Termination under Spanish law
Spanish employment law distinguishes between three categories of grounds for termination. The obligations of the employer and the rights of the employee differ depending on the relevant grounds for termination. This is because, regardless of the reason for termination invoked, a further distinction must be made as to whether this reason actually exists or not. The consequences of a valid (if the reasons for termination exist), invalid (if the reasons for termination do not exist) or even void termination (if there is a reason for invalidity) differ.
It is therefore necessary to first distinguish between the different categories of grounds for termination.
Different categories of termination
1.) Despido disciplinario – Termination due to breach of contract (the employer terminates the employment relationship because the employee is accused of serious and culpable misconduct), in accordance with Article 54 of the Estatuto de los Trabajadores (Spanish Workers’ Statute).
The cases recognised as such misconduct are mainly the following:
– Repeated and unjustified absence or tardiness
– Undisciplined behaviour or insubordination at work
– Verbal or physical misconduct / attacks
– Abuse of trust or conduct contrary to the principles of good faith
– Decline in work performance
– Persistent drunkenness or continued influence of drugs in general
– Bullying and any persistent, continued or explicit harassment of superiors, colleagues or subordinates
2.) Despido objetivo – dismissal for operational reasons (the employer dismisses the employee for economic, organisational, technical or production reasons).
The relevant grounds for dismissal are described in Article 52 of the Workers’ Statute.
These are:
– Inability of the employee
– failure to adapt to the workplace
– justified absence
– Insufficient economic resources – Surplus of employees
3.) Collective dismissal (ERE = Expediente de Regulación de Empleo) (collective dismissal if the following conditions are met as a result of objective or operational reasons [collective dismissal]):
– Termination of at least ten employees if the company has fewer than 100 employees
– Termination of 10% of employees in companies with 100 to 300 employees
– Termination of 30 employees if the company has more than 300 employees
The consequences associated with each reason for dismissal
1.) Despido disciplinario – dismissal due to breach of contract
If the dismissal is found to be lawful, the employee will not receive any compensation.
If the dismissal is unlawful, the employer has the choice of either a.) reinstating the employee or b.) compensating them.
In the event of compensation, a distinction must be made depending on when the employment relationship began. If the employment relationship was established before 12 February 2012, the compensation for the period prior to the reform of 2012 coming into force amounts to 45 days’ pay per year of service (up to a maximum of 42 months’ pay). If it was entered into after that date or continued beyond that date, the compensation for work performed after 12 February 2012 is reduced to 33 days’ pay per year of service.
If the dismissal can be classified as void, the employee must, in principle, be reinstated in the company. Likewise, the salaries accrued during the legal dispute must be paid.
2.) Despido objetivo – dismissal for operational reasons
If the dismissal for operational reasons is permissible, the employee must be paid compensation of 20 days’ wages per year of service (up to a maximum of 12 months’ wages).
If the termination is unlawful, the employer has the choice between compensation and re-employment.
If the employer opts for compensation, a further distinction must be made: For the period in which the employment relationship existed before 12 February 2012, compensation amounting to 45 days’ wages per year of service (up to a maximum of 42 months’ wages) must be paid. For the period after that, i.e. after 12 February 2012, 33 days’ pay per year of service, up to a maximum of 24 months’ pay, shall be paid.
If the dismissal is void, the employee must be reinstated.
BUT: Very important for the entire article!!!! Although the distinction based on the start of employment for determining the maximum amount of compensation to be paid was confirmed by the Tribunal Supremo in 2015, a decision by the Tribunal Supremo in 2016 stipulates that the maximum amount is 24 months’ salary.
3.) Despido colectivo – Mass redundancies
Either the mass dismissal was authorised, in which case the employer must pay 20 days’ wages for each year of service as compensation. Otherwise, the dismissal is null and void, and the employee must be reinstated at their workplace.
