POSSIBLE NEW DOCTRINE FROM THE High Court of Justice OF CATALONIA:
Additional compensation, as the name suggests, refers to the payment of an amount above the statutory minimum, that is, paying more than 33 days' salary per year of service in cases of unfair dismissal, or more than 20 days per year in cases of objective dismissal.
Written by Albert Perez
Employment law adviser
How dismissal compensation in Spain has evolved since 2012
As you may know, prior to the 2023 reform, severance pay stood at up to 45 days per year worked, with a maximum of 42 monthly instalments, and interim wages were also payable in all cases where a dismissal was declared unfair.
This changed with Royal Decree-Law 3/2012, of 10 February, on urgent measures for labour market reform. From its entry into force, the obligation to pay interim wages in cases of unfair dismissal was removed, and the compensation amount was also reduced, falling to 33 days per year worked, with a maximum of 24 months' salary.
The legal arguments underpinning additional compensation
The Spanish Constitution directs us to international treaties in Chapter Three of Title III, Articles 93 to 96.
ILO Convention No. 158 on Termination of Employment (1982) establishes that workers must receive adequate compensation taking into account their length of service, their level of remuneration, and other relevant circumstances.
Article 24 of the European Social Charter likewise provides that all workers dismissed without valid reason are entitled to receive adequate compensation or other appropriate remedy.
Can I claim additional compensation in a dismissal?
The High Court of Justice of Catalonia ruling of 23 April 2021 concerned a objective dismissal during the COVID period, in which the claimant, in addition to the statutory compensation to which they were entitled (€3,000), sought a further €3,000 in additional compensation, making a total claim of €6,000. The court found the grounds put forward to be insufficient and rejected the claim.
The High Court of Justice of Catalonia ruling of 30 January 2023 concerned a dismissal of a employee who was dismissed on disciplinary grounds just before their company commenced a Temporary Layoff Procedure (ERTE) ETOP procedure. The individual was also a foreign national who had relocated solely for the purpose of employment. Their claims were for a declaration of unfair dismissal and the corresponding statutory compensation, which was very low given their short length of service (less than €1,000). At first instance, the dismissal was declared fair; on appeal, the High Court of Justice of Catalonia declared it to constitute unfair dismissal, awarded the €1,000 statutory compensation, and additionally granted supplementary compensation.
Grounds on which the court awarded the additional compensation:
The court held that, as established in the appeal, the statutory compensation was manifestly insufficient and, having regard to the provisions of international treaties, compensation awards must be adequate, on this basis, the court granted the additional compensation.
Particular circumstances of the case: The employee was a foreign national who had come to Spain solely for work purposes. Critically, he was dismissed just before the commencement of a Temporary Layoff Procedure (ERTE) on economic grounds (ETOP). Had his dismissal not occurred, he would have been included in that Temporary Layoff Procedure (ERTE) ETOP, which lasted over three months, and would have received three months' worth of payments.
Conclusions on additional compensation for dismissal
Several factors suggest that the awarding of additional compensation may become more common:
- International legal standards are carrying increasing weight in Spanish case law.
- The 2012 labour reform significantly reduced unfair dismissal compensation, which can result, in certain circumstances, in awards that are manifestly inadequate.
These two factors, taken together with the favourable ruling referred to above, suggest that we may be looking at a precedent that will establish binding doctrine at the High Court of Justice (TSJ).
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