Severance pay was left out of the labor reform negotiations, to prevent an additional hurdle from derailing the whole package, but now unions feel it’s time to get back on board.
At the outset, they deny that it is true that in Spain it is expensive to fire. “It is not true that Spain is the country with the most expensive dismissals”, said yesterday the deputy general secretary of trade union policy of the UGT, Fernando Luján, and added that “we are close to half a million annual dismissals, of which a large part are inappropriate”. For the general secretary, Pepe Álvarez, “we need to stop using big phrases that lead nowhere, that try to cover up reality with a big phrase”.
A reality that, for the UGT, is insufficient compensation that has no deterrent effect. To support their position, they presented a study on the cost of dismissal in Spain, in which it was pointed out that in 2021 there were around 450,000 dismissals with an average compensation of 11,416 euros. This figure varies depending on the type of dismissal. The individual disciplinary, that is to say, the non-proceeding, which is what focuses the attention of the UGT, was an average of 9,512 euros.
But where there are important differences is in compensation by type of contract. So, it goes from only 1,477 euros on average for full-time temporary contracts, which remain at 618 euros if it is part-time; to 4,617 euros for indefinite part-time contracts, and it jumps to 18,112 euros if the indefinite is full-time. In addition, the UGT adds that according to the OECD employment protection index, Spain ranks 2, below the OECD and European averages and countries such as Germany ( 2.6).
From here, the claims come. Basically, return to severance pay of 45 days per year worked, which was reduced with the labor reform of the PP and which is currently 33 days with a limit of 24 monthly payments. A new element is unfair dismissal compensation that includes a minimum of six months’ compensation, plus possible additional compensation, depending on the harm caused to the worker. A claim with a “dual purpose: to compensate and deter”. As complementary demands, the option to choose between compensation and reinstatement, and also to recover processing wages, stand out.
The report also details indemnities by sector, in which it is highlighted that hospitality and construction are where more redundancies coincide with lower average indemnities. Specifically, 3,834 euros in hospitality and 4,218 in construction. In terms of the number of redundancies, trade stands out, with 87,000, but here the compensation rises to 13,000 euros.
At the other extreme are energy and banking, with far fewer redundancies and higher compensation, approaching 46,000 euros in energy, and 40,000 in banking. Here the union points out that a few very high compensations to managers in these sectors distort the average upwards.
This report comes while the UGT awaits the resolution of the European Committee of Social Rights of the Council of Europe (CEDS) on its claim regarding the dismissal system. The union alleges in this complaint that the successive labor reforms have turned unjustified dismissal into free and underpaid. “The reduced compensation for an arbitrary termination does not cover the damage actually caused”, argues the union before the CEDS, which they repeated yesterday when they presented this report. The resolution of the CEDS is expected for the first months of next year.
