international employment law firm alliance L&E Global

Spain: The High Court of Justice of Catalonia awards a dismissed employee a complementary payment on top of the statutory severance payment

In the present case, the company dismissed the employee based on business grounds, specifically due to productive reasons. Just 5 days after the termination, the company resorted to a temporary labor force adjustment plan due to force majeure derived from the pandemic.

As a result of the dismissal, the employee filed a lawsuit claiming the unfairness of the dismissal with its respective legal severance payment. However, what is relevant in this specific case is that the employee requested an additional payment on top of the legally assessed severance. This request was based on the moral damages caused to the employee as a result of the dismissal, as well as on the loss of earnings.

In this sense, and until now, what our regulations and case law contemplated was the possibility of requesting and granting an additional severance payment in cases in which the dismissal decision had been adopted for discriminatory reasons or in violation of fundamental rights and other public liberties. However, it is true that recently we are seeing an increasing number of judgments admitting the possibility of granting employees a severance payment higher than the legally established, in cases in which the legal severance payment for unfair dismissal is very low and therefore does not have a dissuasive effect for the company, nor does it sufficiently compensate the employee for the loss of employment.

In the present case, the employee received a total of 1,000 euros in severance payment for unfair dismissal, and the Court considers that the amount is not sufficiently compensatory. However, the court does not consider that the employee has suffered any moral damages, since they are alleged in a generic and unsubstantiated manner, in addition to the fact that no fundamental right of the employee has been violated.

However, the Court does accept an additional severance payment for loss of earnings because, prior to the dismissal, the employee had a certain and real expectation of having been included in the imminent temporary labor force adjustment plan that was processed by the company due to the pandemic, which would have allowed the employee to avail herself of the extraordinary measures on unemployment protection that the Spanish Government provided for those difficult and extraordinary times.

The court finally fixed the additional payment at 3,493 euros, equivalent to the three months in which the employee should have received the unemployment benefit applicable in this case.

Key action point

This judgment sets an important precedent allowing dismissed employees to include a further claim for additional compensation in their dismissal lawsuits, without the need to prove the violation of a fundamental right. Therefore, it is important for companies to be aware of the reasoning used by the Court, especially when considering the total cost that a termination may entail for the company.