European Committee of Social Rights report on Spain’s unfair termination compensation

At a glance

• Spanish regulations on severance compensation in the event of unfair dismissal, violate the Charter of Social Rights of the Council of Europe (Charter).
• The Ministry of Work has announced that they are working on a proposal to modify the regulations.

On 20 March 2024, the European Committee of Social Rights, issued a report. This report was shared with Spain on 28 March 2024 and was made public on 29 July 2024.

The report examines Spain’s legal structure and court rulings concerning compensation for unfair employment termination. It highlights the reduction in maximum compensation from 45 to 33 days of salary per year of service, capped at 24 monthly salaries, as a result of the labour reform in 2012. The report also points out the potential for extra compensation in exceptional circumstances, as acknowledged by recent legal precedents, but observes that this is not frequent practice in Spanish courts.

The Committee concludes that the restrictions imposed by Spanish law do not sufficiently compensate the victim or discourage employers, therefore infringing the Charter which amongst other things, guarantees the right to adequate compensation or suitable reparation in instances of unjust employment termination.

The Ministry of Work has announced that they are working on a proposal to modify Spanish regulations in relation to severance payment in the event of unfair dismissal. However, this report is not legally binding and Spanish courts cannot directly apply it or the Charter.