How do you terminate an employee in Spain in 2026?
Spain pays severance from the very first day of work: 20 days of salary per year of service for an objective dismissal, with no qualifying tenure. Get the grounds wrong and the rate jumps to 33 days per year, capped at 24 months of salary.
· Spain guide
Illustration · Madrid, Spain
In Spain you must have a valid legal ground to dismiss someone. The three grounds are: disciplinary (conduct), objective (economic or organisational reasons), and collective redundancy. A fair disciplinary dismissal pays no severance. An objective dismissal pays 20 days of salary per year of service, prorated for part-years, capped at 12 months of total salary. Both rates apply from day 1. There is no qualifying period.
If a labour court finds the dismissal unfair, the rate rises to 33 days of salary per year (for service from 12 February 2012), capped at 24 months of salary. The employer then has five days to choose: reinstate the employee or pay the higher amount. Unfair dismissal protection also starts on day 1. That is unusual in Europe.
Objective dismissal notice is a flat 15 days, regardless of how long the employee has been there. During probation, either side can end the contract immediately with no notice and no severance. Anti-discrimination rules still apply during probation. Collective redundancy (ERE) needs a consultation period of at least 15 days for smaller companies and 30 days for companies with fifty or more employees.
What grounds justify termination in Spain?
Spain's Estatuto de los Trabajadores splits dismissal into three categories. Each has its own procedure, severance rate, and risk. Pick the wrong category and a fair dismissal becomes an unfair one.
The three categories are: disciplinary dismissal (despido disciplinario) for serious misconduct. Objective dismissal (despido objetivo) for economic, technical, organisational or production reasons, or individual capability. Collective redundancy (ERE) when headcount thresholds are met.
| Category | Grounds | Severance if fair | Severance if unfair |
|---|---|---|---|
| Disciplinary (despido disciplinario) | Repeated or serious misconduct, breach of contract, persistent absenteeism | None | 33 days per year, cap 24 months |
| Objective (despido objetivo) | Economic, technical, organisational or production grounds; individual incapacity | 20 days per year, cap 12 months | 33 days per year, cap 24 months |
| Collective redundancy (ERE) | Economic, technical, organisational or production grounds affecting headcount thresholds | 20 days per year minimum (often negotiated higher) | Null and void, reinstatement ordered, or enhanced severance |
Protected grounds
Dismissals motivated by pregnancy, maternity or paternity leave, union activity, whistleblowing, disability, gender, or any other protected characteristic under Spain's equality legislation are null and void (nulidad), not merely unfair. A null dismissal requires reinstatement plus back-pay for the entire period between dismissal and the court ruling. There is no cap equivalent on null dismissal awards.
The procedure for objective dismissal
The employer must deliver a written dismissal letter (carta de despido) setting out the grounds, with 15 days notice and the severance payment (20 days per year) paid at the time of dismissal. The worker can challenge the dismissal at a labour court within 90 days of the last day of employment.
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Choose the correct dismissal category
Identify whether the termination is disciplinary, objective, or collective. The category determines the severance formula, the procedure, and the notice requirement. Getting this wrong at the outset converts the dismissal to unfair.
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Prepare the carta de despido
Draft the written dismissal letter setting out the specific grounds in legally sufficient detail. Vague grounds are routinely found insufficient by Spanish labour courts.
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Calculate and tender severance
For objective dismissals, calculate the severance at the statutory rate based on complete and partial years of service, and tender it alongside the dismissal letter. Late payment does not invalidate the dismissal but opens a damages claim.
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Serve notice or pay in lieu
Serve the statutory notice period for objective dismissals or substitute it with payment in lieu if the contract permits. Disciplinary dismissals take effect immediately with no notice.
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Issue and sign the finiquito
Prepare the final settlement document covering all amounts due: prorated salary, accrued leave, prorated extra payments, and severance. The employee should review the finiquito carefully before signing.
How much notice is required for termination in Spain?
For objective dismissal, notice is a flat 15 days. It does not grow with tenure. Spain has no graduated notice scale like Germany or the UK. The same 15 days applies whether the employee has been there six months or six years.
Disciplinary dismissal needs no notice at all. The dismissal takes effect the moment the carta de despido is delivered. For objective dismissals, the employer can pay out the notice instead of serving it.
| Dismissal type | Statutory notice |
|---|---|
| Disciplinary (conduct) | None (immediate) |
| Objective (economic, organisational, capability) | 15 days |
| Collective redundancy (ERE) | Individual notices after consultation period ends |
| During probation period | 0 days (either party) |
Resignation notice follows the same 15 days statutory floor. Many convenios colectivos (sector collective agreements) extend both employer and employee notice to 30 days, particularly for technical or managerial roles. Where a convenio applies, the longer period governs. Failure by the employee to give the required notice entitles the employer to deduct equivalent pay from the final settlement.
