Dismissal, types of dismissal and dismissal process in Spain

Dismissal can be defined as the decision taken by an employer to terminate the employment contract with a particular employee. This can occur due to various circumstances, which will determine, according to the law, the type of dismissal in question. For this reason, we would like to dedicate this article to talk about the types of dismissals that currently exist and the process that must be carried out.

Types of dismissal

It is possible to distinguish between three different types of employment dismissals, which are detailed below:

Disciplinary dismissal

Disciplinary dismissal is when the employer decides to terminate a contract due to a serious breach of contract by the employee. The causes of disciplinary dismissal are stipulated in article 54 of the Workers' Statute, which are:

• Repeated and unjustified lack of attendance or punctuality.
• Indiscipline or disobedience to superiors.
• Breach of contractual good faith and breach of trust in the performance of work.
• Physical or verbal offences against the employer or co-workers.
• Continuous and voluntary reduction of agreed productivity and performance.
• Drunkenness or drug addiction if they have a negative impact on work performance or pose a risk to the worker or co-workers.
• Harassment of the employer or co-workers on the grounds of race, ethnicity, religion, beliefs, age, sexual orientation, gender or disability.

It should be noted at this point that these are the causes established, in general, in the Workers' Statute, although each sector is governed by its own Collective Bargaining Agreement, which usually contains a specific list of very serious misconduct that can lead to sanctions and disciplinary dismissal of the employee.

Objective dismissal

An objective dismissal is considered to be any dismissal whereby the employment contract is terminated for technical, organisational, production or economic reasons justified by the company. In general terms, the causes for this type of dismissal are clearly established in article 52 of the Workers' Statute. These are:

• Inaptitude of the worker known or acquired after his actual placement in the company.
• Lack of adaptation of the worker to his or her job and to the necessary technical modifications.
• Causes listed in article 51.1 of the Workers' Statute, i.e. those relating to collective dismissal.
• Justified but intermittent absences that reach 20% for two consecutive months or 25% for four discontinuous months, provided that the total number of absences in the previous year exceeds 5% of the total number of working days. This does not include absences derived from the application of medical treatment for a serious illness, legal strikes, maternity or paternity, breastfeeding, risk during pregnancy, work as legal representatives of the workers, etc.

Despido colectivo

Collective dismissal, also known as a Redundancy procedure for termination of employment or ERE for termination of employment, occurs when an employer decides to terminate the contracts of a certain number of its employees for objective reasons. It is considered as collective dismissal when:

• At least 10 workers are made redundant in a company with less than 100 employees.
• 10% of the number of workers in companies with between 100 and 300 employees are made redundant.
• At least 30 workers are made redundant in companies with more than 300 employees.

As in the case of objective dismissal, workers who are affected by collective dismissal are entitled to compensation of 20 days' salary for each year they have worked in the company, up to a maximum of 12 monthly payments.

Fair dismissal, unfair dismissal and invalid dismissal

These concepts do not refer to types of dismissal per se, but rather are used as a 'second name' for any of the aforementioned. The worker always has the possibility to claim the dismissal judicially, and a competent judge will be in charge of giving the corresponding qualification, which will have a series of consequences for both parties.

Fair dismissal

A fair dismissal is one in which the employer proves the causes that have motivated him/her to terminate the contract that linked him/her to the employee. Therefore, if these causes are of a disciplinary nature, there is no need to pay any type of compensation. On the other hand, if it is an objective dismissal, the compensation to be paid will be 20 days per year worked up to a maximum of 12 monthly payments.

Unfair dismissal

A judge may classify a dismissal as unfair when the employer is not able to prove the employee's breach of employment or when it is carried out without complying with the formal requirements established by law. In this case, the employee must be reinstated in the same position held within the company and with the same conditions or receive compensation, which will be 45 days per year worked for all the time he/she has provided services prior to 11 February 2012 (date of entry into force of Royal Decree-Law 3/2012 of 10 February, on urgent measures for the reform of the labour market) and 33 days' salary for each year worked after that date. The amount of compensation may not exceed 720 days' salary, except in the event that the calculation for the period prior to the entry into force of the Royal Decree-Law gives a higher amount. If this happens, the amount may not exceed 42 monthly payments. 

Invalid dismissal

A dismissal can only be declared null and void when the cause of the dismissal is related to discrimination prohibited by law or the Spanish Constitution or when fundamental rights are violated. This classification entails the immediate reinstatement of the worker, as well as the payment of the wages corresponding to the months not worked due to the dismissal.

Process of dismissal of an employee

Any dismissal of an employee must follow a series of steps in order to be effective. In short, these are:

• Prior notice. The employer is obliged to give the employee at least 15 days' notice of dismissal (Article 53.1c of the Workers' Statute) by means of the so-called 'letter of dismissal'. This phase is only mandatory in the case of dismissal for objective reasons. If the employer does not carry out this step, he/she is obliged to pay the employee for the days of notice that he/she has not given.
• The letter of dismissal. This document must inform of the termination of the employment contract, as well as the proposed settlement and the amounts owed. In this regard, it should be noted that if the dismissal is for objective reasons, unless they are of an economic nature, the amount must be paid at the same time as it is handed over. It must also specify the facts that motivate the termination of the contract and the date from which it will be effective. The worker's signature is optional, although it is advisable that, in case he/she is thinking of making a legal claim, he/she should write a 'No Conforme' next to it. If the dismissal is verbal, it will be unfair in all cases.
• The settlement. This is the payment of the amount corresponding to salaries, holidays and the proportional part of the extra payments to which the worker is entitled and which he/she has not yet received.
• Severance pay. The indemnities corresponding to each type of dismissal are discussed above. The amount will be adjusted on the basis of this and the length of service of the worker in the company, the gross annual or monthly salary and the type of contract.

Once they have reached this point, the employee and the employer can either reach an agreement and terminate the dismissal process or start legal proceedings. In the latter case, both must hire a labour lawyer. In addition, the worker is obliged to file the lawsuit within a maximum period of 20 working days from the date on which the dismissal became effective. These are the stages of the process when the judicial process begins:

• Prior conciliation. The aim is to avoid court proceedings by means of a new agreement through the presentation of a conciliation bill.
• The trial. Just before the trial, both parties have another opportunity to reach an agreement that will have the same legal validity as a court judgement. If this does not take place either, the relevant judge will determine who is in the right.

We would also like to point out that in labour lawsuits there are no orders for the employee to pay costs. Therefore, in the event of losing the trial, the employee will not have to pay the fees of the lawyer who defended the company. Furthermore, most lawyers specialised in labour law usually establish their fees in two parts: a fixed fee of a very small amount and a variable fee that represents a percentage of the compensation received in the event that the judgement is favourable to the worker.

We hope we have been of help and that, from now on, you will be much clearer about the types of dismissal that exist and the whole process that surrounds them.

You can contact our employment lawyers for any queries related to this issue. We are available online anywhere in Spain.