Here is some advice about the dismissal process in Spain. NOTE we are not employment lawyers: this is our understanding of the processes but you are encouraged to use a lawyer if you ever actually fire anyone in Spain. We can recommend to you a cost effective labour lawyer if you wish.
I. Regular dismissal
This is the most straightforward way to terminate an employment relationship in Spain and does not need to be supported by specific facts or details. The steps to follow would be:
1.- Drafting of a dismissal letter that must be handed over to the employee. Let’s assume that the employee has not committed any act of grave misconduct. This means that the dismissal may be regarded as an unfair dismissal. The employee will then be entitled to a severance payment equivalent to 45 days payment per year of service until February 11th 2012 and 33 days per year of service for each full year of service from February 12th 2012.
The dismissal can be formally justified by for instance the employee’s low productivity, or – an excuse sometimes used – “differences in opinion on policies and strategic direction”. though you can verbally explain to the employee that this is a formality. Alternatively, the dismissal could officially be based on economic reasons, which is probably more likely to be the real scenario. However, we do not recommend using this justifying reason because it is easy for the employee to challenge and likely that the dismissal is declared unfair in a Spanish Labour Court. Note that dismissals based on economic grounds convey a lower severance payment (20 days / year) than normal dismissals (33 days / year), as explained in point II below. This is why the former are normally challenged by the affected employees in Court.
2.- Calculate the severance and termination payments and write up a waiver document. Regarding the termination payment, this should consist of
the monthly salary till the actual termination date,
plus the accrued and unused holidays
and any other outstanding payments such as agreed notice period, accrued bonus, commissions, etc.
Our partners fees for preparing the documents 1 and 2 are 800€.
3.- Conciliation hearing: both parties should attend a conciliation hearing after the dismissal. This way the severance will be tax-free. The settlement and severance payments will be made after the conciliation hearing.
Our partners’ fees for attending the conciliation hearing are 600€. If you need the assistance of our Legal Department to prepare the power of attorney in favour of our partner firm in Spain the cost is 700€.
4.- Prepare and send a special certificate to the Spanish Employment Agency by electronic means with the contributions made by the company on behalf of the employee to the Spanish social security. This will enable the employee to have access to an unemployment pay from the government.
All documents need to be in Spanish, though our partners can provide English versions too for client review if requested.
II. Dismissal for economic or organizational reasons (redundancy)
The procedure to follow a redundancy dismissal is of great importance. In case it is not properly implemented, the dismissal might be declared unfair. The following provisions should be complied with:
(i) A dismissal letter must be served to the employee setting out the reasons in detail. According to Spanish law, the dismissal letter is the beginning of the dismissal procedure and the employee has to prepare his defence in view of the facts stated in the letter. This means that, after the letter is delivered to the employee, the employer cannot allege anything further before the labour court. For this reason, as much detail as possible needs to be provided in the letter. If we try to allege new facts before the labour court that were not stated in the initial letter, the labour judge could rule that the employee could not adequately prepare his defence, and so the dismissal is unfair.
Obviously, a detailed dismissal letter would be also essential to have a strong position within a potential negotiation with the employee.
(ii) Simultaneous to the written notice, the legal severance payment should be made available to the employee. In this sense, a bank check would need to be prepared for the amount of 20 days’ salary per year of service up to a maximum of 12 months salary.
(iii) A notice period of 15 days must be granted to the employee, calculated from the date of the delivery of the notice of the termination of the employment contract, unless the employment contract states a longer notice period. This notice period can be substituted by payment to the employee of salary in lieu of notice, so the employment could be terminated at the same time that the letter is delivered.
Note that the company must receive and keep a copy of the letter signed by the employee in order to prove that it has been delivered. If the employee refuses to sign a copy, two witnesses should sign the letter stating that it was offered to him and this should also be sent to the employees by certified mail.
If the employee does not agree with the decision, he can file a claim before the Labour Court, which will decide whether the dismissal is fair (if the alleged reasons are proved and valid), unfair (if there are no valid and proved reasons) or null (because of discrimination or violation of fundamental rights or due to carrying out the dismissal without following the proper procedure mentioned above).
In the case of an unfair dismissal, the employer will be required to pay a severance equivalent to 45 days per year of service up to February 11th 2012 and 33 days salary per full year of service after February 12th 2012.
If the dismissal is declared null and void, the employee must be reinstated.
Compandben’s Spanish partners can handle all the steps involved in a regular dismissal. However, if you decide to go for the redundancy alternative, you will need to hire the services of a specialised law firm, due to the high chance that the employee challenges the dismissal in Court (we can recommend one if requested).
Our advice is to prepare the calculations of both regular dismissal severance payments and redundancy costs, and compare the figures. If the differences between both alternatives are significant, then it could be taken into consideration going for the redundancy and hiring the services of a law firm rather than going for regular dismissal.
Let us know if you have further queries about these processes.
Contact Compandben or visit Compandben Main Website – Spain Employment Services for more information.