OUTLINE
Notice periods in Spain
Terminating employees in Spain
Post-termination restraints in Spain
Waivers in Spain
Transfer of undertakings in Spain
Avoid risk and missed opportunities with our end-to-end employment solutions
Ending an employment contract in Spain
Like in all countries, there are specific rules that apply to ending an employment contract in Spain, whether it ends because the employee resigns, due to a termination, or through collective redundancy. Employers hiring employees in Spain need to understand the specifics of these rules to make sure they comply with them and avoid getting in legal trouble.
In this guide, we’ll take you through everything you need to know about ending an employment contract in Spain. We’ll discuss the minimum notice periods that both employers and employees need to give to end a contract and the ways in which an employer can dismiss an employee. We’ll also talk about the different post-termination restraints you can impose on your employees, and the rules governing what happens to employees when one business is bought by another.
Notice periods in Spain
The standard notice period in Spain for both employers and employees is 15 days, as set by the Workers’ Statute (Estatuto de los Trabajadores). This means that employees typically need to give 15 days’ notice to quit, and employers need to give employees 15 days’ notice to terminate their employment.
Exceptions to the 15-day notice period in Spain
A notice period is typically not needed in Spain in the following circumstances:
- Dismissal for gross misconduct: Employers are usually not required to provide a notice period if an employee is terminated for disciplinary reasons.
- Resignation with just cause: Employees can typically leave without notice if they resign with ‘just cause’, usually due to a breach of contract by the employer.
- Dismissal or resignation during the probationary period: Either the employee or the employer can usually end the contract without notice during the probationary or trial period.
There are special termination rules that apply to senior executives, who may have a longer notice period. Also, collective bargaining agreements (CBA) can stipulate a longer notice period in a specific sector or job category. If you hire employees in Spain, it’s important to pay attention to the CBA in force to make sure you understand the notice period you have to give your employees.
Giving notice to employees to Spain
Employers should give their employees notice in writing and include both the reason for the dismissal and the date the employment will end. Employers can also choose to compensate the employee instead of giving them notice. If their notice period is 15 days, that means they will get paid the amount they would earn for working 15 days.
Severance pay in Spain
When an employee is dismissed due to economic, technical, organisational, or production-related reasons in Spain, they are entitled to severance pay. Specifically, they are entitled to 20 days of wages per year they have worked for the company, with a cap of 12 months’ salary.
Employees are also entitled to severance pay if a labour court finds that they have been unfairly dismissed. In this case, the employer must pay them 33 days’ wages for each year of service, up to a maximum of two years’ salary.
Terminating employees in Spain
Employers have to have a valid reason for terminating employees in Spain. They also have to abide by the termination notice period, which is typically 15 days.
Ways of terminating employees in Spain
Employers have to provide valid grounds for terminating employees in Spain. This could be:
- Objective causes: When an employee is dismissed due to problems with their work. For example, an employee who is not meeting their work targets could reasonably be dismissed.
- Disciplinary reasons: When employees are dismissed due to their conduct, such as being repeatedly late for work, violating their contract, or being threatening to others.
- Collective redundancy: When a group of employees is dismissed due to technical, economic, organizational, or production reasons. For example, if a company is losing money, they may need to reduce their headcount to cut costs.
In all cases, employers generally have to provide a termination letter that states the reason for the termination.
Special requirements for terminating employees
Each type of employee termination in Spain comes with its own rules and regulations according to the law. In the case of collective redundancies, employers have to consult with employee representatives before dismissing employees. In certain cases, they may also need administrative authorization.
For disciplinary dismissals, employers need to be able to show that the employee has seriously breached their contract or done something that constitutes gross misconduct. They must also give the employee an opportunity to respond to the claims about their behavior before dismissing them.
Unfair dismissal in Spain
If an employee believes that they have been unfairly dismissed, they have 20 working days to file a claim with the labor court. If the court finds in favor of the employee, the employer must either reinstate the employee with full back pay or pay them severance pay.
Post-termination restraints in Spain
Post-termination restraints are restrictions that employers can put on their employees’ actions after they stop working for them. The idea behind post-termination restraints is to stop former employees from damaging a business, either by poaching its clients and employees or by setting up a competing business in the same geographical area.
