Dismissal costs of persons over 55 years of age in the context of collective dismissal

In collective dismissal proceedings in Spain due to economic, technical, organizational or production reasons, companies must establish a series of criteria in order to determine the workers affected by dismissals.

One of the selection criteria that is applied most by companies is the age criterion. Thus, it is usually workers who are nearing the age of retirement who are affected. For this reason, when the affected workers are 55 years of age or older, the employer is obliged to sign a special agreement with Social Security.

The cost of collective dismissal under a special agreement

The special agreement must be signed, on the one hand, by the employer and the worker, and on the other, by the General Treasury of Social Security.

The purpose of the special agreement is to maintain Social Security contribution and coverage of the situations that arise from common contingencies (common illness or non-work-related accident) until the worker reaches the normal retirement age or until the date of access to the early retirement pension.

Requirements

  • To be 55 years of age or older
  • To not have the status of a mutualist on January 1, 1967
  • No prior contribution period is required

Contribution

The value starts from the date on which the termination of the employment relationship occurs. Moreover, it covers the period between the termination of the contract and until the worker reaches 67 years of age; or 65 years if the worker can prove that they have contributed at least 38 years and six months.

At first, the contributions will be handled by the employer until the worker turns 61, when they come to a collective dismissal for economic reasons; or 63 years, when they come to a collective dismissal for technical, organizational or production reasons.

The contributions will be borne by the worker from the age of 61, or, in this case, 63 years, until they reach the standard retirement age, or until the date on which they access the early retirement pension.

The contributions will be determined by applying the average of the contribution bases of the worker in the last six months of their occupation prior to their dismissal.

Likewise, the contribution base for workers under 61 years of age may be increased when it is requested by the employer, the affected worker, or both parties.

In conclusion, within the framework of a collective dismissal in Spain for employees aged 55 or over, the company must sign a special agreement with the Social Security Service as established in the Workers’ Statute (Estatuto de los Trabajadores).

For furter information regarding collective dismissals in Spain,

Please note that this article is not intended to provide legal advice.

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