Spanish employment law distinguishes between different types of dismissal. As in other legal systems, such as German or Austrian law, a dismissal for operational reasons or for conduct-related reasons, for example, is linked to different conditions and leads to different consequences in each case.

Irrespective of the reason for termination, however, every termination must at least be formally duly pronounced. Mistakes are often made at this point.

There are always three points to bear in mind:

1) Written notice of termination

Notice of termination must be given in writing. For this purpose, the employee must be given a letter of termination. Verbal termination is invalid.

The letter of termination must clearly state that notice of termination is being given. At the same time, the reasons for the termination must be stated. The letter must also state the date on which the employment relationship will be terminated.

The employee can initiate conciliation proceedings within a period of 20 working days and then formulate the corresponding action for protection against dismissal (the 20-day period extends to the period up to the action for protection against dismissal, i.e. the conciliation proceedings must be initiated within 20 days, the application for which suspends the 20-day period; if the conciliation proceedings are unsuccessful, the remaining 20 days continue to run).

2) Advance notice

In general, notice of termination must be given in advance. The notice period is usually 15 days, i.e. there must be 15 days between the notice of termination and the termination of the employment relationship. An exception applies to terminations due to breach of contract (i.e. terminations due to misconduct), as in such cases the obligation to give advance notice does not apply.

If notice of termination is given without prior notice, the employee is entitled to the corresponding compensation. This amounts to one day’s pay for each day’s notice not given.

3) Confirmation of the settlement

The employee must be paid the severance pay and compensation to which they are entitled. This is usually done by simultaneously signing a document called a “finiquito” (severance payment). This severance payment document must state that the amount determined will be paid out in connection with the termination of the employment relationship.

This document usually identifies the employer (name, address and tax number of the employer) and the employee (all first and last names, address, tax number and social security number).

It also describes which amounts are paid out for which reasons (outstanding wages, compensation, etc.). Certain amounts may have to be withheld in order to pay them to the social security or tax authorities, although it should be noted that no withholdings are usually made on compensation amounts due to termination of contract.

Once the employee’s monetary claims and the withholdings to be made have been compared, they are offset. The surplus is to be paid to the employee at the time the severance payment document is signed. The payment does not have to be made in cash. However, it is usual for smaller amounts to be paid out directly, while larger amounts are paid by cheque.

By signing the severance payment, the employee declares his or her consent to the termination of the employment relationship and the compensation and severance payment received, which is why he or she effectively waives further legal action and additional payments. Only if the employee adds an appropriate addendum in the form “Received but without consent” when signing the severance payment document can he or she later take legal action against the termination and the severance payment received.

If the employee refuses to sign the severance payment, it is advisable to agree slightly improved conditions if necessary if there are only minor deviations. Subsequent labor court proceedings often cost unnecessary time, money and patience and are disproportionate to the “excessive payment” if there are in fact only the slightest differences between the employer’s and the employee’s expectations. A dispute over 150 euros quickly escalates into a situation in which the employee disputes the dismissal for conduct-related or operational reasons issued by the employer and formulates the corresponding action for protection against dismissal.

If the employee insists on the presence of an employee representative, he is within his rights. So do not deny him this request.

The reasons for termination

As mentioned above, Spanish employment law distinguishes between dismissal for operational reasons(despido ordinario), dismissal for breach of the employment contract(despido disciplinario) and collective dismissal(despido colectivo).

Termination for conduct-related reasons

A dismissal for conduct-related reasons can be pronounced if the employee is characterized by the following things:

• Undisciplined behavior
• Non-compliance with the instructions of superiors
• Alcoholism and other addictions
• offensive behavior
• Violence
• disloyal behavior
• rampant unpunctuality
• Repeated, unauthorized absences

Dismissal for operational reasons

A dismissal for operational reasons can be pronounced in particular if the retention of the job is no longer viable from an economic point of view. However, other situations also fall within this area of regulation, e.g:

• failure of the employee to adapt to the workplace
• Incapacity of the employee
• Changes in operating procedures that make maintaining the workplace appear pointless

Severance payments and compensation

A distinction must be made depending on the reason for termination and the type of contract (permanent employment contracts are dealt with here first, fixed-term employment contracts are dealt with at the end).

