Severance pay in Spain: how much you are entitled to by type of dismissal
Severance pay (indemnización) is compensation the employer pays in some cases when employment ends. The amount depends on the type of termination, your seniority and your salary.
Days of severance per year worked
| Type of termination | Severance | Maximum |
|---|---|---|
| Unfair dismissal (improcedente) | 33 days per year | 24 monthly payments |
| Objective dismissal | 20 days per year | 12 monthly payments |
| End of temporary contract | 12 days per year | No limit |
If you started working for the company before 12 February 2012, the time worked up to that date is compensated at 45 days per year in the case of unfair dismissal.
Example
Marta earns €30,000 a year and has worked for the company for 6 years and 6 months. She is unfairly dismissed.
- Daily salary: €30,000 / 365 = €82.19.
- Days of severance: 33 × 6.5 = 214.5.
- Severance pay: 214.5 × €82.19 = approximately €17,630.
Is severance pay taxed?
Mandatory severance pay is exempt from IRPF up to the amount set by law, with a maximum of €180,000. Anything above the legal severance is taxed. It is not subject to Social Security contributions either.
Remember that, in addition to severance pay, you are entitled to your final settlement.