Council of Europe Urges Spain to Reform Severance Pay for Unfair Dismissals
The Council of Europe has called upon Spain to establish a more robust severance pay system for cases of unfair dismissal, emphasizing that current practices fail to adequately protect workers and deter companies. In a recommendation published this Wednesday, the Committee of Ministers, which oversees the governance of member countries, advocates for legislative changes in line with its Annual Political Plan for 2024.
The core intention is to ensure that compensation awarded in cases of unlawful dismissal reflects the actual damage suffered by victims, while also considering individual circumstances. This recommendation aims to offer better protection for workers against unfair dismissals.
This call for reform follows a significant ruling from the European Committee of Social Rights (ECSR) issued on July 29, which deemed Spain's existing severance pay structure—characterized by a predetermined cap—as irregular and nearly insurmountable. The ECSR ruling supported a complaint filed by the General Union of Workers (UGT) in March 2022, asserting that Spain's current system violates Article 24 of the European Social Charter. This article guarantees workers the right to compensation that is proportional to the damage suffered and sufficiently deters companies from engaging in unfair dismissal practices.
The ECSR's decision has effectively set a precedent in Spain, granting courts the authority to use this ruling as a basis when adjudicating unfair dismissal cases. Consequently, courts can potentially exceed the compensation limits stipulated in the Workers' Statute, which currently allows for compensation calculated at 33 days per year of service, capped at a maximum of 24 months' salary. Furthermore, an additional 15 days per year of service may be considered for cumulative damages, particularly in cases where workers are not reinstated or experience irregular reinstatement.
As workers continue to contend with the ramifications of unfair dismissals, the Council of Europe’s latest recommendations signify an important step towards creating a more equitable labor environment in Spain. This move could pave the way for significant reforms that prioritize worker protection and ensure compensation is duly reflective of the damages incurred.
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