unfair dismissal is a central concept in Spanish employment law, with significant implications for both employees and employers. Below, we offer a comprehensive guide to unfair dismissal in Spain.
Definition of unfair dismissal
A dismissal is considered unfair when the company decides to terminate the employment relationship without a legally justified reason or without complying with the formal requirements established by employment law. This means the dismissal fails to meet the legal requirements, either in form or in substance, as set out in the Workers' Statute and relevant case law.
The ruling of the Supreme Court of 20 April 2022 (rec. 2391/2019) reaffirms that "unfair dismissal occurs when the breach alleged by the employer in the dismissal letter is not proven, or when, even where a cause exists, the formal requirements imposed by law are not met." In other words:
- WHEN THE ALLEGED FACTS ARE NOT PROVEN
- WHEN THE FORMAL REQUIREMENTS OF THE DISMISSAL LETTER ARE NOT MET.
Grounds for unfair dismissal
The grounds that render a dismissal unfair can be divided into two broad categories:
1. Substantive Grounds
These grounds relate to the absence of a material justification for the dismissal:
- Insufficient grounds alleged: Where the employer cannot prove that the employee committed a contractual breach serious enough to justify the dismissal.
- Absence of a legally recognised ground: Where the dismissal is based on reasons not recognised as valid grounds under the applicable legislation — for example, discriminatory or purely subjective reasons — provided these do not infringe a fundamental right (in which case the dismissal could be declared null and void rather than simply unfair).
2. Formal Grounds
Even where a dismissal is materially justified, it may still be declared unfair if the formal requirements imposed by law are not complied with:
- Inadequate dismissal letter: The absence of a dismissal letter, or a letter that does not clearly set out the specific facts underlying the dismissal.
- Failure to give proper notice: Where the employee does not receive the letter in the required form and within the required timeframe, or is not given a notice period where one is required. For example, a disciplinary dismissal communicated verbally is automatically unfair.
- Omission of the effective date: Failing to clearly state the date on which the dismissal takes effect is a formal defect that may result in a finding of unfair dismissal.
- Failure to comply with the Prior Hearing requirement.
Types of Dismissal That May Be Found Unfair
- disciplinary dismissal: This type of dismissal, based on a serious and wilful breach by the employee, may be declared unfair if the gravity of the breach is not duly established or if the required procedural formalities have not been correctly observed.
- objective dismissal: objective dismissal (see link) is based on economic, technical, organisational or production grounds, or on the employee's supervening incapacity. If the grounds are not properly justified, or the required procedural steps and formalities are not followed (for example, failing to pay the statutory severance of twenty days' pay per year of service, capped at twelve months, simultaneously with the objective dismissal), it may also be found unfair.
Further information on types of dismissal
How long do I have to bring a claim for unfair dismissal?
The deadline for bringing a claim in cases of unfair dismissal or null and void dismissal is 20 working days from the effective date of the dismissal. This is a strict limitation period and will be suspended for 15 days when an administrative conciliation claim is lodged. Once that suspension ends, the period resumes and the claim must be filed before the employment tribunal before it expires.
The dies a quo (the date from which the period begins to run) is fixed at the effective date of the dismissal, not at the date of its notification ( STS 25-9-95, 4ª, rec.39/95) — since the termination effects on the employment relationship that flow from the act of dismissal do not arise, as is self-evident, until the employment relationship is actually brought to an end. That said,
- If the employee, having been notified of the dismissal, disregards it and continues working without the company's consent, the relevant date is not the effective date of the dismissal but exceptionally its notification date, since otherwise a de facto situation would serve to frustrate the effect of the dismissal and to extend the limitation period ( STS, 4ª, 13-6-2000, rec. 3287/99 ).
- If the effective date of the termination and the date of notification to the employee coincide, that date will be the relevant one from which the time limit begins to run on the following working day;
- If the effective date of the termination falls after the date of notification, the former (termination date) will be the relevant date for the start of the limitation period;
- If the effective date precedes the notification date, the notification date will be the relevant one for the start of the time limit running from the following working day (unless it can be demonstrated that the employee, aware of the dismissal, deliberately delayed receipt of the notification in order to postpone the expiry of the claim period).
