Compensation for unfair dismissal in Spain following the ECSR Decision
Compensation for unfair dismissal: UGT complaint to the European Committee of Social Rights (ECSR)
The trade union UGT lodged a complaint with the European Committee of Social Rights (ECSR) to assess whether the compensation for unfair dismissal under Spanish law is in line with the Revised European Social Charter (ESC), ratified by Spain in 2021.
The decision of the European Committee of Social Rights
Article 24 of the ESC establishes that unjustified dismissal must be accompanied by ‘adequate’ compensation. In its ruling, the ECSR concludes that compensation for unfair dismissal in Spain does not comply with the Charter, firstly because it is low in the case of short-term contracts (remember that its amount depends on two factors: seniority and salary) and secondly because it does not act as a deterrent.
In particular, the ECSR criticises the current maximum limit of 24 monthly payments for unfair dismissals, which it says is not high enough, and the fact that in many cases it does not grant a higher compensation depending on the worker’s personal and individual situation.
Interpretation of the Supreme Court and rulings of the High Courts of Justice in relation to compensation for unjustified dismissal
Supreme Court ruling
Although the ECSR’s decision is not binding, it is expected that the Supreme Court will soon rule on an appeal related to this issue, and its interpretation may be crucial for the future rulings of our Courts and Tribunals.
Compensation in addition to that provided for by law
There are already Courts in Spain (although few) that have agreed to grant additional compensation to that legally established in cases in which the damages to the person unfairly dismissed have been sufficiently accredited, having considered that the fixed compensation did not sufficiently repair the damage. In this sense, we find, for example, the judgments of the High Court of Justice of the Basque Country 1040/2024, of 23 April (Appeal 502/2024) and of the High Court of Justice of Catalonia 2857/2024, of 22 May (Appeal 177/2024).
Possible amendment of the regulation
The debate is reopened on a possible modification of the regulation of compensation for unfair dismissal in our legislation, which, following the resumption of the social dialogue, is expected to be modified in the medium term.
Hopefully, the possible amendments to our legislation, in whatever sense they may be, will provide legal certainty for both companies and workers. Undoubtedly, advice on the matter is essential in order to know the ‘rules of the game’ at all times and to reduce risks as far as possible.
Advising companies on unfair dismissal cases
Companies must be properly advised, not only because of possible regulatory changes that may occur, but also to analyse each specific case of dismissal that may have the appearance of being declared unfair, since factors that previously went unnoticed must now be taken into account and whose direct implication may be very considerable in the cost of the dismissal in question.
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