Compensation for dismissal of a temporary employee
Patrick Gordinne Perez2024-12-26T23:23:02+00:00Compensation for the dismissal of a permanent worker:in cases of unfair dismissal of a permanent worker, the particularities of compensation and processing wages are different from those of permanent contracts.
See in this article the difference between severance pay for the dismissal of a permanent employee and processing wages.
Compensation for unfair dismissal
Permanent-discontinuous worker
Periods of activity of a permanent-discontinuous worker
Compensation for unfair dismissal is an economic compensation that the worker is entitled to receive when the dismissal is declared unfair.
In the case of permanent-discontinuous workers, as opposed to employees with an ordinary permanent contract, it is calculated according to the periods of activity in the company.
Since this is a severance payment for the dismissal of a permanent employee, it is calculated on the basis of the loss of the contract linked to the actual provision of services.
Seniority of permanent-discontinuous employees
Permanent-discontinuous workers are entitled to have their seniority calculated taking into account the entire duration of the employment relationship, and not only the time of services actually rendered.
However, there are some exceptions to this rule: one of them is precisely the calculation of severance pay.
Calculation of Severance Pay for a Permanent Discontinuous Employee
Dates and salary
In order to calculate the severance pay of a permanent-discontinuous worker, you must take into account the start and end dates of each period of service, as well as the gross salary (if it is monthly, with prorated special payments).
Please note that the gross salary is calculated by taking into account the gross fixed salary of the last month and the average variable salary of the last year.
Calculation of days per year worked for a fixed-term contract
The calculation of days per year worked is done in the same way as for ordinary permanent contracts:
For contracts entered into after 12 February 2012, 33 days’ salary per year worked, with a maximum of 24 monthly payments.
For contracts entered into before 12 February 2012, 45 days’ salary per year worked, with a maximum of 42 monthly payments.
Example of a contract for severance pay for a permanent employee
One of your employees is paid 3,000 euros gross per month (98.63 euros per day), with the extra payments prorated, and has provided services during the periods of activity according to the following date ranges:
Period 1 01/06/2018 – 30/09/2018
Period 2 01/06/2019 – 30/09/2019
Period 3 01/06/202020 – 30/09/2020
Period 4 01/06/2021 – 30/09/2021
Period 5. 01/06/2022 – 30/09/2022
Period 6. 01/06/2023 – 30/09/2023
Period 7 01/06/2024 – 30/09/2024
Total 854 days (2.34 years)
Compensation
The compensation for unfair dismissal in Spain for this employee amounts to EUR 7 616.21 (33 × 2.34 × 98.63).
However, if the dismissal were due to objective individual or collective dismissal, the compensation would be 4,615.88 euros, as 20 days per year worked would be counted (20 × 2.34 × 98.63).
Example 2: Severance pay for dismissal of a permanent contract.
On the other hand, in the case of a worker with the same salary as the previous worker and with a permanent contract whose employment relationship began on 1 June 2018 and ended on 30 September 2024 (i.e. 6.33 years of seniority), the compensation for unfair dismissal amounts to 20,602.82 euros (33 × 6.33 × 98.63).
If the compensation were for fair objective individual or collective dismissal, the compensation would be EUR 12 486.56 (20 × 6.33 × 98.63).
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Readmission
On the other hand, processing wages are those amounts that the company is obliged to pay to the worker from the date on which the dismissal takes place until the date of notification of the judgement declaring the dismissal to be unfair or null and void or, where applicable, until the worker is reinstated (if the company chooses to do so).
Right of option
As a general rule, the employer has the right to choose between reinstatement of the employee and payment of processing wages or payment of compensation.
Therefore, the processing wages correspond to the wages that the employee would have received if the dismissal had not taken place.
As an exception, the representatives of unfairly dismissed workers are entitled to receive processing wages, regardless of their choice.
In addition, they can decide themselves between reinstatement and severance pay for the dismissal of a permanent employee.
Here is an example…
Calculation of the wages for the processing of the dismissal of a permanent-discontinuous worker
Permanent-discontinuous contracts
In these cases, processing wages are only payable during the periods in which the worker has actually been providing the services, i.e. the periods of activity.
For this reason, the work cycle of the contract is taken into account, as there is no entitlement to processing wages during periods of inactivity.
Calculation
Thus, the calculation of processing wages in permanent-discontinuous contracts is carried out starting from the date on which the call-up should have taken place until the date on which the cyclical activity motivating the contract would have ended.
Even if the contract is indefinite in nature, the calculation is made by counting the period during which the temporary activity subsists, regardless of the date on which the judgement is notified.
Therefore, if the season for which the contract was made ends earlier, the wages are only due up to that date.
Discount
If prior to the notification of the judgement the employee has found another job and the employer proves it, the salary received in the new company will be deducted from the amount of the processing wages(if it is lower).
If the amount is higher, there will be no processing wages during that period of time.
The deduction is not for the total amount received in that other alternative employment, but only during the concurrent periods of productive activity and processing wages and in proportion to the respective pay within those periods.
Periods during which the worker is receiving social benefits, such as unemployment or temporary incapacity benefit, must also be deducted from the processing wages.
Differences in dismissal between permanent and indefinite-term contracts
In summary, it is appropriate to order payment of wages for processing from the date of dismissal (or failure to call, which is considered tacit dismissal) until the date of the judgment declaring the termination of the employment relationship.
This is provided that the period of activity does not end earlier, because if this is the case, the salaries only extend up to that moment, without reaching the periods of inactivity (otherwise it would generate an unjust enrichment).
In the case of an open-ended contract, it would be appropriate to order payment of wages for the entire period from the date of dismissal to the date of the judgement or reinstatement.
For the purposes of calculating the severance pay for the dismissal of a permanent-discontinuous employee and the processing wages of permanent-discontinuous employees, the periods actually workedare counted as the time of service.
PERMANENT-DISCONTINUOUS CONTRACT
When can you use a fixed-term contract?
Remember that permanent-discontinuous contracts:
These are open-ended employment contracts designed for those productive activities that are carried out on a regular basis and that, for reasons of activity, have more or less prolonged interruptions.
They can be used for workers who carry out seasonal activities, for example, in sectors such as hospitality or leisure during holiday seasons or similar situations.
They must be in writing and specify the duration of the period of activity, as well as the working day and its timetable.
During the period of interruption, the worker remains linked to the company; therefore, the contract is not terminated, but the duty to work and pay is suspended.
If the duty to call is not complied with, the worker may claim the existence of a dismissal without cause – unjustified – and the corresponding compensation for the dismissal of a Permanent Discontinuous employee mentioned above.