Probation period
During the periodo de prueba, either party can terminate the contract instantly with no notice and no severance. The statutory maximum probation period is 2 months for standard employees in larger companies, extended to 6 months for qualified technical roles. Anti-discrimination and null-dismissal protections apply throughout probation.
How is severance calculated in Spain?
Objective dismissal severance is 20 days of gross salary per year of service. Partial years are prorated. The total is capped at 12 months of salary. There is no minimum service. A worker dismissed on day two is owed two days of severance, prorated.
If a court finds the dismissal unfair, the rate rises to 33 days per year for service from 12 February 2012, capped at 24 months of salary. The employer has five days from the court ruling to choose: pay the higher amount or reinstate the employee.
Under the Estatuto de los Trabajadores, objective dismissal severance is 20 days of salary per year of service, capped at 12 months of total salary. If a court finds the dismissal unfair, the employer must pay 33 days per year, capped at 24 months of salary, or reinstate the employee.
Source: Gobierno de Espana: End of contract, resignations and dismissals
Pre-2012 service
For employees with continuous service that predates 12 February 2012, the rules are split: service before that date accrued at 45 days per year with a 42-month cap under the old regime; service from that date accrues at 33 days per year with a 24 months cap in the event of unfair dismissal. The overall blended maximum across both periods is 720 days of salary. For objective dismissals, the 20 days rate and 12 months cap apply to the full tenure regardless of date.
The finiquito
The final settlement document (finiquito) records all amounts owed on termination: prorated salary, accrued but untaken annual leave (22 days statutory minimum entitlement), prorated pagas extraordinarias (the two mandatory extra salary payments per year), and the applicable severance. The finiquito is due on or by the last day of employment. Signing a finiquito without the phrase "not conforming" (no conforme) is treated as acceptance of the settlement; employees should read it carefully before signing.
When do collective redundancy rules apply in Spain?
Spain's collective redundancy process (ERE, expediente de regulacion de empleo) kicks in when dismissals within any 90 days period pass the headcount threshold for the company's size. In companies under 100 employees, the threshold is 10 or more dismissals. In companies with 100 to 299 employees, it is 10 percent of the workforce. In companies with 300 or more employees, 30 or more redundancies trigger the collective process.
An ERE needs a consultation period before any redundancies take effect. The minimum is 15 days for companies with fewer than fifty employees. It rises to 30 days for companies with fifty or more.
ERE procedure
Once collective redundancy thresholds are met, the employer must:
- Notify the labour authority (SEPE) and open a formal consultation period with employee representatives or works council (comite de empresa).
- Consult in good faith for the required minimum period: 15 days (companies under fifty employees) or 30 days (fifty employees or more).
- Provide employees and representatives with economic justification and a social plan (plan social) for companies over fifty employees covering retraining, outplacement and voluntary redundancy.
- Reach an agreement if possible; if not, proceed after the consultation period expires, subject to the labour authority's non-binding opinion.
Failure to follow ERE procedure correctly can result in a court declaring the collective dismissals null and void, requiring reinstatement of all affected employees. The minimum ERE severance is 20 days of salary per year, capped at 12 months. In practice, negotiated ERE packages regularly exceed the statutory floor, particularly in large Spanish companies where union representation is strong.
Fraudulent individual dismissals
Conducting multiple individual objective dismissals to avoid ERE thresholds is a recognised risk. Courts aggregate dismissals over the 90 days window and may apply ERE rules retroactively if the headcount test is met across that period.
How does mutual termination work in Spain?
Mutual agreement (acuerdo de extincion por mutuo acuerdo) is Spain's version of a settlement exit. Both parties agree to end the employment on negotiated terms. This normally includes a payment that reflects what severance would cost, without going to court.
Unlike the UK settlement agreement or the French rupture conventionnelle, Spain has no specific legal framework for mutual termination outside the ERE process. The terms are entirely up to negotiation.
A mutual termination avoids the procedural requirements of dismissal: no causa required, no 15 days notice to serve, no risk of a court finding the grounds insufficient. The trade-off is that the compensation paid is almost always higher than the statutory objective dismissal severance, since the employee gives up the right to challenge.
Common structure of a negotiated exit in Spain:
- Compensation agreed between the parties, typically at or above the 20 days/year objective floor and often benchmarked to the 33 days/year unfair dismissal rate
- Finiquito covering prorated pay, accrued leave, and pagas extraordinarias
- Reference clause and any confidentiality or non-compete provisions
- Waiver of claims signed by the employee in writing
The tax treatment of severance paid under mutual agreement depends on the amount and whether it mirrors the statutory formula. Amounts up to the statutory objective formula (20 days per year) are generally exempt from personal income tax (IRPF) as they mirror a statutory entitlement. Amounts above the formula are taxable as employment income. Tax advice should be sought for senior exits where the payment diverges significantly from the formula.
