The year 2025 will be a period of extremely significant changes to labour regulations.
The most widely publicized developments, which were already on the political agenda during 2024 and have begun their legislative journey through the Draft Bill approved by the Council of Ministers on February 4, 2025, are as follows:
- Reduction of the weekly working hours from 40 hours to 37.5 hours.
- Obligation to implement a digital system for daily working time registration, accessible remotely and in real-time by employees, their union representatives, and the Labour Inspectorate.
While the legislative process progresses towards the final approval of the two aforementioned measures, this note addresses two jurisprudential developments of extraordinary relevance in the area of dismissal. Although they have not generated the same media impact, they are already binding for all companies. Due to their characteristics, these developments are decisive when properly making a dismissal decision, assessing its potential economic consequences, and correctly executing the termination.
These two developments are as follows:
- Obligation to conduct an internal disciplinary proceeding before notifying dismissal
Article 7 of ILO Convention No. 158, adopted on June 22, 1982, and ratified by Spain in 1985, establishes the following:
“The employment of a worker shall not be terminated for reasons related to their conduct or performance before they have been given an opportunity to defend themselves against the allegations made, unless it cannot be reasonably expected of the employer to provide such an opportunity.”
Despite the existence of this international regulation for decades, Spanish law has always allowed companies to proceed with the immediate execution of disciplinary dismissal without any prior internal procedure requiring the employee to defend themselves against their alleged disciplinary breaches before being dismissed. This is without prejudice to the fact that, as is evident, the employee could subsequently file the corresponding legal claim to seek a judicial declaration that their dismissal was unfair, with the legal consequences derived from such a judicial ruling.
However, the recent Supreme Court Judgment No. 1250/2024, issued on November 18, 2024, has established the obligation to conduct an internal disciplinary proceeding before notifying any dismissal.
Consequently, companies must now always adhere to the following steps before terminating an employee:
- Notify the employee of the “Statement of Charges,” describing the facts allegedly constituting disciplinary infractions, without predetermining in advance that such facts will be sanctioned with dismissal, and ultimately offering the employee the opportunity to present their “Statement of Defence” with the necessary arguments and evidence to attempt to refute the employer’s accusations.
- Allow a reasonable period for the employee to submit their “Statement of Defence.” In this regard, a period of 2 or 3 working days is considered reasonable.
- Notify the employee of the dismissal letter, reaffirming the facts justifying the contractual termination, detailing the reasons why they have not been refuted by the employee in their “Statement of Defence,” and, therefore, demonstrating that they are sufficiently serious to justify the termination of the employment contract.
Naturally, this prior intenal disciplinary proceeding constitutes an extraordinary additional difficulty for companies when executing dismissals.
Furthermore, the lack of regulation on the specific formalities required for the proper implementation of this internal disciplinary proceeding creates enormous legal uncertainty, given that, as of today, it is unknown what consequences may arise from the employer’s failure to comply with this procedure. Would it result in an unfair or null dismissal? Would it lead to an unfair dismissal with an obligation to pay back wages accrued during the judicial procedure? Or perhaps an unfair dismissal with additional compensation?
In the coming months, an immense number of judicial rulings will undoubtedly emerge, likely differing from one another, which will either culminate in unified jurisprudence by the Supreme Court or lead to the adoption of a new regulation incorporated into the Workers’ Statute, determining the exact procedure to be followed for the execution of this prior internal disciplinary proceeding as well as the implications associated with non-compliance.
- Limitation on the statutory compensation for unfair dismissal
Spanish law has always regulated a fixed statutory compensation for unfair dismissal, which, until the Labor Reform of February 2012, amounted to 45 days’ salary per year of service. Following that reform, it was reduced to 33 days’ salary per year of service, as stipulated in Article 56 of the Workers’ Statute.
However, in certain exceptional cases, labour judges had applied higher compensation amounts than those legally established in Article 56 of the Workers’ Statute, relying on Article 10 of ILO Convention No. 158, adopted on June 22, 1982. This provision establishes the “authority to order the payment of adequate compensation or another form of appropriate relief.”
This judicial discretion created significant legal uncertainty, as it allowed judges to arbitrarily increase the legally prescribed compensation (whether 45 or 33 days’ salary per year of service) based on vague legal concepts such as “adequate compensation” or “appropriate relief.”
The recent Supreme Court Judgment of December 20, 2024, ruled that the compensation applicable to unfair dismissal must be the fixed amount legally stipulated in Article 56 of the Workers’ Statute (currently 33 days’ salary per year of service), thereby prohibiting judges from applying higher compensation amounts.
As can be observed, the year 2025 promises to be particularly tumultuous in labour matters, requiring us to remain highly vigilant regarding any new developments that may arise. We will continue to provide timely updates on all modifications that are approved in the coming months.
