In the Minister of Labor and Social Economy's crusade to improve working conditions, reducing working hours is the focus of attention. But behind this lies another, less media-friendly and more delicate issue, which has yet to be addressed politically: compensation for unfair dismissals.
Mariano Rajoy's 2012 labor reform made dismissals cheaper and set them at 33 days per year worked (instead of 45) with a maximum of 24 months (instead of 42): a fixed and capped severance pay. It's a simple formula with known and predictable costs for companies and workers. But it's also a system that ignores the circumstances of the dismissed person, their vulnerability, or the sacrifices made to get the job.
This universal formula has been challenged by the European Committee of Social Rights in response to complaints filed by the UGT (Union of Workers' Unions) and the CCOO (Working Council of Workers). Both responses from this committee have been forceful: the Spanish system does not comply with Article 24 of the European Social Charter, ratified by Spain in 2021, which establishes that workers have the right not to be dismissed without valid reasons and that compensation must be "adequate." However, this committee's opinion is just that: an opinion.
First, the committee questions whether this capped mechanism is sufficient to discourage unjustified dismissals by companies. The cost is known, a cost-benefit analysis is conducted, and if it is worthwhile, the severance pay is paid, and no further explanation is necessary. Second, it also questions whether the universality of the severance pay amount constitutes "adequate compensation" for all those who have been dismissed without just cause.
Faced with this situation, some workers are taking legal action seeking more personalized compensation. The well-known case of a worker dismissed three days before the ERTOs were approved in 2021, who ended up receiving extraordinary compensation, is well-known. This occurred even before Spain's ratification of the European Social Charter. In another more recent case, that of a worker unfairly dismissed after 1 month and 4 days (compensation of €430), the company had to add €30,000 when the court considered that the person had resigned from a permanent contract to accept the new one.
Despite precedents, this summer the Supreme Court ruled that the judicial system cannot fill the gap between the "fixed formula" of Spanish law and the "appropriate compensation" established by the European Social Charter, and that changes must be made through legislation.
The circle is narrowing, but the minister has no support within the government itself, much less in Congress. At most, a modification of the formula will be achieved to increase the amount of compensation for short-term contracts, which are paltry compared to long-term ones and have no deterrent effect on companies.