Procedure for Challenging an unfair dismissal
For a dismissal to be declared unfair, the employee must challenge it before the employment courts. The process unfolds as follows:
- Time limit for the claim: The employee has 20 working days from the effective date of the dismissal to bring a claim for unfair dismissal.
- Conciliation hearing: Before the case proceeds to trial, the parties attempt to reach a settlement through a conciliation process.
- Trial: If no agreement is reached, the matter goes to trial, where a judge will assess whether the dismissal was justified. The judge may rule that the dismissal was fair, unfair, or null and void.
KEY CONSEQUENCES OF unfair dismissal
The consequences of unfair dismissal are significant and depend largely on the company's decision, because when a dismissal is declared unfair, the law gives the company two options:
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Reinstatement of the employee: The company may choose to REINSTATE the employee to their former position, under the same conditions as before the dismissal. In other words, the company is not obliged to pay compensation if it opts for reinstatement instead. If it does choose to reinstate, it must pay interim wages — being the wages the employee ceased to receive from the date of dismissal until notification of the ruling (minus any earnings from other employment or unemployment benefits received during that period).
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Compensation: Alternatively, the company may choose to terminate the employment relationship permanently by paying the employee a compensation sum. This compensation is calculated at 33 days' salary per year worked, up to a maximum of 24 monthly payments (or 45 days' salary per year worked, up to a maximum of 42 monthly payments, where part of the service predates 2012).
- Where the employee is a trade union representative or staff delegate, it is the employee who chooses between reinstatement and compensation.
- Time limit for the choice: The employer has 5 days to elect between reinstatement and compensation. If no election is made within that period, the employer is deemed to have opted for reinstatement. This is in accordance with Article 56 of the Workers' Statute.
Special Cases of unfair dismissal
- Senior executives and senior management contracts: It is worth noting that these contracts may be terminated by withdrawal from contract of the company, with a low severance of 7 days' salary per year of service, capped at 6 months' pay. In the event of dismissal, the severance payable is 20 days' salary per year of service, capped at 20 months' pay. In such cases, the compensation for unfair dismissal may be combined with compensation for failure to observe the notice period.
- Domestic workers: see here for everything relating to unfair dismissal of domestic workers.
The difference between unfair dismissal and null and void dismissal
null and void dismissal vs. Unfair dismissal: It is important not to confuse unfair dismissal with null and void dismissal. A dismissal is null and void when it occurs in specific circumstances (discrimination, violation of fundamental rights, dismissal during pregnancy, etc.), or even where the law expressly declares it so, which requires the reinstatement of the employee with no option for dismissal compensation (though the judge may still award damages where these are found to have arisen).
Further information on null and void dismissal
Economic and Social Impact of unfair dismissal
From a business perspective, unfair dismissal can have a significant financial impact. The obligation to pay substantial severance and interim salary costs can represent a considerable expense, particularly for companies with a large workforce or operating in sectors with high staff turnover.
Furthermore, a finding of unfair dismissal can give rise to workplace disputes and affect employee morale, especially where the company is perceived to have handled the dismissal process poorly. For this reason, it is advisable for companies to seek legal advice before proceeding with any dismissal.
Tips for Preventing Unfair Dismissals
- Prior legal advice: Before proceeding with any dismissal, it is essential that companies obtain legal advice to ensure that the dismissal is justified and that all procedural requirements have been met.
- Sound human resources management: Implementing clear and fair procedures for performance appraisal and handling workplace disputes can prevent unnecessary dismissals.
- Rigorous documentation: It is essential that companies maintain detailed, documented records of employee performance, as well as any contractual breaches that may justify a dismissal.
Both employers and employees should be familiar with their rights and obligations in order to avoid disputes and ensure that dismissal procedures are carried out in accordance with the law. If you need to negotiate an unfair dismissal or calculate compensation for unfair dismissal, sound legal advice is essential. We advise both companies and employees to mitigate financial risk and protect their interests throughout every stage of the process.
Contact our employment lawyers, specialists in unfair dismissal:
