How To Resign In Spain - Globaloptimizer.com

Resignation and employee termination are unavoidable and frequently nasty components of running a business. You must tread carefully between employment law and due cause. A misstep might result in major legal concerns, financial headaches, and reputational loss.

If you operate in or plan to hire in Spain, you should know that local workers have strong employment safeguards that you must respect. Failure to comply with Spanish legislation can substantially influence the success—or failure—of your company enterprise.

Here’s an outline of Spanish employment law and what you should be aware of if you’re resigning yourself or thinking about firing someone.

Leaving A Job Voluntarily

You have the right to resign from your job in Spain at any time. As previously stated, unless your contract is temporary and lasts less than 12 months, you must provide your employer with written notice at least 15 days in advance.

Depending on your contract or collective bargaining agreement, the notice period may be extended. In the following circumstances, you may be eligible for 20 days’ pay for each year of employment with the company:

Your employer is not upholding your agreed-upon employment contract, for example, by failing to pay on time or in full.
Your employer significantly alters your working conditions and fails to comply with Spanish labor law regulations in doing so.
You do not agree to relocate to a different work location, which will necessitate a change of residence.

Spain Labor Laws

Spain provides broad and considerable legal safeguards to both native and international employees. The bulk of labor laws are defined in the Estatuto de los Trabajadores, or “Workers Statute,” as well as the Spanish Civil Code. These govern:

Spanish legal and regulatory provisions
Collective bargaining agreements
Local and professional customs and practices
Intentions of both parties in an employment contract

Employment safeguards apply to adults and kids in various occupations and prohibit discrimination based on race, religion, ideology, sexual orientation, or any other class. Recent legislation amendments address data security, workplace safety, remote employment, employee perks, and gender equality.

Spain Employment Contracts

In Spain, an employment contract might be either verbal or written. However, some work contracts, such as short-term contracts, must be in writing. Furthermore, if you are outsourcing staff from Spain, having a formal labor contract assures and outlines the expectations and work relationship between both parties.

The Spanish employment contract must explicitly state the following for employers:

Both parties involved in the contract
The expected employment duration
Relevant collective bargaining agreements
Location of work
Type of work
Total working hours
Base salary
Additional compensation and benefits
Notice periods

If you hire someone and then ask them to do work considerably above or below their pay grade, they must be eligible for salary, promotion, and contract adjustments. The employee may cancel the employment contract with pay if this is not done.

Grounds For Termination

The following are the reasons for termination in Spain:

mutual consent of the parties;
grounds established in the contract;
expiration of the contract term or end of the specific job;
employee’s resignation;
employee’s death or permanent illness;
retirement of the employee;
employer’s death, retirement, or permanent illness;
force majeure that makes it impossible to continue rendering services;
collective dismissal based on objective grounds;
employee’s voluntary departure based on breach of contract by the employer;
disciplinary dismissal of the employee.

Collective Dismissals

Terminations for economic, technical, organizational, or productivity reasons are considered collective when: ten (10) workers are affected in companies with fewer than one hundred (100) employees; at least 10% of the employees are affected within ninety (90) days in companies with between one hundred (100) and three hundred (300) employees; and thirty (30) workers in companies with three hundred (300) or more workers.

Individual Dismissals

Termination might be based on objective criteria or disciplinary grounds.

Reasons For Objective Dismissal

worker’s incompetence;
worker’s inability to adapt to technological change;
layoffs based on economic, technical, organizational, and or productivity grounds.

Given how conservative labor tribunals are in admitting dismissals based on commercial grounds, this technique is rarely employed unless the grounds are completely obvious (e.g., bankruptcy).

Reasons For Disciplinary Dismissal

repeated and unjustified delay or lack of attendance at work;
lack of discipline or insubordination;
verbal or physical offense towards the employer, other people working in the company, or residing family;
contravention of good contractual faith and misuse of trust;
continuous and voluntary decrease of the worker’s regular or agreed performance;
intoxication due to alcohol or drugs when causing a negative effect on work;
Harassment is based on: race, religion, birth, gender, age, disability, opinion, social condition, and sexual orientation.

Is Severance Pay Required?

A disciplinary dismissal is one in which the reason is based on the employee’s behavior, which is penalized. Disciplinary dismissals must be reported to the worker in writing, explaining clearly and properly the circumstances behind the dismissal and the date on which the dismissal will take effect. A disciplinary discharge entitles an employee to no remuneration from the employer. A severance payout will be imposed only if a court rules that the firing was unjust.

