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How to calculate compensation for unfair dismissal 2023


If your company has dismissed you and you consider it to be unjustified, it is necessary for you to know how you should act and how to calculate your compensation for unfair dismissal.

We explain everything below in a simple, quick and clear way.

What is unfair dismissal?

An unfair dismissal occurs when the employer dismisses the employee without justifiable reasons or without complying with the requirements of the law.

From that moment on, the worker has the possibility of both collecting unemployment benefit or subsidy, and of challenging the dismissal in court to claim compensation or reinstatement in the company.

The unfairness of the dismissal must be recognised by the judge in the corresponding legal proceedings or by the company itself during the negotiation with the worker (prior conciliation).

In this regard, it is important to point out that the time limit for filing a dismissal claim is 20 working days, from the day following the date on which the dismissal takes effect. 

And if the dismissal is finally classified as unfair, the company will be able to:

  • Reinstate the worker in the same job, respecting the conditions, maintaining his seniority and paying all processing wages.
  • Or terminate the employment relationship definitively and pay the worker compensation for unfair dismissal.
compensation for unfair dismissal

Causes for unfair dismissal in Spain in 2023

As mentioned above, in order for a dismissal to be classified as unfair, it is necessary to the company does not meet the formal requirements or does not show cause for dismissal to take place (material requirements).

Let us look at these causes in detail.

Formal requirements:

  • Dismissal must be communicated in writing by means of a letter of dismissal indicating the cause of dismissal (disciplinary or objective). Verbal dismissal or tacit dismissal is not valid.
  • Dismissal on the grounds of sick leave is not possible.

Material requirements:

  • In the case of objective dismissalIn the case of a worker with a disability, the employer must prove your unsuitability, lack of adaptation, or economic, technical, organisational or production-related causes.
  • In the case of disciplinary dismissalthe employer must demonstrate:
    • Repeated and unjustified absenteeism or punctuality.
    • Indiscipline or disobedience.
    • Verbal or physical attacks on the employer or others.
    • Breach of contractual good faith or breach of trust in the work.
    • Intentional and sustained decline in work performance.
    • Drug addiction or drunkenness that adversely affects performance.
    • Racial, religious, gender or any other type of discrimination, whether against the employer or any other person in the work environment.
    • For reasons set out in the Collective Bargaining Agreement of your professional sector or company.

What is the compensation for unfair dismissal in Spain?

  • In the event that the dismissal has been declared unfair, your indemnity will correspond to 33 days' salary per year worked, up to a maximum of 24 monthly payments to be collected.
  • If your employment relationship was less than one yearIf you have been working for more than one month, the compensation will be prorated to adjust it to the number of months you were working.
  • If the start of your contract is before 12 February 2012your severance pay would be the sum of 33 days per year worked (with a maximum of 24 months) from that date until the effective date of dismissal, plus 45 days per year worked, with a maximum of 42 months, from the beginning of the employment relationship until 11 February 2012.

Severance pay in the event of unfair dismissal

Whatever the type of dismissal, the employee is always entitled to a severance payment. It is mainly composed of:

  • The unpaid salary for the current month.
  • The proportional part of special payments.
  • Holidays not taken.
  • Non-wage payments due.
  • Compensation for the type of dismissal -with the exception of cases of fair disciplinary dismissal.
compensation for unfair dismissal calculate

Calculate your unfair dismissal compensation in 2023

  • Add your gross salary for the last 12 months, plus any extra pay if not pro-rated.
  • Calculate your monthly remuneration: divide last year's total by 12.
  • Calculate your daily wage: divide the monthly average by 30.
  • Finally, it calculates the corresponding compensation (number of compensable days x daily wage x years worked).

Example of calculation of severance pay for unfair dismissal

  • Start of employment contract: 01/10/2019
  • End of employment relationship: 22/07/2022
  • Monthly salary without pro rata bonus payments: 2.086,8€.
  • Number of extra payments: 2

Calculation of the daily (gross) wage:

  • Annual salary: 2.086,8€ x 14 (12 months + 2 extra payments) = 29.215,2€.
  • Daily wage: 29.215,2€ / 365 = 80,04€.
  • Calculation of seniority: 2 years, 9 months, and 21 days*.

*For the calculation of seniority, it is always rounded up to the full month, i.e. 2 years and 10 months.

The employment contract dates from after February 2012, which means that he is entitled to 33 days' salary per year worked.

In total, he has worked 2 years and 10 months, (34 months): he is entitled to the proportional part: 33 days of salary x (34 months / 12 months) = 93.5 days of salary.

Compensation for unfair dismissal: 80,04 per day x 93,5 days = 7.483,74 €.

Lawyers for compensation for unfair dismissal in Málaga

On some occasions, we find that companies take advantage of their workers' lack of knowledge to process unfair dismissals.

That is why, from our Law firm specialising in labour law in Malaga we will advise you and analyse your situation and compensation; we will also negotiate with your company and defend your rights and interests in court, if necessary.

If you need more information about our services, contact us. 

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