Unfair dismissal, compensation amount and labour legal procedures

The Royal decree 1/1995, that approves the final text of the Ley del Estatuto de los trabajadores (Worker's Statute Law), regulates in its article number 56 the unfair dismissal.

Unfair dismissal vs for-cause dismissal

A dismissal will be considered unfair in case that the requirements for the for-cause dismissal are not fulfilled. These requirements are incompetence, failure to adapt to the technical changes, repeated absences and unpunctuality and organizational reasons, according to the article 52 of the aforementioned Law.

An unfair dismissal cannot fulfil the characteristics of the null dismissal neither which is based on discriminatory reasons forbidden by the Spanish Constitution (birth, sex, race, religion, etc.).

The Worker’s Statute Law also considers as null dismissal the one happened after a worker returns from the legal contract suspension periods for maternity, adoption or paternity are finished (unless more than nine months have passed from the date of birth or adoption).

A dismissal can be considered as unfair, even when the employer describes it as a for-cause dismissal on the official communications to the employee, when after the mediation of the authorized conciliatory organ (CEMAC), a Judge of the Labour Jurisdiction determines it to be an unfair dismissal, according to the article 56 of the Ley del Estatuto de los trabajadores.

Compensation amount

The compensation, that must be paid to the worker as a compensation for an unfair dismissal, is included in the 56th article, the fix amount has to be forty five days of salary per year of service, prorating the months for the periods of time shorter than one whole year, until a maximum of forty two monthly wages.

According to the law the worker will also have a right to claim the unpaid salaries from the date of dismissal until the date of the communication of the sentence declaring the unfairness or until the date in which he found a new job, in case that this event is previous to the sentence (known as salarios de tramitación or processing salaries in the Spanish Law).

The article 56 also states that if the employer pays the amount of the compensation into court within 48 hours following the dismissal, communicating it to the worker, no processing salaries will be owed.

As for the liquidation of vacation periods, they will be prorated, corresponding thirty days of paid vacation time per year of service, unless the collective agreement established a higher rate. It could happen that vacations are already spent by the worker when his contract is finished, so that the worker would owe to the employer the amount of days of vacation that exceed the ones accrued in proportion to the days of service during the year. It also could be that the worker has enjoyed the right vacation time according to the accrued one, in which case there would be no debts on this regard. Finally, when the employee has not spent vacation time during the year, the employer must pay the remaining days when the contract becomes extinguished.

Nevertheless, if the unfair dismissal is determined by a Judge of the Labour Jurisdiction and the dismissed worker is not a legal representative of the workers, the employer can choose between:

• Readmitting the worker within five days from the communication of the sentence, paying him the processing salaries, or
• paying him the compensation of forty five days of salary per year of service.Considering as expiry date of the contract the one when the employer admits the unfairness of the dismissal, pays the aforementioned compensation into court and communicates it to the worker.

When the sentence declaring the unfairness of the dismissal is pronounced after more than sixty business days since the date of submittal of the lawsuit, the employer can claim to the Spanish Administration the refund of the amounts owed to the worker, as compensation and processing salaries, plus the due amounts to the Social Security.

Royal decree 2/1995 that regulates the Labour Procedure. Particularly, its article 63 and following articles explain the conciliatory act that must be done previously to the procedure. Moreover, the article 83 and following articles refer to the labour procedure itself in its conciliation and trial stages.

The mandatory conciliatory act (CEMAC)

The application of the mandatory previous conciliation act will suspend the deadline for the application of the lawsuit. In case that the worker does not attend the act, he will not have any right to bring the lawsuit. If the employer is the one not attending, the worker will be able to bring the lawsuit. Once thirty days have passed without the conciliatory act being done, the procedure will be considered as finished and the requirement of conciliation fulfilled. The parties will then have thirty additional days to contest the conciliatory act.

The employee has a period of twenty business days from the communication of the dismissal to bring a lawsuit against the employer. This is an absolute time limit for the action and cannot be interrupted. This action requires the attachment of the conciliatory act certificate. The lawsuit must be brought to the court assigned to the defendant’s domicile or to the place where the work was done, any of both being eligible by the claimant. Even though, the law establishes the claimant’s domicile as an exception, in case that the previous ones were not available.

Once the procedure has started, the court, in a public hearing, will try again to reach a conciliatory act. If there is no agreement, the trial will proceed. Then the claimant needs to ratify his lawsuit or extend it, as long as it is not substantially modified. The defendant has the right to reply to the claimant’s declaration, accepting or denying the facts in the lawsuit and citing any pertinent exceptions. Both parties formulate their declarations as many times as the court determines.

When there is a disagreement concerning to the facts, evidences are considered, being shown in the same act if possible. Once evidences are shown and discussed, the court will pronounce its sentence in a deadline of five days, publishing it immediately and communicating it to the parties or to their representatives within the two following days, communicating them also the possible appeals and their deadlines.

The court can declare a dismissal as for-cause, unfair or null.

• If its considered a for-cause dismissal, a twenty days compensation will be owed to the employee, prorating the months for the periods of time shorter than one whole year, until a maximum of twelve monthly wages;
• If its considered an unfair dismissal, a forty five days compensation will be owed to the employee.
•  If its considered a null dismissal, the worker will be readmitted immediately, receiving every wage yielded in the meanwhile.

Its is not a secret that the Spanish labour market has overly rigid dismissal regulations, this makes it essential to plan very carefully how new employees are hired and, when a dismissal its needed, anticipate all legal consequences.