The cost of layoffs in Spain: possible reform proposals

01 October 2024

The European Committee of Social Rights has notified Spain that it considers that the legal limit on compensation for unfair dismissal in Spanish legislation does not comply with the provisions of the European Social Charter, opening up a path of uncertainty with several possible bifurcations. From a minimum change to a profound labour reform:

1.- changing the regulations to 'shield' the power of judges to set compensations of more than 33 days without having to eliminate this limit. However, this path has the disadvantage of triggering the judicialisation of dismissals and inequality between workers. This could be avoided by establishing by law a scale of compensations, similar to the scale that exists in the case of traffic accidents, binding on judges. A disadvantage not only for companies but for workers, who would be forced to exhaust the entire legal process to prove that the dismissal not only has no justified cause, but that there is a clear harm to the worker that the assessed compensation does not compensate.

2.- Establish a minimum limit on compensation so that it is not so cheap to dismiss these workers with less seniority. It is a model similar to that proposed by Italy (with a threshold of six months' compensation) or Portugal (three months).

3.- Return to the 45 days in 42 monthly payments that were paid before the labour reform.

4.- A la carte dismissal that allows judges to establish additional compensation according to the personal circumstances of each worker.

4.- A comprehensive reform of dismissal that includes variable compensation and increases the pressure on companies that do not justify the dismissal. For example, reinforcing the assumptions of nullity to impose the reinstatement of the worker in cases that until now were declared unfair. And in passing, even toughening those that allow objective dismissals for economic or productive reasons.

PDF: 24101_Articulo_D_Toscani

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