In the event of dismissal for conduct-related reasons, the employee is not entitled to compensation from their employer solely on the basis of the dismissal.

In the event of dismissal for operational reasons, the employee is entitled to compensation amounting to 20 days’ pay for each year worked. This is up to a maximum amount of 12 monthly salaries.

If the employee files an action for unfair dismissal after being dismissed and a court comes to the conclusion that the dismissal was unlawful, the employee is entitled to 33 days “pay per year worked. This is up to a maximum amount of 720 days” pay.

If the dismissal is null and void, the employee would have to be reinstated to their job. If applicable, he would also be entitled to the wages that have not been paid in the meantime.

In the event that the employee resigns of his/her own accord, the employee’s entitlement to compensation lapses.

If the contract is for a fixed term instead of an indefinite term, the following adjustments apply:

• If the fixed-term employment contract was concluded by December 31, 2011, the employee’s entitlement to compensation amounts to 8 days’ pay per year worked
• If the fixed-term employment contract was concluded from January 1, 2012, the employee’s entitlement to compensation amounts to 9 days’ pay per year worked
• If the fixed-term employment contract was concluded from January 1, 2013, the employee’s entitlement to compensation amounts to 10 days’ pay per year worked
• If the fixed-term employment contract was concluded from January 1, 2014, the employee’s entitlement to compensation amounts to 11 days’ pay per year worked
• If the fixed-term employment contract was concluded from January 1, 2015, the employee’s entitlement to compensation amounts to 12 days’ pay per year worked

The human side

In addition to the purely legal aspects, the human side of a termination should also be given just as much consideration. As already mentioned, every dismissal is different. Both the specific reasons for dismissal and the employee’s personal circumstances always convey a human dimension to the problem.

Furthermore, a dismissal affects not only the employee in question but also their colleagues. Every dismissal can have a lasting effect on the working atmosphere. An irascible former employee can damage the reputation of the entire company.

Psychologists and personnel consultants therefore usually advise strategies that are suitable for generating a less drastic experience for the employee.

This includes recommendations such as giving notice at the beginning of the week rather than on a Friday, for example. The employee is effectively dismissed as unemployed for the weekend, and his subjective perception makes it particularly difficult for him to find a new employer. Although statistically most job advertisements are placed at the end of the week, the fact that in the vast majority of industries it is practically impossible to contact decision-makers at the weekend conveys the feeling that the search for a new job could be particularly difficult.

The dismissal should also be announced directly by the line manager, head of department or employer (depending on the hierarchy). In this way, the employee will feel less underappreciated and the person who initiated the dismissal is usually more qualified to explain the reasons.

In recent years, more and more training courses have been given away at the same time as a dismissal. The company making the employee redundant can sweeten their departure by paying for the relevant course. In this way, the employee is not put into an unproductive phase, but is distracted and can qualify for a new job with another employer. At the same time, the remaining employees recognize that the company values its employees, which can have a motivating effect on everyone.

However, only the employer can assess what is actually advisable in individual cases. A problematic employee, who has probably caused difficulties not only for the company but also for the other employees, cannot also be given such farewell gifts as further training courses. The result would very quickly be the exact opposite of the advantage described here. Instead of motivating the remaining employees, they could come to believe that they only need to exert the appropriate pressure to be rewarded with additional benefits, or that their own achievements are not sufficiently appreciated or have even gone unrecognized.

However, all of this ultimately only reinforces the conviction that the true focus should already be placed on the selection process for future employees. Ideally, the money and time invested here will pay off with the recruitment of permanent employees who are suitable and fit in with the team.