Calculation of severance pay, calculation of severance pay, calculation of severance payment

Calculate severance pay

This severance pay simulator allows you to:

• Calculate compensation for unfair dismissal.
• Calculate compensation for disciplinary dismissal.
• Calculate compensation for fair collective dismissal.
• Calculate compensation for objective dismissal.
• Calculate compensation for dismissal for economic reasons.
• Calculate compensation for null dismissal.
• Calculate compensation for termination of a temporary contract.
• Calculate compensation for substantial modification of working conditions.

What are the causes of dismissal?

Have you been fired? These are the types of dismissal you can have.

• Disciplinary dismissal.
• Dismissal for objective causes.
• Dismissal due to force majeure.

How can the dismissal be qualified?

• Fair dismissal: Type of dismissal in which the reason for dismissal argued in the dismissal letter is stated.
• Unfair dismissal: The reasons for dismissal argued by the company are not accredited.
• Null dismissal: The dismissal is so qualified when there has been a violation of a fundamental right of the employee, i.e., when the cause of the dismissal is due to maternity leave, for example.

Compensation depends on the type of dismissal that has been declared. The fair dismissals can be challenged if the reasons stated in the dismissal letter are not true.

Calculation of severance indemnities to be taken into account according to the type of dismissal

• In the case of unfair dismissal, the indemnity will be 33 days per year of service worked.
• Relationships prior to February 2012, will have a higher compensation for unfair dismissal of 45 days per year of service worked until that date.
• The indemnity for unfair dismissal is capped at 24 monthly payments unless the right to indemnity for unfair dismissal had been generated before 2012, which is capped at 42 monthly payments.
• In the case of objective dismissal, the indemnity is 20 days per year of service with a limit of one year's salary.
• In fair disciplinary dismissal, there is no right to severance pay.
• In null dismissal, the company must reinstate the employee with payment of the processing wages and, if applicable, the inclusion of a possible additional indemnity.

How is severance pay calculated?

In order to correctly calculate the severance pay to be awarded for dismissal, the following must be taken into account:

• The base salary: amount received in terms of the total number of hours worked.
• Seniority: refers to the period of time between the start date and the end date of the contract, due to a dismissal.
• Number of days per year worked: varies according to the type of dismissal.

How to calculate the regulatory salary

To calculate the severance pay, you must know the daily salary that corresponds to you:

• Division of the gross annual salary including the amount of extraordinary payments, between the days of the year (365 or 366 days).
• Include salary concepts such as overtime or variable salaries in the calculation of the division to know the amount of salary that corresponds to you per day and make the division.
• If you currently have a reduction in working hours, the gross salary you had before the reduction in working hours must be taken into account.

How to calculate length of service

• The length of service refers to the number of months from the beginning of the contract to the date of termination of the employment contract or dismissal. Previous temporary contracts must also be taken into account in calculating the total length of service.

Practical case

If you have been dismissed from a company where you had been working for 4 years, 2 months and 5 days, the total length of service in the company would be 51 months (4 years would be 48 months, to which 2 months and 1 month equivalent to the 5 days would have to be added).

How to calculate compensation for unfair dismissal

With Law 3/2012 of July 6 of urgent measures for the reform of the labor market, the number of days per year worked changes depending on the type of dismissal that occurs. It is necessary to take into account the updated number of days to calculate the severance payment.

With the new labor law reform, there is a segregation in the number of days per year worked, depending on the beginning of the contract:

• Contracts initiated after February 12, 2012

For the calculation of the indemnity for unfair dismissal in contracts initiated as from the date indicated above, the total number would be 33 days per year worked with a maximum limit of 24 monthly payments, even if the contract has exceeded the number of monthly payments set forth above.

• Contracts started before February 12, 2012

In contracts prior to the labor market reform, as of February 12, 2012, a total of 45 days per year worked with a maximum limit of 42 monthly payments would be counted to calculate the compensation for unfair dismissal.

Case study

Let's suppose that you have suffered an unfair dismissal and you want to know how to calculate the severance payment due to you.

Below, we provide you with the data in a hypothetical case:

Annual salary: 12,000 euros
Months worked: 24 months
Daily salary: 12,000 euros / 365 days = 32.87 euros per day.
Calculation of compensation for unfair dismissal:
€32.87 per day x 24 months x 2.75 = €2169.86 severance pay.

As we have verified, the calculation of the above severance payment does not exceed the limit of 24 monthly payments established in an unfair dismissal. In this case, if the limit of 24 monthly payments were exceeded, knowing that the salary is 1,000 euros per month, it would not be possible to receive more than 24,000 euros in severance pay.

Your calculation would be as follows:
1,000 euros per month x 24 monthly payments = 24,000 euros.

How to calculate compensation for objective dismissal

An objective dismissal can be for economic, technical or production reasons.

To calculate the amount of compensation for objective dismissal, the daily salary must be multiplied by 20 days per year worked, up to a maximum of 12 monthly payments, according to the new labor reform.

If you request the assistance of a labor lawyer because you do not agree with the type of objective dismissal carried out, you can challenge the dismissal.

If it is later declared as an unfair dismissal, the severance payment would change, since it would be 33 days per year worked with a limit of 24 monthly payments.

Is it possible to negotiate a severance payment?

A severance payment can be negotiated as long as there is an understanding between the employer and the employee.

In the case of requesting a higher severance payment than the one that would be included in the regulations, you have to take into account that it has to be taxed by calculating the amount of the difference between the amount received and the maximum severance payment that could be given according to the regulations included in the Labor Law.

What do I do if I have suffered a dismissal? Do you need to calculate a severance payment?

If you have been dismissed and you do not agree with the causes stated in the dismissal letter, or with the severance pay you have been given as compensation, request the legal assistance of our expert lawyers in claiming severance pay for dismissal.

What do the clients of G.Elías y Muñoz Abogados think?

The clients of our labor lawyers are satisfied with the work done to calculate the severance pay due to the worker, as well as their legal claim.