Loss of Work Compensation

If a company in Spain employs you and for any reason you get fired, there are several administration procedures that have to be pursued.

With the termination of the relations between employer and employee, the company has to provide a certificate and documents stating the amount of contributions to the social security that have been made by the employer. These will be necessary in case the fired employee require unemployment benefits.

The worker will receive as well a document stating the amounts that the company will owe to the ex-employee. This is called in Spain the “finiquito” and will include the compensations that by law are entitled to the worker.

Compensations

The compensation that the company will pay to the ex-employee depends on many factors. In case the:

• The employee was fired during the initial trial period
• The employee resigned
• There was a common agreement between the parties
• The termination was due to causes specified in the contract (breach of contract from the employee)
• The termination was due to disciplinary causes. The employee is not entitled to any compensation

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Disciplinary causes can include:

• Absences or lack of punctuality repeated and unjustified.
• Lack of discipline or disobedience at work, serious and unjustified by the worker.
• Verbal or physical abuse to the employer, the co-workers or relatives who live with them.
• The transgression of contractual good faith. For example mistreating a client or revealing confidential information to a competitor.
• Continuous or voluntary decrease in performance standards or amount of work.
• Habitual intoxication or drugs influence with negative impact on work performances.

Redundancy for objective reasons

In case the job termination is due to force majeure conditions or for objective reasons (causas objectivas in Spanish) the worker is entitled to compensations equivalent to 20 days of work per year worked in the company (with a maximum of 12 years) for periods after the 12/02/2012 and 45 days per year before this date (with a maximum of 42 months).

What is exactly an “objective cause” is specified in article 52 of the “Ley del Estatuto de los Trabajadores”. In general we can say that objective cause is:

• A cause related to economic, technical, organizational and production. Most of the time if the company has difficulties or is changing its location.
• For absences from work, even justified but intermittent, which reaches 20% of the working days in two consecutive months or that total absences in the previous twelve months reaches 5% of the working days, or 25% in four discontinuous months within a period of twelve months.
• Impossibility for the employee to adapt to technical changes in his job, when such changes are reasonable

Dismissal for unfair reasons

In case the job termination is considered unfair (“despido improcedente” in Spanish). The compensation is much higher and is equivalent to 45 days per year worked in the company (with a maximum of 42 months) for work periods before the 12/02/2012 and 33 days per year after. Unfair termination is happening when the company didn’t justify the dismissal, didn’t follow the correct procedures considered by Spanish law or didn’t produce enough evidences in case of disciplinary dismissal.

Most Spanish labour court cases are revolving around stating if redundancies are objective or unfair.

A piece of advice for companies and employees

• The compensation payment has to arrive at the same time than the letter of notification. Failure to do this, the dismissal will be considered unfair
• There must be at least a 15 days notice. Without this notice the employee is entitled a day more of compensation for each day without notice
• Putting any conditions on the compensation payment (for example the signing of a document on the part of the employee) will make the dismissal unfair.
• Wrong calculation of the compensation amounts will make the dismissal unfair.
• Always communicate with the other party by certified burofax.