The Council of Europe again calls on Spain to reform compensation for wrongful dismissal

The Council of Europe has once again urged Spain to revise its laws regarding unfair dismissals, citing violations of the European Social Charter. This request comes after the Committee of Ministers of the Council of Europe, which oversees the organization’s activities among its 46 member states, approved a recommendation calling on Spain to amend its legislation on compensation for wrongful termination. The recommendation follows a resolution issued last March by the European Committee of Social Rights (CESR), which had previously addressed similar concerns raised by trade unions CC.OO. and UGT. The CESR had already made a similar recommendation in response to a similar complaint from UGT in previous years, leading to the same outcome.

The Council of Europe emphasized that Spain's current system for calculating compensation for wrongful dismissal does not adequately reflect the actual harm suffered by employees or their specific circumstances. It recommended that Spain review and modify relevant legislation to ensure that compensation awarded in cases of illegal dismissal considers the real damage experienced by victims and their individual situations. Additionally, the Council encouraged Spain to continue efforts to ensure that compensation amounts—both for material and moral damages—for workers dismissed without valid cause, including those employed under fraudulent temporary contracts—are sufficiently deterrent for employers to prevent such unlawful terminations. The Council also urged Spain to take measures ensuring national courts can assess the possibility of reinstatement in consultation with the parties involved in the process.

The European Social Charter, upon which this petition is based, is an international treaty ratified by Spain in 2021. Article 24(b) of this document establishes the right of workers who have been fired without just cause to receive adequate compensation or other appropriate remedies. The CESR interprets that Spain’s current system, which calculates compensation based on a fixed number of days per year worked—with a maximum of 33 days per year worked, capped at 24 monthly payments, and 45 days for periods before 2012—does not always provide sufficient redress for workers who have been wrongfully terminated, especially when their employment relationship was brief. Therefore, the organization based in Strasbourg highlights that Spanish legislation violates this principle.

Before the CESR resolutions and the previous request from the Committee of Ministers, the ratification of the European Social Charter had already given some courts in Spain grounds to award additional compensations beyond the fixed-day calculation, taking into account each employee's specific situation. This was demonstrated in a landmark case in January 2023, where a court in Barcelona ruled that a worker who was fired in March 2020—just before the pandemic outbreak—which prevented her from qualifying for temporary employment regulation measures (ERTE)—was entitled to more than the standard 33 days of compensation, as she had only signed her contract five months prior to her dismissal.

Such decisions were occasionally replicated until the Supreme Court intervened decisively. In December 2024, the Supreme Court rejected the idea that additional compensations could be awarded under Spanish law, reaffirming this stance in July 2025, even after considering the ratification of the European Social Charter. This ruling, which three of the 13 judges dissented from, was criticized by trade unions for contradicting the CESR’s interpretation in favor of their positions. Moreover, they have filed a constitutional protection appeal against this decision.

This rejection by the Supreme Court serves as the main argument used by the Confederation of Business Organizations of Spain (CEOE) to oppose reforms that would increase compensation for wrongful dismissal. The CEOE argues that such changes could undermine business stability and deter investment. Meanwhile, trade unions and the Ministry of Labor advocate for reforms that go beyond the fixed-day compensation model, emphasizing the need to consider the unique circumstances of each employee. However, both the CEOE and the Ministry of Economy reject these proposals, maintaining that the current system is sufficient and should remain unchanged.