Can an employer stop paying salary at the end of the month?

The end of the month is approaching and the company doesn't have enough liquidity to pay salaries:

We would never encourage any employer to stop paying wages. However, a short-term cash flow problem can be a very real challenge that must be faced head-on. We strongly recommend addressing the company's difficulties with full transparency: this is everyone's problem, and we will solve it together, as a team.

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Conesa Legal

At Conesa Legal, a legal advisory firm based in Barcelona, we have a team of lawyers specialized in all areas of law. We also provide comprehensive advisory and management services covering payroll, tax and accounting, and corporate compliance for both companies and self-employed professionals. We stand out for our expertise in labor law and social security, offering a highly specialized and personalized service since 1976. Our services include both preventive and reactive legal advice and representation, tailored to the needs of businesses and workers alike. Our multilingual team provides legal assistance in English, French, and Spanish, and is well prepared to support a broad range of local and international clients, whether they are companies seeking comprehensive legal solutions or individuals in need of personalized legal advice.

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- You can apply for COVID-19 financial support:

Link to Spanish Official Gazette (BOE) 14/03/20 Royal Decree 463 declaring the State of Emergency, dated 14 March 2020

- You can defer Social Security debts if you are up to date with payments:

This option frees up liquidity. You can apply directly through this link:

- You can reach an agreement with the employee to defer part of the month's salary.

Here is a template agreement:

How can I reach an agreement if the employee is at home and documents cannot be signed in person?

We provide you with these two tools, which are highly practical and carry evidential weight:

- Certified email delivery system for legally valid notifications

- Tool for obtaining electronic signatures with evidential validity 

- IF THERE IS NO OTHER OPTION, YOU MAY PAY A PERCENTAGE OF THE salary:

The company must pay salary on time, and failure to do so is one of the grounds on which an employee may terminate their employment contract. However, a one-off delay does not in itself justify such termination, and case law supports this position, provided the employer can demonstrate the circumstances that prevented them from meeting their payment obligations. If a court finds that the employer is abusing the situation, it may uphold contract terminations and may even award damages against the employer.

- IF THERE IS NO ALTERNATIVE, EXTRA PAYMENTS MAY BE SUSPENDED:

Case law has also confirmed that, where a company's financial difficulties justify it, the company may suspend payment of both extra payments. This is important to bear in mind, as the current situation calls for long-term thinking rather than short-term fixes.

- IF THERE IS NO ALTERNATIVE, MONTHLY SALARY PAYMENTS MAY ALSO BE SUSPENDED:  

The same applies as in the point above.

We would add that case law has confirmed, provided the company's necessity is duly evidenced, that non-payment of salary for up to three months does not entitle the employee to claim constructive dismissal on grounds of the employer's failure to pay salary. The obligation to pay salary remains, but where there is a justified and proven reason for non-payment by the company, such temporary non-payment does not give the employee the right to unilaterally terminate their contract.

WE ANTICIPATE A LEGAL BACKLOG:  

Barcelona has had 33 Labour Courts for over 30 years. It made sense that, at the time, they took around 5 months to issue a ruling, yet they are now taking more than a year to resolve wage and salary claims between employers and employees.

We expect the volume of claims to increase even further following the outbreak of Covid-19, meaning that any breach by an employer could take considerably longer to resolve.

Please note that wage claims accrue default interest at a rate of 10% on outstanding amounts.

YOU CAN REQUEST A MORATORIUM OR DEFERRAL OF DEBTS FROM Social Security:

WE ARE HERE FOR OUR CLIENTS WHEN THEY NEED US MOST: