SPAIN Law and Practice Contributed by: José Antonio Segovia, A&O Shearman
company must deliver to the employee a dismissal letter, which should include a detailed description of its reasons and the date of termination, which may be immediate. Should the employee challenge the dis - missal, and where the labour court subsequently rules that it was unfair, the company will have to pay them severance equal to 20 days’ salary in cash per year of service up to a limit of 12 months’ salary. In the case of objective dismissal, the same procedure applicable to ordinary employees shall apply. Termination by a top executive with severance entitlement Top executives are entitled to terminate their contract at will with the right to receive: • the severance agreed in their contracts, if any; or • in the absence of contractually agreed severance, severance pay equal to seven days’ salary (in cash) per year of service subject to a limit of six months’ salary in the case of: (a) a substantial change to the executive’s employment terms and conditions which result - ed in damage to the executive’s professional training or dignity (decided by the employer in a serious breach of contractual good faith); (b) lack of payment or repeated delay in the pay - ment of the remuneration agreed; (c) any other serious breach of contractual duties by the employer; or (d) a transfer of undertaking or relevant change in the ownership of the company, which involved the restructuring of senior executive positions, provided that the top executive exercises their right to terminate within three months following the transfer. A top executive may have to serve the employer with three months’ notice (or a longer period if agreed in their employment contract). Should this not be served, the employer will be entitled to be paid the salaries corresponding to the period in lieu of notice. Statutory Severance of Temporary Contracts Upon the termination of a temporary contract, due to the expiry of the time agreed or completion of the work or service subject to the temporary contract, employ -
ees are entitled to a severance payment equivalent to 12 days of salary per year of service (except in cases
of replacement and training contracts). 7.3 Dismissal for (Serious) Cause
This type of dismissal is based on an employee’s seri - ous and wilful non-compliance with their contractual duties. Legal causes for dismissal must be proven by the employer and include the following: • unjustified repeated absence or lack of punctuality; • lack of discipline or disobedience; • verbal or physical offences against the employer or other people who work in the company or to their relatives who live with them; • breach of good faith or betrayal of trust; • continued and wilful unsatisfactory performance; • habitual drunkenness or drug addiction affecting work performance; and • harassment on grounds of racial or ethnic origin, religion or belief, disability, age, sexual orientation and sexual or gender-based harassment of the employer or persons working in the company. Additional causes may be set out in applicable CBAs or individual employment agreements. Unless further requirements are set out in an appli - cable CBA or an employment contract, the company shall terminate the employee concerned by way of a written letter of dismissal stating the date on which the termination takes effect as well as the grounds for dismissal. This type of dismissal will not entitle the employee to statutory severance pay. However, recent case law from the Spanish Supreme Court now requires that, prior to issuing a disciplinary dismissal letter, companies must formally initiate a disciplinary proceeding by delivering a written notifi - cation detailing the alleged misconduct. The employ - ee must be granted a reasonable period to submit a response to these written allegations. Only once this period has elapsed and the employee’s response (if any) has been received and considered, may the employer decide to proceed with the dismissal and issue the termination letter. Failure to follow this pro - cedure may result in the dismissal being declared unfair or even null and void. Should the employee be
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