Compensation for dismissal in Spain depends on three fundamental factors:
- The salary of the worker: gross annual salary
- The seniority of the worker within the company: when it comes to counting the seniority of the worker for compensation; whether the worker has worked one day of the month or the full month, it is considered a full month’s work
- Type of dismissal: currently, compensation is only for objective and unfair dismissals. A fair dismissal does not give the right to compensation, unless there is a settlement.
Depending on when the employee started working for the company, the calculation of compensation for an unfair dismissal will be made in one of the following two ways:
- If the contract was formalised after 12 February 2012, the compensation is 33 days’ worth of salary for every year worked, with a cap at 24 months.
- If the contract was formalised before this date, the compensation is calculated in two portions:
- For the time up until 12 February 2012, the compensation will be 45 days’ salary per year worked (with a maximum of 42 months)
- For the time worked after 12 February 2012, the compensation is 33 days
The total compensation is capped at 720 days of salary, except when calculation accrued in the first section is higher, in which case that amount operates as the maximum amount.
For the final amount of compensation for an unfair dismissal, the two sections must be added up.
To calculate seniority, work periods less than one year will be prorated by months.
When a company dismisses a worker through an objective dismissal, companies must provide the worker a letter of dismissal along with compensation for 20 days worked per year, with an upper limit of 12 months (in no case shall the compensation be higher than the result of multiplying the monthly salary by 12).
This article is not considered as legal advice