Where an employee is a member of the works council or is a trade union representative, additional protections apply and a works council opinion may be required before the termination is finalised. Mutual agreement does not bypass these protections.
How Teamed runs Spain terminations
Teamed becomes your legal employer of record in Spain for from $599 per employee per month, with zero FX mark-up in any currency. Your employee is on Spanish law from day one. The 20 days/year objective severance formula applies straight away. Unfair dismissal protection also starts on day one. The qualifying period is 0 months.
We handle the dismissal letter, severance calculation, finiquito reconciliation, and Social Security notifications on one platform. The decision on whether and why to terminate stays with you.
Real HR and legal experts handle your Spain hires, from the first offer through every cotizacion and payroll run. An actual person coordinates the termination, not a ticket queue. There is no setup fee and no exit fee, and employer cost passes through at cost, itemised on every invoice.
The split of responsibilities under EOR for Spain terminations:
| What Teamed handles | What the client decides |
|---|---|
| Dismissal category selection advice and carta de despido drafting | Whether to terminate, why, and on what timeline |
| Severance calculation (20 days or 33 days per year formula, prorated) | Whether to offer more than the statutory minimum |
| 15 days notice period management or payment in lieu | Communication with the wider team |
| Finiquito reconciliation: salary, accrued leave, pagas, severance | Negotiated exit terms and any enhanced package |
| SEPE notification and Social Security de-registration | Whether to include non-compete or confidentiality clauses |
| ERE procedure coordination where collective thresholds are met | Business restructuring decisions and social plan content |
Spain's day-1 severance entitlement means the financial exposure is real from the very first hire. EOR payroll, contractor onboarding, and entity setup all live on one platform. A Spain contractor who converts to a direct hire keeps their record, and that same employee can graduate from EOR to your own Spanish entity without switching systems. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first Spain hire, until it isn't. Start from the Spain hiring overview.
Key sources: Estatuto de los Trabajadores, Gobierno de Espana: end of contract, and SEPE.
Frequently asked questions
Does Spain have a qualifying period before an employee can claim unfair dismissal?
No. Unfair dismissal protection applies from the very first day of employment under the Estatuto de los Trabajadores. There is no qualifying service period. The only exception is during the probation period, when either party may terminate without cause or notice, though dismissals for discriminatory or null reasons are still void even then.
How is objective dismissal severance calculated in Spain?
Objective dismissal severance is 20 days of gross salary per year of service, prorated for partial years, capped at 12 months of total salary. Service accrues from day 1 with no minimum qualifying tenure. The severance must be paid at the time the dismissal letter is served, not afterwards.
What happens if a Spanish dismissal is found unfair by a court?
If a court finds the dismissal unfair (improcedente), the employer must elect within five days: either reinstate the employee with back-pay covering the period between dismissal and the court ruling, or pay enhanced severance of 33 days of salary per year of service (for service from 12 February 2012), capped at 24 months of salary. If the dismissal is declared null and void (for example, because it was discriminatory), reinstatement is mandatory and back-pay cannot be capped.
When does collective redundancy procedure apply in Spain?
The ERE (collective redundancy) process applies when dismissals within any 90 days period meet size-banded thresholds: 10 or more in companies under 100 employees, 10 percent of the workforce in companies with 100 to 299 employees, or 30 or more in companies with 300 or more employees. A mandatory consultation period of 15 days applies for smaller companies and 30 days for companies with 50 or more employees.
How much notice is required for dismissal in Spain?
Objective dismissals require 15 days notice, which the employer may substitute with payment in lieu. Disciplinary dismissals take effect immediately with no notice. During the probation period, either party may terminate with 0 days notice. Employee resignation requires 15 days statutory notice, though the applicable convenio colectivo may specify a longer period.
Is severance pay taxable in Spain?
Severance paid on objective dismissal up to the statutory formula amount is generally exempt from personal income tax (IRPF) as it mirrors a legal entitlement under the Estatuto de los Trabajadores. Amounts paid above the statutory formula, or payments made under mutual agreement that exceed the formula, are taxable as employment income. The finiquito components covering accrued salary and leave pay are always taxable as normal earnings.
The most common Spain termination error we see is treating it like a UK redundancy: drafting grounds vaguely and expecting the payment to cover the procedural gap. In Spain, the carta de despido must be specific enough to stand up in court on its own. The severance is not a substitute for the procedure.
Spain charges severance from day 1. There is no qualifying period, no threshold to cross: 20 days of salary per year of service starts accruing the moment the contract starts.
Most employers price in the cost of the hire. Fewer price in the cost of the exit from the first payslip.
That is the gap EOR closes.
