Unfair Dismissal in Spain: Compensation and Deadlines

🇪🇸 Read the original in Spanish

Dismissal is one of the most complex and stressful situations a worker can face in Spain, especially when it occurs unilaterally and without a justified cause by the employer. Understanding what constitutes an unfair dismissal, how the corresponding compensation is calculated, and what the legal deadlines are to file a claim is fundamental to protecting your employment rights. In this detailed guide, prepared by the legal team at AbogadoAI, we will thoroughly analyse the Spanish regulatory framework so you know exactly how to act, what steps to follow, and how to calculate every single cent you are legally owed.

What is an unfair dismissal according to Spanish legislation?

Under the Spanish legal system, dismissal is neither free nor unrestricted. For the termination of an employment contract by the employer's will to be valid, it must be based on legal grounds (economic, technical, organisational, production, or disciplinary causes) and comply with a series of strict formal requirements.

An unfair dismissal (despido improcedente) is the legal declaration determining that the employer's decision to terminate the employment contract does not comply with the law. This classification is not decided unilaterally by the employer; rather, it is the result of an agreement in a labor conciliation hearing or a ruling handed down by a Juzgado de lo Social (Social Court).

According to *Article 56 of the Estatuto de los Trabajadores (Workers' Statute - Royal Legislative Decree 2/2015)*, a dismissal will be declared unfair in the following scenarios:

• Lack of real cause: When the reasons alleged by the company in the dismissal letter (whether economic or disciplinary) cannot be proven or are not serious enough to justify the termination of the employment relationship.
• Non-compliance with formal requirements: When the employer fails to deliver a written dismissal letter detailing the facts, fails to respect the applicable collective bargaining agreement (convenio colectivo), or fails to carry out the mandatory contradictory procedure if the worker is a legal representative of the workers or a union delegate.

The difference between unfair, null, and fair dismissal

It is crucial to distinguish between these three legal classifications that a dismissal can receive:

1. *Fair Dismissal (Despido Procedente): The employer proves the alleged causes and complies with the formalities. If it is an objective dismissal, the worker is entitled to compensation of 20 days' salary per year worked*; if it is a fair disciplinary dismissal, they are not entitled to any compensation.
2. *Unfair Dismissal (Despido Improcedente):* The company fails to prove the causes or commits serious formal errors. It gives the worker the right to the maximum legal compensation or reinstatement.
3. *Null Dismissal (Despido Nulo): This occurs when the motive for the dismissal is based on any of the grounds of discrimination prohibited by the Constitution or by law, or when the fundamental rights and public freedoms of the worker are violated (for example, dismissing a pregnant worker or one on maternity leave). Its immediate consequence is mandatory reinstatement and the payment of salarios de tramitación* (back pay/processing wages).

Compensation for unfair dismissal: How is it calculated?

The amount of compensation for unfair dismissal is one of the most important reforms that the Spanish labor market has undergone. Currently, two different calculation brackets coexist due to the labor reform that came into force on 12 February 2012.

*Article 56.1 of the Estatuto de los Trabajadores*** establishes the following rules for the calculation:

1. Contracts signed on or after 12 February 2012

For the period of service rendered from this date onwards, the compensation is calculated at a rate of 33 days of salary per year of service, with periods of time shorter than a year being prorated by months, up to a maximum of 24 monthly payments.

2. Contracts signed prior to 12 February 2012

For indefinite employment contracts signed before that date, the calculation is mixed and is divided into two periods:

• Bracket A (seniority prior to 12/02/2012): This is calculated at a rate of 45 days of salary per year of service, with periods of time shorter than a year being prorated by months, up to a maximum of 42 monthly payments.
• Bracket B (seniority from 12/02/2012 onwards): This is calculated at a rate of 33 days of salary per year of service, with periods of time shorter than a year being prorated by months.

Maximum cap rule: The sum of both brackets cannot exceed 720 days of salary (approximately 24 monthly payments), unless the calculation for the bracket prior to 12 February 2012 by itself already exceeds that figure. In that extreme case, the absolute cap applicable will be 42 monthly payments (1,260 days of salary), and no days of compensation can be computed for the subsequent period.

Practical examples of compensation calculation

To clearly understand how these formulas are applied, we will analyse two different scenarios with concrete figures.

