Dismissal in Spain: notice, severance pay and the finiquito

An employment contract in Spain can end in several ways, and what you are owed depends on which one applies. A fixed-term contract running out, you resigning and your employer dismissing you are treated differently, and the law distinguishes several kinds of dismissal. Three things matter from day one: what kind of ending it is, which deadline is now running, and what has to appear in your final settlement, the finiquito.

How an employment relationship ends

• A fixed-term contract ends: you receive compensation of twelve days' pay per year of service, pro rata (Article 49.1.c of the Estatuto de los Trabajadores). Training contracts and replacement contracts are excluded. If the contract lasted more than a year, whoever ends it must give fifteen days' notice.
• You resign (dimisión): you can leave at any time, but must give the notice set by your collective agreement or, if it says nothing, local custom (Article 49.1.d). The law itself names no number of days. There is no severance and, as a rule, no unemployment benefit.
• During a probation period: either side can end the contract without notice or reason. Our guide to employment contracts has the details.
• Disciplinary dismissal (despido disciplinario): for a serious and culpable breach, such as repeated unjustified absence or lateness, indiscipline or breach of trust (Article 54). If the court upholds it, there is no severance.
• Dismissal on objective grounds (despido objetivo): for reasons listed in Article 52, including economic, technical, organisational or production reasons. The employer must give written notice, fifteen days' notice period and, at the same time, make available twenty days' pay per year of service, capped at twelve months' pay (Article 53.1).

Every dismissal must be in writing, stating the facts behind it and the date it takes effect (Article 55.1). A spoken ‘don't come in tomorrow’ or a chat message does not meet that requirement. Keep the letter, the message or any other proof of the date.

Unfair or void: what the court decides

If your contract began before 12 February 2012, severance for unfair dismissal is calculated in two parts (eleventh transitional provision of the Statute): 45 days' pay per year for the time worked up to that date and 33 days per year after it. The total may not exceed 720 days' pay, unless the first part alone already comes to more; in that case that amount applies, with an absolute cap of 42 months' pay.

A dismissal is void (nulo) if it discriminates, violates fundamental rights or falls under one of the situations protected by Article 55.5, such as pregnancy. The employer then has no choice: it must reinstate you immediately and pay the wages you lost in between (Article 55.6).

The deadline: 20 working days

Before going to court you must attempt conciliation at your region's mediation service (Article 63 LRJS) — the SMAC in Madrid, the TAMIB in the Balearic Islands. Filing the request, the papeleta de conciliación, pauses the deadline. It resumes the day after the conciliation hearing or, if none is held, fifteen working days after filing (Article 65). If there is no agreement, you file your claim with the employment court (Juzgado de lo Social).

The finiquito: what it should contain

Together with notice of dismissal or of the contract ending, the employer must give you a proposed final settlement (Article 49.2). You can ask for a workers' representative to be present when you sign, and the document must record whether one was. It normally covers:

• pay for the days worked in the final month, including any allowances,
• the pro rata share of the extra payments (pagas extras), unless they were already spread across your monthly pay,
• holiday earned but not taken — the only point at which it may be paid out in cash,
• outstanding overtime or additional hours (horas complementarias),
• any severance or end-of-contract compensation, shown separately.

Severance, tax and unemployment benefit

Severance for dismissal is free of income tax up to the amount the Workers' Statute makes compulsory, subject to a ceiling of €180,000. Anything agreed on top of that is taxable. As for unemployment benefit (paro): after a dismissal or the end of a fixed-term contract you can generally claim it if you meet the other conditions. After resigning you cannot, because the system only covers people who lose their job involuntarily.