End of employment in Spain

Employee Termination Procedures & Guidelines in Spain

Employment in Spain cannot be ended “at-will”. Termination must have a valid cause or be agreed mutually, and it must follow statutory procedures. Employers must provide written notice, final payment, and where applicable, severance.

Termination procedure

Termination must comply with the employment contract and statutory labour laws. Employers must provide written notice and demonstrate cause.

This includes:

• Written notice is required, typically 15 days.
• Dismissal must comply with the contract and labour law requirements.
• Employers must document the grounds for termination to avoid disputes.

Final payment

At the time of termination, employers must settle all outstanding dues, including:

• Unpaid wages and accrued holiday
• Pro-rata salary and bonuses (if applicable)
• Severance pay, if due
• Certificate of employment

Cause of termination

Valid reasons for dismissal include:

• Misconduct
• Poor performance
• Redundancy or business closure

Unfair Dismissal Guidelines in Spain

In Spain, failure to follow the legal requirements for fair dismissal carries serious repercussions for employers. A dismissal is considered unfair when no valid reason is established or procedures are not correctly followed.

If a dismissal is declared unfair, the employee is entitled to compensation of 33 days’ salary per year of service, capped at 24 months, or reinstatement if ordered by the court. In the case of a null dismissal, such as one that is discriminatory or violates fundamental rights, the employee must be reinstated immediately with full back pay. Employers that breach dismissal procedures may also face financial penalties, liability for unpaid entitlements, and reputational damage. In addition, breaches expose companies to disputes in labour courts, which can be costly and time-consuming to resolve.

Repercussions for breach

If employers fail to follow correct procedures, they may face reinstatement orders, significant compensation costs, fines, and reputational risk.

• Compensation: Employees are entitled to 33 days of pay per year of service, up to a maximum of 24 months.
• Reinstatement: Courts may reinstate the employee instead of awarding compensation.
• Null dismissal: If dismissal is discriminatory or violates fundamental rights, the employee must be reinstated immediately with full back pay.
• Other penalties: In case of unfair dismissal, employers may also face financial penalties, liability for unpaid entitlements, and reputational damage.

Other End-of-Employment Guidelines in Spain

Severance pay and compensation

Compensation applies in cases of unfair dismissal and redundancy. Severance is calculated based on years of service and capped at statutory limits.

Notice periods

The statutory notice period is generally 15 days, although collective agreements may require longer periods.

Contractors vs employees

Independent contractors must be genuinely self-employed. If a worker is misclassified, the company may face fines, liability for back pay, unpaid social contributions, and compensation claims.

Fixed-term contracts

Fixed-term contracts in Spain are tightly regulated. They may not exceed 6 months, except in specific circumstances where they can extend up to 12 months. All fixed-term contracts must be justified by objective reasons. Abuse of temporary contracts can result in their conversion into permanent contracts.