Example 1: Contract signed after the 2012 reform (Carlos's Case)

Carlos started working at a software development company on 1 January 2019 and is unfairly dismissed on 31 December 2023. His gross monthly salary (including the proportional part of the extra payments, or pagas extraordinarias) is €3,000.

• Step 1: Calculate the daily salary.

$$\text{Annual salary} = \text{€3,000} \times 12\ \text{months} = \text{€36,000}$$ $$\text{Daily salary} = \frac{\text{€36,000}}{365\ \text{days}} = \mathbf{\text{€}98.63/\text{day}}$$

• Step 2: Calculate seniority.

Carlos has worked exactly 5 years (60 months).

• Step 3: Calculate the days of compensation.

As it is a contract signed after 2012, he is entitled to 33 days per year. $$\text{Days of compensation} = 5\ \text{years} \times 33\ \text{days} = \mathbf{165\ \text{days}}$$

• Step 4: Calculate the final amount.

$$\text{Compensation} = 165\ \text{days} \times \text{€}98.63/\text{day} = \mathbf{\text{€}16,273.95}$$ (This amount does not exceed the limit of 24 monthly payments, which in his case would be €72,000, so it is received in full).

Example 2: Contract signed prior to the 2012 reform with a mixed calculation (Sofía's Case)

Sofía started working at a financial institution on 1 January 2008 and is dismissed on 31 December 2023. Her daily salary is €100.

• Bracket 1 (Before 12/02/2012):
• Time worked: 4 years, 1 month, and 11 days (rounded up to 50 months for the monthly proration).
• Days of compensation (45 days/year): 185 days.
• Bracket 1 Amount: $185\ \text{days} \times \text{€}100 = \mathbf{\text{€}18,500}$.

• Bracket 2 (From 12/02/2012 onwards):
• Time worked: 11 years, 10 months, and 19 days (rounded up to 143 months).
• Days of compensation (33 days/year): 392 days.
• Bracket 2 Amount: $392\ \text{days} \times \text{€}100 = \mathbf{\text{€}39,200}$.

• Total sum of days: $185 + 392 = \mathbf{577\ \text{days}}$ (Equivalent to €57,700).
• Limit check: The cap for contracts signed prior to 2012 is 720 days of salary (€72,000). Since 577 days is less than 720, Sofía will collect the full €57,700.

The deadline to claim for unfair dismissal

Time is the most critical factor in Spanish labor law. The deadline to challenge a dismissal is subject to caducidad (forfeiture/statute of limitations), which means it cannot be extended, and weekends or holidays do not stop the clock, except for the exceptions set by law.

The legal deadline to file a dismissal claim is 20 business days (Article 59.3 of the Estatuto de los Trabajadores and Article 103 of the Ley Reguladora de la Jurisdicción Social - LRJS, the Law Regulating Social Jurisdiction).

How are business days calculated?

• Saturdays, Sundays, and public holidays (national, regional, and local holidays of the town where the court is located) are excluded from the calculation.
• The period begins to count on the day following the effective date of the dismissal (the date you actually stop working, not necessarily the day you are handed the letter).

Suspension of the deadline

The filing of the papeleta de conciliación (conciliation petition) before the corresponding administrative service—known as SMAC, UMAC, or CMAC, depending on the Comunidad Autónoma (Autonomous Community)—suspends the 20-day deadline. The count resumes the day after the conciliation hearing is held, or once 15 business days have elapsed since the petition was filed without the hearing taking place.

