🇪🇸 Terminations Overview for Spain

Henning Wandsleb
Henning Wandsleb
  • Updated

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The Labor Code provides various reasons for which an employment agreement can be terminated. The reasons include, but are not limited to, mutual agreement of the parties; reasons validly established in the contract, to the extent permitted by the law; resignation, retirement, death or disability of the employee or employer, force majeure, dismissal, and constructive dismissal.

Indefinite Employment Contract

In Spain, ordinary employees may only be dismissed with cause. The basic causes for termination can be grouped into:

  1. Disciplinary causes; and
  2. Objective causes, which most commonly are economic, technical, productive or organizational causes.

During the probation period, the employment contract may be terminated by either party freely.

Disciplinary dismissal (including gross misconduct)

Employees can be terminated on the following disciplinary grounds:

  1. Any serious or culpable breach by the employee;
  2. Contractual breach by the employee like:
    • Repeated and unjustified absence or punctuality to work
    • Lacking discipline or disobedience in work
    • Verbal or physical offense to the employer, other employees, or to the family members living with them
    • Transgression of good contractual faith and abuse of confidence in the work performance
    • Continuous and voluntary decrease in work performance or agreed work performance
    • Habitual drunkenness or drug addiction; and
    • Harassment on the grounds of racial or ethnic origin, religion or convictions, disability, age or sexual orientation and sexual harassment or on grounds of sex of the employer or other employees working.

Disciplinary termination must be notified in writing to the employee, and the employer must state the facts that triggered it and the effective date of termination. Other formal requirements for dismissal may be established by collective agreement. If the employer does not comply with the formal requirements for dismissal, the employer may issue a new termination within 20 days of the date of the original termination, and must pay the salary accrued during such time.

Employees dismissed on disciplinary grounds don't require any notice of termination. An employee terminated because of disciplinary action has 20 days from the effective date of termination to contest the dismissal.

Objective Dismissal

The employer can terminate the employment contract on the following objective grounds:

  1. Ineptitude of the worker coming to light after effective hiring by the company;
  2. Inability of the worker to adapt to changes made due to technical modifications; and
  3. Termination due to economic, technical, organizational or production causes.

Employees terminated under this head are also entitled to severance pay 20 days of salary per year worked, capped at 12 months of salary. Further, the employee must be given a letter of dismissal and provided with fifteen (15) days prior notice or salary in lieu of notice.

Collective Dismissal

The collective dismissal procedure must be used when in any ninety-day period the number of employees to be dismissed for economic, technical, productive or organization reasons equals or exceeds the following:

  1. 10 employees in companies with less than one hundred employees;
  2. 10 percent of the workforce in companies with one hundred to three hundred employees; or
  3. 30 employees in companies with three hundred employees or more.

Collective dismissals have to follow a specific procedure. Employers should seek advice before proceeding with a collective dismissal.


Performance related terminations:

Performance related termination can be of two kinds:

Intentional and continuous reduction of regular or agreed work performance; This is cause of disciplinary dismissal.

On objective grounds

  • Ineptitude of the worker coming to light or not foreseen until after being hired by the company.
  • Inability of the worker to adapt to changes made to his job. Before dismissing the worker, employers must offer the worker a training course to facilitate adaptation to such changes. Workers cannot be dismissed until a minimum period of two months has elapsed since the changes were made or the training was completed.

Severance payments and notices

  • In cases of justified and fair objective dismissals or collective redundancies the minimum severance pay is 20 days’ salary per year of service capped at 12 months. In addition, employees are entitled to 15 days’ notice, which can be substituted by payment of salaries in lieu. Severance payment must be paid on the date the notice is given.
  • A dismissal considered unfair results in a severance pay 33 days’ salary per year of service capped at 24 months’ salary.

Garden Leave

Employees have a right to work and cannot be impeded from working by their employer, unless there is a legitimate reason or unless the employee agrees. In practice, in cases of termination, garden leave can normally be agreed with employees, unless the employee is eager to begin working at another company. Companies often ask employees to take any outstanding time off up to the date of dismissal.

Mutual Terminations

Employment agreements can also be terminated by mutual consent. What prevails is the will of both parties and no justification is needed. However, a mutual agreement is non-existent if the cause is unlawful, or the conditions are breached, or it involves waiver of rights. This would have to be claimed by the employee in court.

Final wages

Regardless of the termination types, the final pay must include pending salaries, unused accrued holidays, summer/Christmas bonus, overtime, amounts that the employee owes the company, and any other amount that the parties had agreed on. Payments must be made at the end of the employment contract, however, there are some companies that wait until the end of that month.

However, severance pay (in its case) must be made available to the worker at the same time the written notice of dismissal is served.

In case of a mutual agreement, the parties may agree on the payment time.

Fixed Term Employment

Fixed term contract does not require notice for employment agreements of less than a year.

A severance of 12 days of salary per year worked is due at the end of the fixed term employment.

All temporary contracts must be made in writing and must specify the reason for their temporary nature in sufficient detail. Otherwise, or if the ground for the temporary contract does not truly correspond to one of the legally-established grounds, the contract will be deemed to be made for an indefinite term, unless evidence of its temporary nature is provided.

Fixed Term Employment must be for a maximum of 6 months within a 12-month period.

The CBA applicable to Oyster only allows temporary contracts of up to 12 months for employees who perform the functions of Administrative Staff and Office Specialists, if it is justified by the seasonal nature of the activity of the company.



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