Types of Employment Dismissals in Spain and their Compensations
Given that there is no EU framework, Spain offers three types of non-consensual labour dismissals by which an employer may end the employment relationship with its employee.
The first type concerns a dismissal based on a serious breach by the worker and is regulated by Article 54 of the Statute of Workers. It does not require a notice period nor any compensation when the grounds for dismissal are one or more of the following;
Repeated and unjustified absences or lack of punctuality.
Lack of discipline or disobedience at the workplace.
Verbal or physical offenses directed toward the company or its employees or their relatives.
Abusing the good faith contractual relationship that the employee has with the employer.
Participating in the continued, voluntary reduction in the employee’s regular work.
Alcohol intoxication or drug use if either negatively affect the employee’s work.
Harassment for racial, ethnic, age, religious, sexual orientation, or disability reasons.
For this dismissal to be proper, the reasons for termination must be written and described in fact and subsequently addressed to the employee, as well as the date that the employer will consider the termination to be effective.
Collective Bargaining Agreements (CBAs) establish that action must be taken within periods of 10, 20 or 60 days from when the employer becomes aware of the infringement and , in any case, no later than 6 months after it took place. Otherwise, the action is time-barred and no disciplinary dismissal can take place.
The court may consider the disciplinary dismissal as;
Fair, occurring when the court finds in favour of the company and agrees with the employee’s breach of duty.
Unfair, when it finds no cause for dismissal or failure to comply with the formal requirements. In such case the employee may be reinstated or offered back pay, hence the payment the employee would have received had he stayed in the company.
Null and void, when dismissal is based on prohibited discriminatory grounds. In this case the worker is reinstated and offered back pay.
If the dismissal is found to be unfair, the employee is entitled to compensation. As of February 12th 2012, it consists of 33 days of salary per year of employment, capped at 24 months salary. For people with a longer length of services, beginning prior to February 2012, the severance payment is calculated in two parts, 45 days of salary per year of employment until February 2012 and from then onwards, the 33 days of salary per year.
A second type of employment termination is the objective one, whereby the employee is dismissed for reasons not connected to his behaviour. It is regulated by Article 52 of the Statute of Workers. Said dismissal does have a number of requirements, including a notice period of 15 days, which may also be paid in lieu. It also requires a compensation of 20 days of salary per year of service up to a maximum of 12 months salary and time-off to seek employment consisting of 6 hours a week.
The reasons for objective dismissals may be the following;
Economic: when there is a negative economic situation due to actual or forecasted losses; or a sustained decrease in ordinary income or sales. A sustained decrease can be demonstrated, for example, if during three preceding consecutive quarters the level of ordinary income or sales is less than the corresponding three quarters in the previous year.
Organisational: changes in the working methods and systems.
Production: changes affecting the demand for the products or services offered.
Technical: changes in the production means or equipment.
Objective dismissals can be tricky in the way that they may easily become a collective dismissal, the third and last type. This may occur when the threshold to trigger a collective dismissal consultation procedure is met. Such occurs when the company proposes to dismiss for objective reasons during any 90 day period 10 employees in companies with less than 100 workers, or 10% of the number of employees between 100 and 300 employees or 30 employees in companies with a workforce of over 300. The threshold would also be met in the case that the company ceases its activity in Spain and over 5 workers are affected.
As with objective dismissals, collective ones are legally compensated with 20 days of salary per year of service capped at 12 months salary. These also require a 15 days prior notice period which may also be paid in lieu.