Practical step-by-step procedures to file a claim

If you have received a dismissal letter and consider it to be unfair, you must act quickly and precisely. Follow these steps in order:

``` [Receipt of Letter] ➔ [Sign "No Conforme"] ➔ [SMAC Petition (20 days)] ➔ [Conciliation Hearing] ➔ [Judicial Route (if no agreement)] ```

Step 1: Sign the documentation safely

When the company hands you the dismissal letter and the finiquito (proposed settlement of outstanding amounts), you must sign both documents, writing in your own handwriting the phrase "No conforme" (Not in agreement) next to the date and your signature. This does not oblige you to claim later, but it reserves your right to do so and prevents the company from claiming that you accepted the dismissal and its conditions by mutual agreement.

Step 2: Drafting and filing the Papeleta de Conciliación

Before going to court, the law requires you to attempt an amicable agreement. You must draft a papeleta de conciliación (conciliation petition) where you state the facts, your seniority, salary, professional category, and the reasons why you consider the dismissal to be unfair. This is filed with the mediation and arbitration service of your Autonomous Community.

Step 3: Attendance at the Conciliation Hearing

On the scheduled date, you will appear together with the company's representative before the public service's conciliation officer. Here, three scenarios can occur:

• *Agreement (Avenencia):* The company acknowledges the unfairness and the compensation is agreed upon. The process ends.
• *No Agreement (Sin avenencia):* A minute is drawn up reflecting the lack of agreement, and the judicial route is opened.
• *Attempted without effect (Intentado sin efecto):* The company fails to appear at the hearing.

Step 4: Filing the Lawsuit before the Juzgado de lo Social

If no agreement is reached during conciliation, you must file a lawsuit before the corresponding Juzgado de lo Social (Social Court). To do this, the calculation of the remaining days of the original 20 business days deadline will resume. At this stage, although it is not always mandatory for lower-value claims, it is highly recommended to have the representation of an employment lawyer or a graduado social (licensed labor relations professional).

Errors you must avoid when being dismissed

Making a mistake in the first few hours after receiving the dismissal notice can ruin your chances of obtaining the compensation you are entitled to. Always avoid the following:

• Signing blank documents or without the "No conforme" note: Never trust a verbal promise that "they will pay you everything next week" if you sign the finiquito amicably and without reservations.
• Letting days slip by thinking you are on holiday or sick leave: The 20 business days deadline runs relentlessly. Being on medical leave for temporary disability (incapacidad temporal) does not suspend this forfeiture deadline.
• Failing to request a copy of everything you sign: You have a legal right to demand a copy signed and stamped by the company of the dismissal letter and the proposed finiquito. If they refuse to give it to you, do not sign anything.
• Confusing calendar days with business days: Counting weekends and holidays when calculating your deadline to sue can result in you filing the claim out of time, losing all your rights irreversibly.

Frequently Asked Questions (FAQ)

Am I entitled to unemployment benefits if my dismissal is declared unfair?

Yes, of course. Dismissal, whatever its classification (fair, unfair, or null), places the worker in a legal situation of unemployment according to the Ley General de la Seguridad Social (General Social Security Act - LGSS). You can apply for unemployment benefits (el paro) provided you meet the minimum required contribution period (a minimum of 360 days of contributions in the last 6 years).

Who decides between reinstatement or the payment of compensation?

As a general rule, the option between reinstating the worker and paying them the salarios de tramitación (back pay) or paying the compensation for unfair dismissal corresponds exclusively to the employer. The employer has a period of 5 days from the notification of the ruling to declare their choice. However, if the dismissed worker is a legal representative of the workers or a union delegate, the choice corresponds to the worker themselves.

What are salarios de tramitación and when are they collected?

Salarios de tramitación (processing wages/back pay) are those wages that the worker stopped receiving from the date of dismissal until the notification of the ruling declaring the dismissal unfair. Currently, they are only paid in two scenarios: when the employer (or the workers' representative) chooses reinstatement in the job, or in cases of null dismissal. If the employer chooses to pay the compensation, no salarios de tramitación are paid.

Do I have to pay taxes on unfair dismissal compensation?

According to the IRPF (Personal Income Tax) regulations in Spain, compensation for unfair dismissal is exempt from tax up to the mandatory limit established in the Estatuto de los Trabajadores (with an absolute maximum cap of €180,000). Any amount exceeding that limit or voluntarily agreed upon above what is legally established will be subject to taxation.

In summary

• Unfair dismissal occurs when the company terminates the contract without a justified cause or by committing serious formal errors.
• The general compensation is 33 days' salary per year worked for contracts signed after February 2012, with a cap of 24 monthly payments.
• For contracts signed prior to that date, a mixed calculation applies, which can reach a maximum of 42 monthly payments.
• The absolute deadline to initiate a claim is only 20 business days from the effective date of the dismissal.
• It is mandatory to attempt a prior administrative conciliation (SMAC petition) before you can go to court before the Juzgados de lo Social.
• Always signing any dismissal document with the phrase "No conforme" is the best safeguard to be able to claim your rights with guarantees.

General legal information, not personalised legal advice. For your specific situation, ask your question for free at AbogadoAI — answers grounded in Spanish law (BOE), in English.

This is general information, not legal advice. Verify on the BOE or consult a lawyer for your specific case.