Calculation of compensation for unfair dismissal

In this article we are going to study how the calculation of compensation for unfair dismissal and the different assumptions after the entry into force of the labor reform of July 8, 2012.

Calculation of compensation for unfair dismissal

It is established in the Workers' Statute that if the dismissal is declared unfair, the employer has 5 days from the time he is notified of the ruling to decide whether to reinstate the worker or pay the corresponding compensation, although in the event that the dismissal is A legal representative of the workers or a union representative will be the one who decides whether they prefer reinstatement or compensation.
On July 8, 2012, the labor reform came into force that affected the calculation of compensation in the event that a dismissal is declared unfair. Therefore, we must differentiate three cases: the first of them is that of unfair dismissals prior to the entry into force of the labor reform, the second would be that of employees dismissed after the entry into force of the labor reform and who have always provided services in the company after the entry into force of the labor reform and, finally, the most complicated case is that of dismissals declared unfair after the entry into force of the labor reform but of workers who began to provide services in the company before July 8, 2012.
1. Unfair dismissal prior to the entry into force of the labor reform: Here the corresponding compensation would be 45 days of salary per year worked with a maximum amount of 42 monthly payments.
2. Unfair dismissal after the entry into force of the labor reform of workers who provide services as of July 8, 2012: In this case, a compensation of 33 days of salary per year worked would correspond to a maximum of 24 monthly payments.
3. Unfair dismissal after the entry into force of the labor reform of workers who provide services before July 8, 2012: It is the most complicated assumption and the one we are going to study in more detail.
This assumption is resolved by the Transitional provision 5 of Royal Decree-Law 3/2012, of February 10, on urgent measures for the reform of the labor market, which establishes that for the time worked prior to the entry into force of the labor reform, compensation of 45 days of salary per year worked will be calculated and compensation will be calculated for the time elapsed after the entry into force of the labor reform. 33 days of salary per year worked. But the amount of compensation may not exceed 24 monthly payments.
There is an exception to the limit of 24 monthly payments in the event that the compensation for the period prior to the entry into force of the labor reform is greater than that corresponding to the amount of 24 monthly payments. Here the amount corresponding to the compensation would be used without taking into account the limit of 24 monthly payments, but it cannot exceed the amount of 42 monthly payments. An example may be illustrative:
If a worker earns €1,000 per month, the amount of 24 monthly payments is €24,000 and the amount of 42 monthly payments is €42,000. If the worker has performed services in the company for 30 years before the entry into force of the labor reform, he or she is entitled to the following compensation:
1,000/30 = €33.33 per day worked 42 days per year: 33.33 · 42 = €1,400 €1,400 · 30 years = €42,000
As can be seen, the worker would be entitled to a total compensation of €42,000, as this is exactly the limit established by the Law. If the worker had provided services for 32 years, the amount would be higher but no greater compensation than €42,000 would be appropriate because the limit of 42 monthly payments.

I hope this information has been of interest to you and do not hesitate to leave a comment on any matter. You can also request information by contacting us.