When a worker leaves a company, either voluntarily or due to dismissal, it is important to follow the stipulated procedure to avoid claims. In these cases, the Workers’ Statute Law makes it clear that every worker has the right to a settlement . This economic compensation is not linked to the cause of termination of employment, but rather applies the same to voluntary termination as to dismissal or termination of the employment contract .
What is a settlement?
When the employment relationship between the company and a worker ends, it must make a proposal for the settlement of the amounts owed to it, this is known as a work settlement . This document not only breaks down the concepts and amounts that the company must pay the worker, but it also implies that both parties agree to terminate the employment contract.
What does a worker’s settlement include?
In the work settlement, everything that the company owes to the worker for the functions performed is added, adding the severance pay, if it is the case. To calculate a worker’s settlement, you must take into account:
- The part of the payroll corresponding to the month in which the employment relationship ends.
- The pending vacation days that the worker did not get to enjoy.
- The portion proportional to the extraordinary pay, if it is charged separately and is not prorated in the payroll.
- Debt of the company for the last 12 months, such as some commission that was not received at the time.
How to calculate the settlement for voluntary withdrawal?
The company must prepare a document in which it reflects the remuneration accrued and those that have not yet been received, as well as the compensation, if applicable. There is no standardized settlement model, but this document must explicitly reflect its purpose and contents.
Salary pending for the current month
- Divide the salary by 30 days, to know the daily salary.
- Multiply the daily wage by the days actually worked.
For example, if the worker’s monthly salary is € 1,500, it is divided by 30 days, obtaining € 50 per day. If the employee worked until the 10th of the new month, multiply 10 x 50, which yields € 500. The deductions for Social Security and Personal Income Tax paid by the company must be subtracted from that amount. The result is the pending salary for the current month.
Vacation days not taken
- Count the days of the year worked until the termination of the employment relationship.
- Based on the vacation days per year worked that are applied, the accumulated vacation days are calculated and the days that have already been taken are subtracted.
- The days not enjoyed are multiplied by the daily salary.
If the contract ended on December 10, for example, the employee will have worked 344 days that year. Given that 30 days of vacation are applied each year, until that moment 28.27 days would correspond, which must be multiplied by the € 50 per day. If the employee has already taken a few days of vacation during that year, these are subtracted from the total.
Extra payments
This calculation is carried out independently for each of the extraordinary payments following the same logic as in the calculation of the pending salary, except that the Social Security deductions are not subtracted but only the corresponding personal income tax.
- Taking the days worked as a reference, it is determined how many extraordinary payments the worker is entitled to. If the employment relationship ends in September, for example, the worker will be entitled to the Christmas pay that accrues in January and the summer pay.
- Divide each pay by 360 days to calculate the average daily bonus.
- Multiply that average by the days elapsed since the payments were accrued until the termination of the employment relationship.
Salary supplements
If the company provided salary and non-salary supplements, you must include them in the calculation of the settlement, taking into account the time worked . Seniority, night time, turnicity, dangerousness or production bonuses are some of the most common salary supplements. Among the non-salary supplements are compensation for the worker’s expenses while carrying out his work activity, transportation or distance bonuses, as well as travel allowances.
However, the collection of some supplements is subject to the worker continuing to belong to the company. In that case, the employee loses the right to the supplements and if he has received an advance, the company has the right to claim it, so that the result of the settlement could be negative.
Redundancy payment
The calculation of this severance pay is more complex since it depends on the reasons for the dismissal , although it basically involves multiplying the days per year worked according to the type of dismissal by the daily salary, adding the result of dividing the total extra pay by the 365 days of the year.
In the case of unfair dismissal, for example, 33 days per year of work are calculated up to a maximum of 24 monthly payments. In collective dismissals or causes of force majeure, 20 days per year of work are foreseen up to a maximum of 12 monthly payments.
In the end, the sum of all the parts will result in the work settlement that the company must pay.
What is the term to receive the settlement?
If the settlement responds to a dismissal or the termination of the employment contract, the company must deliver it together with the notification of the dismissal or the day the contract ends . If the company gives days of notice, the settlement will be presented on the last day of work, to adjust the amounts to this date.
If it is the worker who requests the voluntary leave and has not given advance notice, it is possible that the company may not have the settlement ready for the last day of work. However, you have the obligation to calculate the settlement and deliver it as soon as possible.
The law does not establish a time limit for the company to enter the settlement , but the correct thing to do is to make that payment at the time of delivering the settlement or in the days immediately after the termination of the employment relationship. In any case, the worker has a period of one year to claim the amount owed by the company.
Is it mandatory to sign the settlement?
The settlement has a discharge value for both parties and is considered as proof of the termination of the employment contract . However, this releasing value does not mean that the worker renounces his rights, although it will be more difficult for him to claim if he has already signed and given his consent.
That is why lawyers often recommend that workers sign the settlement indicating “not compliant . ” This will make it easier to claim in case there has been an error or payment is not received. In fact, the signing of the settlement implies that the worker agrees with the calculation and has received the amount reflected in it. If at the time of signing the settlement you still have not received the money, you can indicate “amounts not received”.
If the worker is not satisfied with the settlement, he can refuse to sign it and present a conciliation ballot in the court of his domicile to urge the company to reach an amicable agreement that avoids judicial proceedings.
