Types of dismissal in Spain: a quick guide for companies

Dismissal is one of the most sensitive decisions in running a company. Here is a summary of the three types of dismissal under Spain’s Workers’ Statute, what can happen afterwards and how it must be done step by step. This is a general guide: each case must be analysed individually.

Download the full guide in PDF (in Spanish): click here.

The three types of dismissal

• Objective: for economic, technical, organisational or production reasons linked to the company or the job. It requires a reasoned letter and 15 days’ notice, and severance is 20 days per year of service, up to 12 months’ pay, made available to the employee with the letter.
• Collective: the same reasons, but affecting several employees within 90 days (10, 10% or 30, depending on workforce size). It requires a prior consultation period (up to 30 days, or 15 in companies with fewer than 50 employees) and notification to the labour authority. Minimum severance: 20 days per year, up to 12 months’ pay.
• Disciplinary: for serious misconduct by the employee (absenteeism or lateness, offensive behaviour, poor performance…). No notice or severance is required unless it is declared unfair or null, but a mandatory prior hearing must be offered to the employee before notification (Supreme Court ruling 1250/2024).

After the dismissal: fair, unfair or null

• Fair: the reasons are proven and the dismissal stands.
• Unfair: the reasons are not proven, or there are formal defects. The company chooses between reinstatement or severance of 33 days per year, up to 24 months’ pay.
• Null: it violates a fundamental right. It requires reinstatement and payment of back pay. Dismissals linked to pregnancy, birth or childcare leave, or reduced working hours for work-life balance are null unless there is an entirely unrelated cause.

The employee has 20 working days to file a claim with the conciliation service (in Madrid, the SMAC). If no agreement is reached, the next step is the Social Court.

Final settlement vs. severance

The final settlement is always paid: it covers the current month’s salary, untaken holidays and other pending items. Severance is only paid in objective or collective dismissals, or if the dismissal is declared unfair or null; never in a fair disciplinary dismissal.

Step-by-step procedure

1. Written notice. If it may be contentious, it is advisable to deliver it before two neutral witnesses in case the employee refuses to sign.
2. Employee’s signature. Signing only confirms receipt, not agreement; the employee may sign as “not in agreement”.
3. Claim. The employee has 20 working days to ask for the dismissal to be declared unfair.
4. Conciliation. A key step: for unfair dismissal severance to be exempt from personal income tax, unfairness must be recognised at the conciliation hearing or by a court ruling.
5. Company’s decision. Recognise unfairness and pay 33 days per year (minus any amount already paid) or defend the dismissal in court.

Important: a disciplinary dismissal letter without specific reasons, or without a prior hearing, may lead to unfairness on formal grounds. Dismissal also gives the employee legal unemployment status, unlike voluntary resignation.

Before making any decision, contact us and we will analyse your case.