Understand the tool for calculating compensation from the judiciary.

April 13, 2020 Admin-MBDPLawFirm 0 Comments

No one is free from, at any given moment, being the victim of a dismissal by the company for which they are hired. In such situations, it is convenient to know what is the amount of compensation to which we are entitled to be able to act accordingly. And it is that there are many cases in which, to obtain the corresponding amount, it is necessary to resort to the judicial route.

In this sense, the General Council of the Judiciary (CGPJ, from now on) has enabled, within its website, a simple tool that offers the possibility of knowing the amount of compensation to which you are entitled as a result of the dismissal. Here we want to talk in depth about it and this matter in general.

Aspects that influence the calculation of severance pay

The amount of compensation depends, fundamentally, on three factors:

  • The seniority of the worker in the company: this is the number of months during which the employee has been hired in the company that has fired him.
  • The salary received: it is calculated from the total gross annual amount received by the worker.
  • The type of dismissal: the only dismissals that entail the payment of compensation are the objectives and the unfair ones. Those coming, for obvious reasons, are not subject to them, although they do pay a settlement.

The amount of compensation depending on the type of dismissal

Earlier we commented that, depending on the time worked and the type of dismissal suffered by the worker, the amount of the compensation varies. Here we will see how:

  • Dismissal for objective reasons: this type of dismissal involves the payment of compensation equivalent to 20 days of salary for each year of work performed in the company. The maximum limit is set at 12 monthly payments, that is, one year of salary. In other words, the compensation may never exceed the equivalent of the monthly net salary multiplied by 12.
  • Unfair dismissal: to carry out this type of dismissal on a contract signed after February 12, 2012, the company must pay the worker compensation equivalent to 33 days per year worked with a maximum limit of 24 monthly payments or, what It is the same, two years of salary.

The calculation of mixed compensation

But, what happens if the contract that is improperly terminated was signed before February 12, 2012, that is, after the last Labor Reform came into force? Well, it will be necessary to proceed to the calculation of a mixed compensation since the previous legislation provided for other amounts:

  • Period worked prior to February 12, 2012: the worker has the right to receive compensation equivalent to 45 days of salary for each year worked with a maximum set at 42 monthly payments, that is, in 3 and a half years.
  • Period worked after February 12, 2012: the aforementioned and the provisions of said Labor Reform come into effect, that is, 33 days of salary per year worked with a limit set at 24 monthly payments.

As can be seen, despite the change in regulations made in 2012, there is no retroactivity in order to benefit the interests of the long-term worker.

How to know the value of a day’s wages?

This process for calculating severance pay is simple but, at the same time, a little tedious. The first thing to do is to collect all the payrolls corresponding to the last year worked, including those that refer to the extra payments if they have been collected separately and on a non-prorated basis. If this is the case, the gross amount of these must be added to the total, and then divide that amount by 12.

Once the monthly gross salary including the extra payments has been obtained, this amount must be divided by 30. The result will be the gross salary that has been collected each day worked. Then, you just have to multiply that amount by 20, 33 or 45, always depending on whether it is a dismissal for objective reasons, inadmissible after February 12, 2012 or inadmissible before that date.

Let’s take the example of a worker who has received € 24,000 gross per year for the last 5 years and who has suffered an unfair dismissal:

  • Annual salary including extra payments: € 24,000
  • Average monthly salary: € 24,000 / 12 months = € 2,000 per month
  • Average daily wage: € 2,000 / 30 = € 66.66 per day
  • Compensation per year worked: € 66.66 x 33 = € 2,200 per year
  • Total compensation: € 2,200 x 5 years worked: € 11,000

It must be borne in mind that these € 11,000 are gross, that is, the worker must deduct the corresponding taxes on personal income tax to obtain the net amount that he will receive.

It should also be considered that the months worked partially count as integers, even if only one day has been worked. For example, if the contract that we have used as an example was signed on March 25, 2012 and terminated on March 2, 2017, that first and last month will be considered as if they had been fully worked on when calculating the compensation.

A simpler way to calculate the amount of compensation

The CGPJ, aware of the number of claims that occur and of the difficulty that the average worker has in calculating the amount of compensation that corresponds to him, has enabled, within its website, a simple tool that allows them to obtain the amount Exactly in seconds.

It should not be forgotten that severance pay has nothing to do with the settlement. This last concept refers to the number of days worked during the month in which the employment relationship ends, as well as the corresponding days of vacation not enjoyed. The employer must pay its amount to the worker at the time of termination of the contract.

Ultimately, this is all you need to know about calculating severance pay. As you may have seen, technology is making it easier for us to know exactly judicial and labor issues that, until not too long ago, could have been quite complex.

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