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Practical manual for Income Tax 2023.

G) Exempt compensation derived from the termination of the employment contract for objective causes

Regulations: Art. 52 Workers' Statute

In the case of dismissals for any of the objective reasons referred to in Article 52 of the Workers' Statute, the compensation received that does not exceed the amount of 20 days' salary per year worked will be exempt, with a maximum of 12 monthly payments .

For these purposes, the objective causes referred to in Article 52 of the Workers' Statute and for which the contract may be terminated with exempt compensation of 20 days' salary per year worked, with a maximum of 12 monthly payments are the following:

  • Due to the worker's ineptitude, known or occurring after his or her effective placement in the company. Incompetence existing prior to the completion of a trial period may not be alleged after said completion.

  • Due to the worker's failure to adapt to technical changes in his/her workplace, when such changes are reasonable. The employer must first offer the employee a course aimed at facilitating adaptation to the changes made. The time spent on training will in all cases be considered effective working time and the employer will pay the worker the average salary that he or she was receiving. Termination may not be agreed by the employer until at least two months have elapsed since the modification was introduced or since the training aimed at adaptation ended.

  • In the case of open-ended contracts entered into directly by non-profit entities for the execution of specific public plans and programmes, without a stable financial endowment and financed by the Public Administrations through annual budgetary or extra-budgetary allocations as a result of external income of a specific purpose, due to the insufficiency of the corresponding allocation for the maintenance of the employment contract in question.

Unlike the above, when the contract is terminated for the reasons set out in letter c) of article 52 of the Workers' Statute, that is, when any of the economic, technical, organizational, production or force majeure reasons provided for in article 51.1 of the Workers' Statute occur and it affects a lower number of workers than that established in said article, the part of the compensation received that does not exceed the limits established on a mandatory basis in the aforementioned Statute for unfair dismissal will be exempt (33 days per year of service up to a maximum of 24 monthly payments with the application, where appropriate, of the transitional regime for contracts formalized prior to February 12, 2012).

In this regard, it should be noted that collective dismissal and objective dismissal respond to the same economic, technical, organizational, production and nature causes. The only difference is the number of workers affected. When the termination affects a number of workers equal to or greater than that established in article 51.1 of the Workers' Statute, the procedure provided for in said article for collective dismissal must be followed.