Employment in Spain is highly regulated with employee’s enjoying enhanced legal protection. This can make terminating contracts in Spain notoriously difficult. As a guide, you can budget for the termination of an employee in Spain as a severance fee, which would be due in the event of wrongful termination. This equates to 33 days of salary per employment year (one month of salary for every year worked with the company) which is in addition to any contractual notice period.
The calculation base for the fee is based on the total gross income over the last 12 months, meaning it includes any additional income such as bonus and commissions. If a company wishes to terminate, they should also expect to pay at least one additional month in lieu of notice, over and above the severance fee.
It’s worth noting that if an employee believes they have been terminated unfairly, they may lodge a case against their termination in a Spanish labour court. This process is convoluted and costly. However, if the company engages an Employer of Record, the responsibility for assessing the legal basis and issuing appropriate legal documentation for a potential termination rests with the EOR. It’s imperative that the workside employer (client) consults the EOR prior to any individual discussions taking place around possible termination of contracts.
Mileage can be reimbursed at 0,19 cents per km tax-free — anything more than this would be taxable. If mileage is claimed, it’s important that adequate records are maintained as the employer would have to provide satisfactory evidence of proof of business mileage if the employee became subject to an inspection in the future.