Terminating an employee in Spain involves strict procedures, regulated notice periods, and often mandatory severance payments. Whether you’re an employer planning to dismiss someone or an employee facing a termination, it’s important to understand your rights and obligations.
This guide breaks down how employment termination works in Spain, including types of dismissal, documentation, and financial consequences.
📋 1. Legal Grounds for Termination
Spanish law recognizes several types of termination, each with its own rules:
| Type of Termination | Trigger | Employer Cost |
|---|---|---|
| Objective Dismissal | Economic/technical/organizational reasons | Severance required |
| Disciplinary Dismissal | Serious misconduct or breach of duty | No severance |
| Mutual Agreement | Negotiated exit | Negotiable |
| Resignation | Voluntary departure by employee | No cost to employer |
| Contract Expiry | End of fixed-term or project-based contract | Prorated severance |
📝 2. Mandatory Dismissal Letter
Dismissals must be communicated in writing via a dismissal letter that includes:
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The specific reason(s) for dismissal
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The effective date
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Supporting evidence (in case of disciplinary dismissals)
Failure to provide a proper letter can result in the dismissal being declared void or unfair.
📅 3. Notice Periods in Spain
Spanish law sets a standard notice period of 15 days for most objective dismissals and resignations. Collective agreements or contracts may require more.
Exceptions:
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Disciplinary dismissals require no notice
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Employees resigning may owe notice if stated in contract
📌 Employers can waive the notice by paying salary in lieu.
💰 4. Severance Pay (Indemnización)
Severance depends on the type of dismissal:
Objective Dismissal:
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20 days’ salary per year of service, capped at 12 months
Unfair Dismissal (Despido improcedente):
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33 days per year of service (after 2012 reform), capped at 24 months
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For pre-2012 employment: blended formula using 45/33 days
End of Fixed-Term Contract:
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12 days per year worked
Disciplinary dismissals with just cause = no severance, unless later deemed unfair.
⚖️ 5. Fair vs. Unfair vs. Null Dismissals
When challenged in court, a dismissal can be declared:
| Type | Result |
|---|---|
| Fair | No further action—dismissal is valid |
| Unfair | Employee may choose between reinstatement or compensation |
| Null | Dismissal voided due to rights violation (e.g. pregnancy, union bias) |
Null dismissals require immediate reinstatement and back pay.
🏛️ 6. Termination Procedure: Step-by-Step
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Prepare dismissal letter (clearly state reason and effective date)
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Calculate severance if applicable
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Deliver letter in person or via burofax/email with receipt
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Offer settlement agreement (optional)
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Provide finiquito (final payslip including unused vacation and prorated bonuses)
💡 Employees must sign the finiquito—but can note “no conforme” if disputing the terms.
📑 7. Finiquito: Final Payment
The finiquito (settlement document) must include:
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Pending salary
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Unused paid holidays
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Prorated bonuses or commissions
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Expenses and allowances due
This is separate from severance and must be paid in all terminations.
⚖️ 8. Legal Challenges & Labor Courts
Employees can challenge dismissal within 20 working days at the Juzgado de lo Social (labor court).
Common grounds for challenge:
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No valid reason
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Procedural errors
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Discrimination
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Lack of severance
Court resolution may lead to compensation, reinstatement, or negotiated settlement.
🛡️ 9. Protection Against Dismissal
Certain groups have special protection from termination:
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Pregnant employees or on maternity leave
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Employee representatives or union delegates
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Victims of gender violence
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Employees on sick leave (must follow strict justification rules)
📌 Dismissing a protected employee without cause or procedure = automatic null dismissal.
👨⚖️ 10. Need Help with Dismissals in Spain?
At Borderless Lawyers, we advise both employers and employees in:
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Drafting legal dismissal letters
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Calculating severance
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Negotiating mutual exits
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Challenging unfair terminations
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Representing in labor courts