Non-compete restraints in Spain
Non-compete restraints (or non-competition clauses) prevent former employees from working for or setting up a business that competes with their former employer. These are usually limited in both time and geographical scope.
Customer non-solicits in Spain
This type of post-termination restraint is designed to stop employees from soliciting important customers when they leave their employment. If an employee extensively solicits their former employer’s customers, this may also be subject to civil law claims under Spanish unfair competition law.
Employee non-solicits in Spain
This type of restriction is designed to stop employees from ‘poaching’ members of staff when they leave an organisation. This may be limited to certain key employees. Again, excessive solicitation of former employees may be covered under unfair competition rules.
Limitations on post-termination restraints in Spain
In Spain, there are certain restrictions on the restraint of trade rules employers can impose on their former employees. First, employers must show that the restriction is to protect a legitimate business interest. Post-termination restraints in Spain are also typically restricted to two years in duration.
Most crucially, employees in Spain must receive adequate compensation for any post-termination restraints imposed on them. The law doesn’t define exactly what this means, but the compensation the employee receives should be in proportion to the restriction.
Waivers in Spain
In general, employees in Spain can’t waive their statutory rights. However, there are some exceptions. For example, senior employees who report to a company’s board of directors can sometimes waive their rights to overtime pay or time in lieu.
Settlement agreements in Spain
Another type of waiver is when an employee waives their right to make a claim against an employer as part of a settlement agreement. This is typically part of the employee termination process in the case of a dispute between an employer and an employee. In exchange for waiving their right to make a claim, employees usually receive a one-time payment from their employer
Transfer of undertakings in Spain
When a business is bought or acquired by another company, the employees at the first business have certain rights. This is called a transfer of undertakings. In Spain, the rules are defined in Article 44 of the Workers’ Statute (Estatuto de los Trabajadores).
Employee rights after a transfer of undertakings in Spain
In a transfer of undertakings in Spain, employers of the purchased business (the transferer) are automatically transferred to the new business (the transferee). The transferee is required to maintain all existing terms and conditions of employment for the employees, including any special benefits or retirement benefits that employees may have accrued.
Collective bargaining agreements in Spain
When a business is transferred, the existing collective bargaining agreement (CBA) continues to apply to the transferred employees until a new one is approved. Informing and consulting with employees
Employers also have an obligation to inform employees before proceeding with a transfer of undertakings in Spain. They should tell their employee representatives:
- The planned date of the transfer
- The reasons for the transfer
- Any legal, social, or economic consequences that could impact employees
- Any measures they anticipate taking regarding employees
If the transferer plans to take any measures with respect to its employees before the transfer, they must also consult with employee representatives before the transfer of undertakings. This includes things like changing employment contracts, changing work location, or collective redundancies.
Joint liability after a transfer of undertaking in Spain
After a transfer of undertakings in Spain, the transferer and the transferee retain joint liability for obligations to pay wages and social security contributions for three years. After this period, the transferee is solely responsible.
Avoid risk and missed opportunities with our end-to-end employment solutions
There are many different ways an employment contract can come to an end. But whatever the situation, you need to understand the rules that cover the end of employment in Spain — or you could end up facing legal issues.
Our solutions ensure your business is protected from risk when a relationship with a worker comes to an end — whatever the reason. We can also help you to avoid missed opportunities by re-deploying talent where possible.
Compliantly hire workers anywhere with CXC
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
DISCLAIMER: The information contained on this website is provided for general informational purposes only and should not be construed as legal, tax, or other professional advice on any subject matter. While we endeavor to ensure that the content is accurate and up to date, we make no warranties or representations of any kind regarding the completeness, accuracy, reliability, suitability, or availability of the information contained herein. The content on this site is not intended to be a substitute for professional advice. Users should not act or refrain from acting based on any information on this website without seeking the appropriate legal, tax, or other professional advice tailored to their specific circumstances from qualified professionals. We expressly disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this website. Use of the information on this site does not create an attorney-client, tax advisor-client, or any other professional-client relationship between the user and the website or its authors.
Australia/New Zealand Head Office
Asia Head Office
EMEA Head Office
North America Head Office
Latin America Head Office
Level 3, 99 Walker Street
North Sydney, NSW 2060 Australia
