Understanding Termination of Employment Contracts in Spain
Termination of Employment Contracts in Spain
Will of the Workers
A) Resignation
Resignation is a voluntary act by the employee to end the employment relationship. It must comply with the formalities of reliable communication and notice, if applicable.
B) Abandonment
Abandonment occurs when the employee fails to meet the agreed-upon formalities for resignation. To determine abandonment, a reasonable timeframe and clear signs of the worker’s intention to terminate the employment relationship must be considered.
C) Causal Resolution
Causal resolution, as outlined in Article 50 of the Spanish Workers’ Statute (ET), allows the worker to terminate the contract due to employer breaches. Justifications for causal resolution include:
- Significant changes to working conditions: These changes must negatively impact the worker’s training or dignity.
- Non-payment or late payment of wages: Repeated delays or non-payment of wages, typically after three days and with multiple instances, can justify causal resolution.
- Breach of employer obligations: This includes discrimination or harassment by the employer. Compensation for causal resolution is the same as for unfair dismissal: 45 days’ salary per year worked, up to a maximum of 42 monthly payments.
Even with business failure, if the employee unilaterally terminates the contract without proper justification, it could be considered abandonment.
Death, Disability, and Retirement of the Worker
Death
The death of the worker terminates the employment contract. However, legal consequences for the employer may arise from agreed-upon obligations, such as compensation to the family.
Disability
Disability can also lead to contract termination. Different levels of disability are recognized in the Spanish social security system:
- Permanent non-disabling injuries: Compensation for moral damage caused by accidents or occupational diseases.
- Partial permanent disability: Functional reduction of at least 3% that doesn’t directly impact work execution but may cause additional hardship.
- Total disability for the usual occupation: Terminates the contract for the specific job, even if the worker retains residual work capacity.
- Absolute disability: Total cancellation of work capacity, with 100% provision and contract termination.
- Severe disability: Requires assistance for essential life activities. Terminates the contract with 150% provision.
Retirement
Retirement, typically upon reaching the legal age, terminates the employment contract and prevents income-generating activities. However, extensions to age 70 are possible for employed workers, and self-employed individuals can retire at any age. Early retirement is possible depending on the profession’s hardship or toxicity. Partial retirement, linked to relief contracts, allows a worker to reduce their working hours while a new worker takes over the remaining hours.
Death, Disability, and Retirement of the Employer
The consequences of the employer’s death, disability, or retirement depend on the business structure:
- Sole proprietorships: Workers are entitled to one month’s salary as compensation.
- Legal entities: This situation triggers a collective dismissal under Article 51, with compensation of 20 days’ salary per year worked, up to a maximum of 12 months.