One of the rights that correspond to every worker is to obtain severance pay.

However, are compensation always calculated in the same way? Or is it different depending on the type of dismissal?

We recommend you read this article and clear the doubts that exist on this point.

The right to severance pay

economic compensation for dismissal
is a right that is contemplated in favor of the worker, in a large number of countries.

Especially, in those who have experienced movements that managed to introduce into legislation the so-called Second Generation Rights or Social Rights.

an employment contract,
it is usually established that, when one of the parties terminates it untimely and unjustifiably, the other is entitled to receive compensation.

This spirit has also been transferred to the employment contract. If the employment relationship is terminated for a reason not attributable to the worker, he is entitled to receive a sum of money.

Spain does not escape the recognition of this right in its labor legislation. Now, next, you will see how this right is not absolute.

A key issue in setting compensation: the type of dismissal

To begin with, it is necessary to determine the type of dismissal,to analyze if the compensation is appropriate.

When the worker is dismissed on disciplinary grounds, he is not entitled to compensation. For example, if you have repeatedly insulted superiors or quarreled with your peers.

Of course, the worker can question this type of dismissal, in court, and claim compensation, but that is another story.

Severance pay must be paid in two cases: objective dismissal and collective dismissal.

Objective severance pay

The objective dismissal proceeds for the following reasons:

  1. Ineptitude of the worker;
  2. Lack of adaptation of the worker to technical modifications;
  3. Productive, technical, organizational or economic causes;
  4. Repeated absences from work;
  5. Lack of budget (only for NGOs).

Compensation for collective redundancies

On the other hand, collective dismissal occurs when it reaches at least 10% of the staff of companies that have between 100 and 300 employees.

Also when it affects 30 workers, if the company has 300 or more, or the company has more than 5 workers and all of them are dismissed for cessation of activity and closure of the company.

In addition, there must be productive, organizational, economic or technical causes.

Both the objective dismissal and the collective dismissal must be appropriate. That is, all the requirements for dismissals to be considered as such must be met.

How is severance pay calculated?

Cómo calcular la indemnización por despido

Depending on the type of dismissal in question, the calculation of compensation will be different.

A main element that is taken into account is the seniority in the job.

When it comes to an objective dismissal,the worker receives compensation equivalent to 20 days per year worked.

That is, the worker’s salary corresponding to 20 days is multiplied by his years of seniority in the company. This formula has a cap: it cannot exceed the amount of 12 monthly payrolls of the employee.

It may be the case that the objective dismissal is declared inadmissible by a Court of Justice.

In such a case, the employer may choose between reinstatement of the worker or paying him higher compensation.

If you choose the compensation, this will be 33 days of salary for each year worked,with a maximum limit of 24 monthly payrolls.

In the case of appropriate collective redundancies,the formula for calculating compensation is the same, if a better one is not negotiated.

However, it must be considered that collective dismissal must be consulted in advance with the legal representatives of the dismissed workers.

About the start date of the contract

The rules you saw, so far, arise from the Labor Reform approved in 2012 (Royal Decree Law 3/2012). However, it is important to clarify the contracts initiated prior to February 2012.

In such cases, when there is objective or unfair collective dismissal, the compensation is calculated as follows:

  • 45 days of salary per year of seniority for the period elapsed before the effective date of the Labor Reform (with a limit of 42 monthly payments);
  • 33 days of salary per year of seniority for the period elapsed after the effective date of the Labor Reform (with a limit of 24 monthly payments).

Special cases where compensation varies according to the type of contract

So far, we saw the rules for the generality of contracts.

But there are special assumptions,such as the employment contract for the promotion of indefinite hiring.

In this case, if the dismissal is considered unfair, the compensation will be 33 days of salary per year of seniority, with a maximum of 24 payrolls and prorated by months the durations of less than one year. Regardless of whether the start date of the contract is before February 2012.

When the employment relationship is of a special nature, the formula provided for in said employment relationship applies.


Severance pay is a basic right in any employment relationship, but it is also not absolute.

The types of dismissal will determine the formula for calculating the amount of compensation.

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Contact our AYCE Laborytax team and we will help you solve all your doubts.