Termination of Contract for Employer Breaches

Compensation for Contract Termination Due to Employer Breaches

One of the grounds on which an employee may terminate their contract is serious breach of obligations by the employer.

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Written by Josep Conesa

Employment and insolvency lawyer

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Such breaches must be serious in nature, for example, repeatedly paying salary late, failing to pay three months' salary, tolerating or engaging in workplace harassment (mobbing) against the employee, failing to provide a safe and healthy working environment, and similar conduct.

The Workers' Statute provides that in such cases the employee may claim compensation equivalent to unfair dismissal.

To do so, the employee must bring a claim for termination of the employment contract, and it is the ruling that will formally dissolve the employment relationship. This means the employee is required to continue working throughout the duration of the court proceedings.

There is, however, the possibility of applying to the court for an interim measure suspending the obligation to work for the duration of the proceedings.

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Contract Termination and Accumulated dismissal:

An illustration of the consequences of contract termination can be found in ruling 26/25/2021 of the Supreme Court, in which the court held that where an action for termination of the employment contract has been brought under Article 50 of the Workers' Statute and, in the course of those proceedings, the company carries out a dismissal, with both actions being joined, the employee will be entitled to challenge both.

Should the dismissal claim succeed, the employee will be entitled to compensation for unfair dismissal and, additionally, if the claim for termination of contract on grounds of employer breach is also upheld, they will be entitled to all wages unpaid from the date of dismissal up to the ruling declaring the termination of the contract under Article 50 of the Workers' Statute.

Calculate the compensation amount for contract termination here: dismissal and contract termination compensation calculator