Severance Pay Resulting From Objective Dismissal

Severance pay for an objective dismissal is a tax-free payout of twenty (20) days’ compensation each year of service, up to a maximum of twelve (12) months’ salary. If the dismissal is not established right in court, the employee is entitled to the severance pay described below for unjust dismissals.

Severance Pay Resulting From Disciplinary Dismissal

If the firing is established in court, the employee has no right to severance pay. If, on the other hand, the dismissal is ruled unjust by the court or admitted as such by the firm before the Conciliation Chamber or the Court, the applicable tax-free severance is thirty-three (33) days’ salary per year of service, up to twenty-four (24) months’ pay. This computation, however, must take into account the following:

The employee is entitled to an indemnity based on 45 days per year of service, with a ceiling of 42 months, for seniority performed before February 12, 2012 (the day the labor reform was adopted).
The employee will be entitled to remuneration based on 33 days per year of employment, with a limit of 24 months, for the period of seniority beginning on February 13, 2012, and ending on the termination date. The total of both sums will be the employee’s legally mandated remuneration.

The maximum time limit has been increased to 720 days. However, if the computation to establish the severance for dismissal prior to February 12, 2012, yields a number of days more than 720, the maximum will be 42 months.

The parties may reach an agreement on a lesser or greater compensation. Higher compensations than those mentioned above will be subject to tax and social security payments in the amounts described below (in the event of mutually agreed terminations).

Calculation Formula And Basis For Calculation

Severance pay is determined by two factors: seniority and daily income. In the event of an objective or unjust disciplinary dismissal, severance will be determined by multiplying the seniority by the daily wage and the number of days (20 in the case of an objective dismissal/ 33 in the case of an unfair dismissal). The daily compensation is determined using the past twelve (12) payments, and the corporation must contain all salary ideas. This covers payment in kind and overtime hours. Only non-salary notions should be avoided. As a result, bonuses, incentives, and irregular payments are all covered.

Stock options will be computed for severance under specific conditions: if the employee takes voluntary absence or is fired for cause, the employee will lose the ability to include stock options in the severance for dismissal. The Supreme Court has stated that if the dismissal was found to be unjust and was carried out a few months before options could be exercised, they would be included in the severance package. The employee or his/her heirs will be entitled to receive these benefits in the case of death, disability, or retirement. Even if a “permanence clause” has been signed, the employee will be entitled to exercise the right to stock options after the contract is terminated in the event of unfair dismissal.

Separation Agreements

Contract termination by mutual consent does not entitle the employee to severance pay or unemployment benefits (unless specifically agreed upon).

Is A Separation Agreement Required Or Considered Best Practice?

If a severance agreement is reached, it will be subject to taxes and social security contributions. To avoid the aforementioned, it is common practice for businesses to dismiss an employee so that he or she is entitled to legal severance as well as unemployment benefits. Although this system is used in the vast majority of cases by employers, a mutually agreed-upon termination that has the appearance of a dismissal (by providing the employee with a dismissal letter in order to receive severance pay free of taxes and unemployment benefits) is illegal and considered fraudulent.

What Are The Standard Terms Of A Separation Agreement?

A mutually agreed-upon termination requires only a simple agreement by both parties to end the employment relationship. We recommend that the parties include background information that briefly explains the grounds for termination, the agreed compensation and the means and timing of payment, a specific mention of gross and net amounts, and several other clauses such as confidentiality, non-disparagement, waiver against future actions, and possibly a non-compete, whenever appropriate, in said agreement.

Does The Employee’s Age Make A Difference?

Independent of the employee’s age, parties can reach a mutual agreement. That being said, we must be cautious of separation agreements disguised as “dismissal letters” with employees nearing retirement age, as they may be subject to inspection by the state, which will be in charge of paying said employees’ unemployment benefits and subsequent retirement pension.

Are There Additional Provisions To Consider?

In general, an employee who signs a separation agreement is not entitled to any additional benefits beyond the agreed-upon severance payment, final payments, and any other amounts. Suppose no dismissal letter is issued, and both parties agree to mutually terminate the contract. In that case, the employee will be required to pay income tax and social contributions not only for the amount that exceeds that of unfair dismissal but for the entire severance paid.

The company must take the entire severance payment and apply it to the employee’s existing tax percentage in his regular payroll. As previously stated, it will also contribute to social security.

Suppose a mutually agreed-upon termination (with no severance pay) is not properly addressed, such as by failing to have a detailed termination agreement with a waiver clause. In that case, the employee may challenge the termination by filing a dismissal claim against the employer.

