Employment Law in Spain (Derecho Laboral): Dismissal, Severance, the ET and the Juzgado de lo Social

Spanish employment law starts from a position that surprises readers arriving from a US employment page. There is no at-will employment. An employer who wants to end an open-ended contract cannot simply give notice and stop; the dismissal needs a legal cause and a set form, and if it has neither the worker is owed money or the job back.

Almost all of it sits in one statute, the Estatuto de los Trabajadores (ET), and a dispute is decided by a specialist court, the Juzgado de lo Social. This page maps that structure: the kinds of dismissal, what each one pays, the short clock for challenging it, and where the safety net (FOGASA) fits.

Information last verified on 22 July 2026. This page provides general legal information about Spanish employment law and does not constitute legal advice in an individual case. Before acting, check the current text in the BOE (www.boe.es).

The Estatuto de los Trabajadores, and what it covers

The ET (currently the texto refundido approved by Real Decreto Legislativo 2/2015) is the backbone of individual employment law in Spain. It sets the rules on the contract, working time, leave, wages, and the part most readers arrive for: how a contract ends and what that costs. Collective bargaining fills in the detail through a convenio colectivo, which can improve on the ET but not fall below it.

A dispute goes to the orden social, the employment jurisdiction, whose entry court is the Juzgado de lo Social. Most claims pass first through an obligatory conciliation step (the papeleta de conciliación before the administrative service, often called the SMAC), which pauses the clock while it runs.

Three kinds of dismissal, three possible verdicts

Spanish law separates the REASON for a dismissal from the VERDICT a court gives it, and both matter for the money.

The main reasons are:

• Despido disciplinario (art. 54 ET): for a serious, culpable breach by the worker. If upheld, it carries no indemnización.
• Despido objetivo (art. 52 ET): for economic, technical, organisational or production causes, or for ineptitude or certain absences. It pays 20 días per year and needs 15 días of notice.
• Despido colectivo (art. 51 ET): the same objective causes applied to a group above statutory thresholds, through a período de consultas and involving the labour authority.

Whatever the reason, a court can reach one of three verdicts:

• Procedente (fair): the cause and form hold up. A disciplinary dismissal that is procedente pays nothing; an objective one that is procedente keeps its 20-días figure.
• Improcedente (unfair): the cause or the form fails. The employer then chooses between reinstating the worker or paying the 33-días indemnización (art. 56.1).
• Nulo (void): the dismissal breached a fundamental right or hit a specially protected worker (for example during maternity or paternity leave). The worker is reinstated with back pay.

What each dismissal pays

The headline figures, all from the ET and verified against it:

The pre-2012 rule is the one that trips people up and the one no government portal computes for you. For a contract signed before 12 February 2012, the time worked before that date is paid at 45 días per year and the time after at 33, the two are added, and the total is capped at 720 días unless the pre-2012 part alone already exceeds it. Our severance calculator runs that doble cálculo.

The finiquito is not the indemnización

The single most common confusion is treating the finiquito and the indemnización as the same thing. They are not. The finiquito is the settlement of what you are already owed when the contract ends: the salary for the days worked in your last month, holiday you accrued but did not take, and the proportional part of your pagas extraordinarias. It is owed on ANY termination, including a resignation.

The indemnización is separate compensation owed only on certain dismissals. A worker can be owed a finiquito and no indemnización, or both.

The 20-day clock, and the route to court

The deadline to challenge a dismissal is short and it is a plazo de caducidad, which matters. Art. 59.3 ET gives 20 días hábiles from the dismissal to act, counting working days only, and unlike a prescripción a caducidad is not interrupted by an ordinary out-of-court demand. Filing the papeleta de conciliación does suspend it. Miss the 20 días and the right to contest the dismissal is generally lost, however strong the case, which is why this is the first thing to check, not the last.

When the employer cannot pay: FOGASA

If the employer is insolvent or in concurso, the Fondo de Garantía Salarial (FOGASA, art. 33 ET) steps in as a backstop. It pays outstanding wages up to a maximum of 120 días, with the daily amount capped at twice the daily SMI, and it pays part of the indemnización, again subject to a ceiling. It is not a substitute for the full claim, but for many workers it is the only sum they actually recover.

The pages in this section

Each page below takes one of these topics down to the worked detail, with the figures anchored to the ET:

• Unfair dismissal (despido improcedente) and how the 33-días figure is built.
• Severance pay (indemnización por despido), with the calculator and the pre-2012 doble cálculo.
• Objective dismissal (despido objetivo): the 20-días route and its causes.
• The finiquito (final pay settlement): what it must contain and why it is not the indemnización.
• Finiquito calculator (calcular finiquito): the arithmetic line by line, with a worked example.
• Collective redundancy (ERE): the thresholds and the período de consultas.
• FOGASA (the wage guarantee fund): what it pays when the employer cannot.
• Excedencia (unpaid leave): keeping or losing your job while you step away.
• The minimum wage (SMI): the current figures and everything the SMI anchors.
• Sick leave (baja laboral): who pays what from day one, and your job protection.

This page is general legal information about Spanish employment law and does not constitute legal advice in an individual case. Figures change; the controlling text is always the current version of the Estatuto de los Trabajadores in the BOE.