Unfair dismissal in Spain: what you are owed in 2026
When a Spanish court finds a dismissal unfair, or the employer accepts it at conciliation, the employer must pay 33 days of salary for each year of service, prorated by month, up to 24 months’ pay, unless it chooses to reinstate you. If you joined before 12 February 2012, the years before that date are paid at 45 days and the total is capped at 720 days of salary, or at the pre-2012 days if those alone are higher, never above 42 months’ pay. The daily salary is gross annual pay, extra payments included, divided by 365. An engineer on €44,000 a year who started in May 2017 and is dismissed on 3 October 2026 is owed €37,792: 313.5 days at €120.55. Put in your own start year and salary below to see both periods and the cap that applies.
Unfair dismissal compensation
Gross compensation
€55,192
| Days at 45 a year (to 11/02/2012) | 187.5 |
| Days at 33 a year | 484 |
| Days paid after the cap | 671.5 |
Service up to 3 October 2026.
Why 12 February 2012 matters so much
Spain’s 2012 labour reform cut unfair dismissal compensation, but transitional provision 11 of the Workers’ Statute protected what had already been earned. If your employment began before the reform, your service is split. A project manager who joined on 14 January 2008 on €39,000 has 49 months before the cut-off, worth 183.75 days, and 176 months after it, worth 484 days. The sum, 667.75 days, exceeds the 720-day cap, so 668 days are paid: €71,349.
For very long careers the rule flips. Someone hired in September 1995 on €50,000 had already earned 742.5 days by February 2012, more than 720. Those days become the cap, so the later years add nothing, and the compensation is €101,712. Many long-serving employees are offered a flat rate for all their years; checking the split is the first thing to do.
Getting the daily salary right
Spanish salaries are usually quoted per year and paid in fourteen instalments: twelve monthly payslips plus a summer and a Christmas payment. The compensation uses the whole annual figure, including both extra payments, regular bonuses, commissions and fixed allowances, divided by 365. Expenses, per diems and mileage are not salary. If your pay varied a lot, courts generally take the average of the last twelve months. A frequent mistake in dismissal letters is to take one monthly payslip and divide it by 30, which leaves out the extra payments and undervalues every day of compensation by about 13%.
Conciliation: the step that makes it tax-free
Before going to court, Spanish law requires an attempt at conciliation before the regional mediation service (often called SMAC). It is not a formality. Since July 2012, unfair dismissal compensation is exempt from income tax only when the unfairness is recognised at that hearing or in a judgment. If the employer admits it in the letter and simply pays, the Tax Agency treats the money as agreed compensation: in the first example, €37,792 would be taxable, reduced to €26,454 by the 30% allowance for income earned over more than two years. The severance tax guide explains the rules for collective and economic dismissals.
Unfair dismissal is not the same as void
A dismissal that breaches fundamental rights, or that targets a pregnant employee, someone on or just back from birth leave, or someone who has asked for family-related working-time changes, is void (nulo) unless the employer proves an unrelated reason. Void means compulsory reinstatement with back pay, not compensation. A disciplinary dismissal whose facts are not proven, or an objective dismissal without sufficient grounds, is unfair, and the employer pays the figures above.
Whatever the outcome, the final settlement (finiquito) is always due: salary for the month, untaken holidays and the accrued extra payment. The dismissal compensation calculator adds them up from your exact dates and shows which cap applied.
What to do in the first twenty working days
Read the dismissal letter (carta de despido) carefully: it must state the facts or grounds and the effective date. Ask for your last payslips and your contribution record (vida laboral), which shows the start date Social Security has for you; a seniority date earlier than your current contract, after a transfer of business or chained contracts, raises the compensation. Then file the conciliation request (papeleta de conciliación) with the regional mediation service before the twenty working days run out. Many cases settle there, often somewhere between the objective and the unfair figure, and a settlement recorded at that hearing keeps the tax exemption.
If you do not settle, the case goes to the labour court (juzgado de lo social). You can represent yourself, but most employees use a labour lawyer or a trade union. While the case runs you can claim unemployment benefit: a dismissal is a legal unemployment situation whatever its outcome, and the benefit does not reduce the compensation.
Frequently asked questions
Who decides that a dismissal is unfair in Spain?
A labour court, after the compulsory conciliation attempt, or the employer itself when it accepts at conciliation that the dismissal was unfair. A dismissal is unfair (improcedente) when the employer cannot prove the reason it gave or does not follow the formal steps, such as a written letter stating the facts and the date.
My employer offers 33 days a year for all my service. Is that right?
Not if you joined before 12 February 2012. Service up to 11 February 2012 is paid at 45 days a year. Accepting 33 days for the whole period can leave you below the statutory minimum, and the difference is not tax-free if it was never agreed at conciliation.
What happens if the employer chooses to take me back?
After a ruling of unfair dismissal the employer has five days to choose between reinstating you and paying compensation. If it reinstates you, it must also pay back pay (salarios de tramitación) from the dismissal date. If you are a workers’ representative, the choice is yours.
Is the compensation paid gross or net?
It is calculated on gross salary and paid without social security deductions. Up to €180,000 it is also free of income tax if the unfairness is recorded at conciliation or in court. Your final payslip, with holiday and extra-payment balances, is taxed normally.
What is the deadline to challenge a dismissal?
Twenty working days from the day after the dismissal, excluding Saturdays, Sundays and public holidays. The clock pauses while the conciliation request is processed. Missing the deadline makes the dismissal final, whatever its merits, so act before signing anything that waives your claims.
Related calculators and guides
Official sources
- Workers’ Statute (Estatuto de los Trabajadores), arts. 38, 49, 51, 53, 56 and transitional provision 11
- Personal Income Tax Act 35/2006, art. 7.e (exemption) and art. 18.2 (30% reduction)
- Spanish Tax Agency, 2025 income tax manual: severance payments
Figures checked against the consolidated texts of the Boletín Oficial del Estado on 3 October 2026. An indicative estimate that does not replace a decision of the administration or professional advice.