Suppose the employee can demonstrate that the termination was truly a dismissal and not a mutually agreed-upon termination. In that case, the employer may be obligated to pay the maximum severance pay explained for unfair dismissals. These sums would then be tax-free, and the employee would be eligible for unemployment benefits.

Remedies For Employees Seeking To Challenge Wrongful Termination

An employee has the right to file an appeal against any such dismissal. However, before filing a claim in court, the parties must first attempt to reach an agreement through Mediation, Arbitration, and Conciliation Service. When an employee files a claim in court, the court will issue one of the following decisions:

Fair Dismissal – In this case, the employer is exempt from any penalties or additional obligations to the employee.
Unfair Dismissal – If the employee is successful in his claim, the following are the primary remedies available:
- reinstatement, with a financial award to cover lost remuneration; or
- an award of 33 days’ salary per year of service, subject to a maximum of 24 months’ salary.

The employer decides whether to make severance payments or reinstate the employee. In cases involving the termination of an employee’s representative, however, the representative is the one who gets to choose the remedy.

Null and Void Dismissal – When the employee’s fundamental right is violated during the dismissal procedure, a court will declare the dismissal null and void (and will award reinstatement, with a financial award to cover lost remuneration).
- Where the dismissal involves an element of discrimination prohibited by the Spanish Constitution or statute or otherwise violates the employee’s fundamental rights;
- Where the employer should have used the collective procedure;
- And where the employer has dismissed any of the protected categories of employees without properly justifying the dismissal.

If the worker is an employee’s legal representative or a trade union representative, formal adversarial procedures will be followed, during which the worker and other union members may be heard. If the worker belongs to a trade union and the employer is aware of this, representatives of the corresponding trade union must be heard ahead of time. Finally, in the event of a mass layoff, the workers’ representatives have first priority in remaining in the company.

There is no absolute protection from dismissal in cases of pregnancy, contract suspension due to maternity leave, risk during pregnancy or breastfeeding leave; adoption or fostering; family leaves to care for children or handicapped persons; and certain circumstances in which female workers have been victims of gender violence.

In such cases, dismissal will be permitted if it is not motivated by pregnancy or the exercise of the right to the aforementioned leaves (dismissal for an objective cause and disciplinary dismissal).

Whistleblower Laws

There is no specific employment legislation in place that protects whistleblowers legally. On the other hand, internal company policies usually provide protection and specific procedures for reporting illegal practices. Internal policies must be implemented in accordance with the provisions of the law and regulations. The most recent Criminal Code reform, which went into effect on July 1, 2015, required companies and their representatives to have internal prevention mechanisms and channels in place to reduce or avoid potential criminal liability.

The Data Protection Authority’s (‘DPA’) guidelines, particularly the “Guide for Data Protection in Labour Relationships,” have also governed whistleblower programs. Typically, protection in an internal policy will be limited to employees of the company who have a direct hierarchical relationship with the company.

Breach Protection And Outsourcing Services

Outsourcing services, agency workers, or independent contractors do not fall within the scope of the employer’s organizational scope, but this does not mean they are not protected in the event of a breach. The reporting system must rely on wrongdoings, which may have an impact on the contractual relationship between the companies and the accused employee. Some businesses have set up “ethical mailboxes” where employees can report alleged violations of the company’s internal code of conduct. The company must ensure that its employees understand this system, how it works, and, most importantly, how their privacy and confidentiality regarding the information in the complaint will be protected. The reporting system was designed to uncover wrongdoings committed by other employees or company officials that may be considered a breach of their contractual relationship.

The main principle, however, is that confidential information is only available to those people who are required to conduct the complaint investigation. The identity of the whistleblower will be revealed only if he or she acts in bad faith. The accused person must be informed of the charges against him as soon as possible, and there will usually be a department responsible for the investigation and data protection rights, though this can also be delegated to an external advisor. If nothing comes of the investigation, the registered information will be destroyed within two months of its conclusion. If there is a legal case, the information can be kept for as long as the company requires.

Because there is a real need to identify the complainant and the accused party, filing an anonymous complaint is generally prohibited. Finally, the body in charge of the investigation must inform the accused party about the protection and confidentiality of their personal information at all stages of the process, including after it is completed.

Final Words

It is not easy to resign. Terminating an employee, even on fair grounds, can be difficult in any industry, especially if you are unfamiliar with the nuances of Spanish labor laws. If you’re thinking about expanding to Spain and hiring locals, a global employer of record can provide expert in-country HR guidance to help you stay in compliance with all Spanish labor laws.