If you work in Spain and have been let go — or fear you might be — the key questions are whether the dismissal is lawful and how much severance you are owed. Spanish dismissal law is generous compared with many countries, but the rules depend on the type of dismissal and whether a court considers it fair (procedente) or unfair (improcedente). This guide explains it in plain English for foreign workers.
Types of dismissal and their severance
Not every dismissal carries the same compensation. Spanish law mainly distinguishes these situations:
| Type of dismissal | If fair | If unfair | Cap |
|---|---|---|---|
| Disciplinary (misconduct) | 0 days/year | 33 days/year | 24 months |
| Objective (economic, technical…) | 20 days/year | 33 days/year | 24 months (unfair) / 12 (fair) |
| Collective redundancy (ERE) | 20 days/year | 33 days/year | 12 months (fair) |
| Resignation (voluntary) | €0 | — | — |
| Mutual agreement | As agreed | — | — |
How unfair dismissal compensation is calculated
The base formula is: severance = regulating daily salary × 33 days × years worked, up to a maximum of 24 monthly payments.
The regulating daily salary is your total gross annual pay (including the two extra payments and fixed bonuses common in Spain) divided by 365. For someone on €2,000 gross/month plus two extra payments of €2,000 each:
When the calculated severance exceeds 24 monthly payments, the cap applies. In this example 24 months equals €56,000, so even 10 years does not reach the cap — you would need roughly 26.5 years of service to hit it.
The transitional regime: contracts before 2012
Before the 2012 labour reform, unfair dismissal paid 45 days per year. If your contract started before 12 February 2012, the time worked up to that date is still calculated at 45 days/year and the time after at 33 days/year, with specific month caps. Long-tenured employees should always have this transitional calculation checked — it can significantly increase the amount.
When is a dismissal declared unfair?
A labour court declares a dismissal improcedente when the employer cannot prove the alleged cause, the legal grounds do not hold, or the required formalities (written letter stating the facts and date, notice period for objective dismissals) were not followed. If the dismissal breaches a fundamental right (for example discrimination), it can be declared null (nulo), which means reinstatement with back pay rather than severance.
Steps to take if you are dismissed
- Do not sign the dismissal letter as "conforme" (agreed) — you can sign only as "recibido" (received) to acknowledge the date.
- Check the finiquito (final settlement) separately from any severance, and do not sign "saldo y finiquito" blindly.
- File a conciliation claim (papeleta de conciliación) within 20 business days — this deadline is strict.
- Get legal advice early; many labour lawyers offer a first consultation and work on the conciliation stage before going to court.
Is severance taxed in Spain?
Statutory severance for unfair dismissal is exempt from IRPF income tax up to €180,000. Anything above that, or amounts agreed by mutual consent beyond the legal minimum, is taxable. The finiquito (pending salary, proportional extra payments, unused holiday) is always taxed as ordinary salary.
Estimate your severance based on your salary, contract type and years worked. Free, no sign-up.
Redundancy Pay Calculator →Frequently asked questions
How much is unfair dismissal compensation in Spain?
33 days of salary per year worked, capped at 24 monthly payments, based on your regulating salary. Time before Feb 2012 counts at 45 days/year.
What is the regulating salary?
Total gross annual pay (including extra payments and fixed bonuses) divided by 365 to get a daily figure, then multiplied by 33 days and your years of service.
When is a dismissal unfair?
When the employer can't prove the cause, the grounds don't hold, or formalities weren't followed. It's null if it breaches fundamental rights (reinstatement instead of severance).
Disciplinary vs objective dismissal?
Disciplinary (misconduct) pays 0 if fair; objective (economic) pays 20 days/year if fair. Both jump to 33 days/year if declared unfair.
Is severance tax-free?
Statutory unfair-dismissal severance is exempt from IRPF up to €180,000. The finiquito is always taxed as normal salary.
How long do I have to challenge it?
Just 20 business days from the dismissal date to file the conciliation claim. Act fast and get advice.