number of workers that would be affected
Termination can be based on objective grounds or disciplinary grounds.
Is severance pay required?
A disciplinary dismissal does not entitle an employee to receive any compensation from the company. A severance payment will only be required in cases that involve a court ruling declaring the dismissal unfair.
Is a Separation Agreement required or considered best practice?
Termination of contracts based on mutual consent does not entitle the employee to severance payments (unless specifically agreed) or unemployment benefits. Should a severance be agreed, it would be subject to taxes and social security contributions. To avoid the aforementioned, the general practice for companies is to dismiss the employee so that he is entitled to the legal severance and also to unemployment benefits. Although this system is used in a clear majority of cases by employers, a termination agreed by mutual consent that has the appearance of a dismissal (by giving a dismissal letter to the employee to get the severance free of taxes as well as unemployment benefits), is unlawful and considered a fraud.
Remedies for employee seeking to challenge wrongful termination
An employee is entitled to appeal against any such dismissal. However, prior to file a claim to the Court, parties are required to try to reach an agreement before the Mediation, Arbitration and Conciliation Service.
There is no specific employment legislation in place that provides legal protection for whistleblowers. However, internal company policies usually provide for protection as well regulate specific procedures to report illegal practices. Internal policies must be implemented in accordance with what is established within the law and regulations. The most recent reform of the Criminal Code, which came into force on 1 July 2015, introduced the need to have internal prevention mechanisms and channels in order to reduce or avoid any potential criminal liability for companies or their representatives.
Whistle-blower programs have also been regulated by the Data Protection Authority’s (“DPA) guidelines, in particular by the “Guide for Data Protection in Labour Relationships”. Usually, protection in an internal policy will be limited to the company’s employees, which have a direct hierarchical relation with the company. Outsourcing services, agency workers or independent contractors do not fall under the organisational scope of the employer, but this does not mean that they cannot be protected in case any breach needs to be violated.
The possibility of filing an anonymous complaint is generally prohibited, because there is a real need to identify the complainant and the accused party. Finally, the organ responsible for the investigation will need to inform the accused party regarding the protection and confidentiality of their personal information during all stages of the process, even upon its conclusion.