New developments in severance payments: legal keys and challenges of the new regulatory framework
The labor, compensation and benefits area of Pérez-Llorca held in Barcelona the session “Labor novelties 2025: severance payments”, with the participation of Manel Hernàndez and Paula Gaitán, partner and lawyer of this practice, and Sara Pose, Magistrate of the Superior Court of Justice of Catalonia.
Image (from left to right): Paula Gaitán, Manel Hernàndez and Sara Pose.
The Organic Law 1/2025 and its implications for the Workers’ Statute
The seminar was opened by Manel Hernàndez, who introduced the speakers and provided the audience with an introduction to each of the topics to be explained. Paula Gaitán went into the subject by analyzing the main novelties introduced by Organic Law 1/2025, of January 2. Among the highlights of this law, she explained the inclusion in the Workers’ Statute of the termination of the contract for non-payment or delay of wages, consolidating the existing case law on this matter. Gaitán pointed out the correction of errors in Organic Law 2/2024, restoring the protection against dismissal in cases of requests for adaptations to the working day and in the case of the enjoyment of special leave under Article 37.3.b of the Workers’ Statute.
Economic impact of the new Social Security obligations
In terms of Social Security, Gaitán highlighted the new additional contribution that came into force on January 1, 2025, by virtue of Article 19 bis of the General Social Security Law (LGSS), an obligation that will apply to remuneration that exceeds the maximum contribution base, with contribution rates that will be reduced by 2025. “This average means an increase in labor costs, which ends up affecting the sectors with higher salaries,” Gaitán pointed out.
Changes in dismissal and judicial conciliation procedures
Hernández addressed the main novelties in dismissal matters introduced by Organic Law 1/2025, which establishes measures to improve the efficiency of the public justice service. He highlighted the new possibility for the Lawyers of the Administration of Justice to summon the parties in advance for acts of judicial conciliation, as well as the obligation to submit documentary and expert evidence at least 10 days before the hearing according to article 82.5 of the Law Regulating the Social Jurisdiction. “This change implies anticipating the defense strategy to the other party, a circumstance that alters the current balance of the procedure,” Hernández clarified.
Regarding recent judicial pronouncements on dismissal matters, the Pérez-Llorca partner explained the impact of the ruling of Chamber IV of the Supreme Court of November 18, 2024, which incorporates as a formal requirement the prior hearing of the worker in cases of disciplinary dismissal. According to this ruling, based on Article 7 of Convention 158 of the International Labor Organization (ILO), the lack of a hearing makes the dismissal unjustified, regardless of the severity of the termination.
The international influence on severance pay in Spain
To conclude the session, Sara Pose analyzed the current state of additional severance payments, focusing on examining whether or not the compensatory system is in line with the various international treaties signed by Spain. In this regard, she acknowledged that the compensation systems in Europe, including Spain’s, have been influenced by the ratification of the European Social Charter: “Although the European Committee of Social Rights has declared that systems such as those of Italy, France and Finland do not comply with Article 24 of the Charter, this has not resulted in legislative changes”.
Recent court rulings and their effect on the compensation system
In this line, Pose emphasized that, although there is no legal precept that recognizes an additional compensation to the assessed one, some courts have admitted its possibility in situations of fraud or abuse of the termination of the contract, as was evidenced in the Judgment of the High Court of Justice of Catalonia of January 30, 2023. This ruling recognized additional compensation in cases where the damages exceeded those compensable under Article 56 of the Workers’ Statute. However, this ruling was partially annulled by the Supreme Court in its judgment of December 19, 2024, which concluded that Article 10 of ILO Convention 158 is not directly applicable in national legislation.
Furthermore, the judgment did not enter into an assessment of the suitability of the taxed system with Article 24 of the European Social Charter, being a dismissal prior to the ratification of the Charter. The Magistrate concluded that possibly the system of taxed severance pay in relation to Article 24 of the European Social Charter will depend on whether the decisions of the European Committee of Social Rights are considered binding. “There are resolutions of State institutions, such as the Council of State, which affirm the binding nature of the decisions of the European Committee of Social Rights,” Pose said.