Employment Regulations Ease Cost Burden On Employers

The Spanish government has recently introduced drastic changes to employment regulations which also affect compensation and benefits by broadly reducing the cost burden on employers. In particular:

• Severance pay on termination: the maximum severance pay has been reduced from 45 days' salary per year of service (subject to a maximum amount equivalent to 42 months' pay) to 33 days' salary (subject to a maximum amount equivalent to 24 months' pay). However, the biggest change introduced by the reform is to bring most terminations into the category of so-called "objective dismissals", where the maximum severance amount payable is 20 days' salary per year of service (subject to a maximum amount equivalent to 12 months' pay).