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Practical manual for Income Tax 2020.

C) Exempt compensation derived from dismissals classified as unfair

Regulations: Art. 56 and the eleventh transitional provision of the Workers' Statute.

Compensation not exceeding the following amounts is exempt:

a. In dismissals declared prior to February 12, 2012: 45 days of salary , per year of service, prorating periods of time less than a year by months, up to a maximum of monthly payments.

b. In dismissals declared from 12 February 2012 it is necessary to distinguish:

  • For contracts signed after February 12, 2012: 33 days of salary per year of service, with periods of less than a year being prorated by months, up to a maximum of 24 monthly payments .
  • For contracts executed before February 12, 2012 : The sum of the following amounts:

    1. Compensation for the period prior to February 12: 45 days of salary per year of service for the time provided prior to said date, with periods of time less than a year being prorated by months.
    2. Compensation for the period after February 12: 33 days of salary per year of service for the time provided subsequent services, with periods of time less than a year also being prorated by months.

    The resulting compensation amount may not exceed 720 days' salary , unless the calculation of the compensation for the period prior to February 12, 2012 results in a higher number of days, in which case this will be applied as the maximum compensation amount, without said amount being able to exceed 42 monthly payments, in no case .

The contracts for the promotion of permanent employment entered into prior to February 12, 2012 will continue to be governed by the regulations under which they were entered into.

The contract for the promotion of permanent employment was regulated in the currently repealed First Additional Provision of Law 12/2001, of July 9, Urgent Measures for the Reform of the Labor Market

However, in the event of disciplinary dismissal, compensation for unfair dismissal will be calculated as indicated above.

In Chapter 3, see practical case for an example of the treatment of compensation resulting from dismissal qualified as unfair.