End of contract: final settlement, unemployment benefit and the deadlines

On the day a contract ends, the company puts a sheet of paper and a pen in front of you, usually in a hurry and often at an emotionally awkward moment. That sheet is the finiquito, and signing it without understanding it is one of the costliest mistakes in Spanish employment. The good news is that it rests on three simple sums you can check yourself in five minutes.

What is a severance payment?

The severance payment (finiquito) is the document that records the settlement of all outstanding financial items between employer and employee at the end of the employment relationship. It must not be confused with redundancy compensation, which is a separate concept that only applies in certain types of dismissal.

The distinction matters because it determines what you are owed. The finiquito is always payable, whatever the reason for termination: even if you resign, the company owes you what you have accrued and not been paid. Compensation, by contrast, only arises in certain dismissals, and its size depends on the type: 20 days per year for objective dismissal, 33 for unfair dismissal, and none at all for voluntary resignation or justified disciplinary dismissal.

The three items in a severance payment

• •1. Current month salary: the days worked in the month of termination that remain unpaid
• •2. Pro-rata bonus: the time worked since the last bonus payment received
• •3. Unused holiday: the holiday entitlement accrued but not taken, calculated on the daily gross salary

Other frequently forgotten items can be added to these three: commissions or incentives accrued but not yet settled, unpaid overtime, transport or productivity allowances for the current month and, under some collective agreements, holiday funds. Everything you have earned and not been paid belongs in that document.

Step-by-step example

Employee on €24,000/year (14 payments), daily gross = €24,000/365 = €65.75. Leaves on 20 June with 20 unused holiday days and 5 months and 20 days since the last December bonus: June salary: 20 × €65.75 = €1,315; pro-rata bonus: (5+20/30)/12 × €2,000 = ~€933; holidays: 20 × €65.75 = €1,315. Total gross severance: ~€3,563.

Note one detail that changes the result: if your bonus payments are pro-rated across the twelve monthly payslips — which you can tell by looking for a «prorrata de pagas extra» line on your payslip — then the second item does not apply to you, because you have been receiving it month by month. Counting it twice is a common error in DIY estimates.

Is tax payable on the severance payment?

Yes. The severance payment is taxed as employment income. The employer must apply income tax withholding at the employee's marginal rate. The net amount you receive is the gross minus withholding and the corresponding Social Security contributions.

Dismissal compensation, however, follows a different rule: it is tax-exempt up to €180,000, provided it does not exceed the legal limits set by the Workers' Statute. That is why the document should clearly separate the finiquito items from the compensation: if everything is merged into a single line, you can end up paying tax on an amount that was exempt.

Signing «no conforme»: how and why

If the numbers do not add up, you do not have to choose between getting paid and making a claim. You can sign while adding «no conforme» (not in agreement) in your own handwriting next to your signature: this records that you are receiving the money but do not accept the settlement as final, and you keep the right to challenge it. Signing without that note can be read as acceptance and waiver, although case law qualifies that a settlement containing objective errors has no releasing effect.

Common mistakes when reviewing the settlement

• •Accepting the daily wage the company proposes without checking it includes the pro-rata of bonus payments where applicable
• •Taking the company's holiday-day count at face value instead of checking it against your own record
• •Failing to claim commissions, overtime or allowances accrued in the final month
• •Confusing the finiquito with compensation and not checking that the exempt portion is itemised separately
• •Signing on the spot without reading it, under the pressure of the moment

After the settlement: unemployment benefit

Spain's contributory unemployment benefit — universally known as «el paro» — is a right you earned by contributing, not a means-tested welfare payment. That distinction matters: the amount depends on what you contributed and the duration on how long you did so, with no account taken of your savings or your household's other income. The unemployment subsidy is a different thing: a flat-rate payment for those who have exhausted the benefit or never reached the minimum contribution period, and there your income is assessed.

Requirements to access the benefit

• •At least 360 days (12 months) of contributions in the last 6 years
• •A legal unemployment situation (dismissal, end of temporary contract, collective redundancy…)
• •Not having reached standard retirement age
• •Registered as a jobseeker and signed up to the activity commitment

The requirement that sinks most applications is the legal unemployment situation. Resigning voluntarily gives no entitlement no matter how many years you contributed: if you leave of your own accord, there is no benefit. Nor does a disciplinary dismissal you do not challenge and which stands as justified. What does qualify: the end of a temporary contract, objective dismissal, unfair dismissal, collective redundancy, and termination at the worker's initiative where the employer is in serious breach.

How long does the benefit last?

Duration does not depend on your salary, only on time contributed in the preceding six years. The scale starts at 120 days of benefit for the first 360 days contributed and adds 60 days of benefit for every additional 180 days contributed, up to a cap of 720 days. In months: one year contributed gives four months of benefit, two years give eight months, three years give a full year, and six years or more give the maximum of two years.

How much is received?

The starting point is the regulatory base: the average of your unemployment contribution bases over the last 180 days worked. Note these are contribution bases, not gross salary: they include the pro-rata of bonus payments but exclude items such as per diems or travel allowances. That base is then paid at 70% for the first 180 days of benefit and at 60% from day 181.

That 60% is recent. Until the reform introduced by Royal Decree-Law 2/2024, the rate from the seventh month was 50%, so any guide written before 2024 — and many calculators that have not been updated — will give you a lower figure than you are entitled to. If you are comparing simulators and see 50%, it is out of date.

The caps: why a high salary does not get 70%

The figure above is not applied as-is: it is bracketed between a floor and a ceiling tied to the IPREM, the public income index used as a reference for most Spanish benefits. The floor is 80% of the IPREM with no dependent children and 107% with them. The ceiling ranges from 175% of the IPREM with no children to 200% with one and 225% with two or more.

The practical consequence is that unemployment benefit compresses salary differences sharply. Someone who earned €4,000 a month does not receive €2,800: the ceiling cuts them well below that, so their real replacement rate ends up far from the theoretical 70%. Conversely, someone on a low salary with dependants often receives more than the percentage alone would give them, thanks to the floor.

Worked example

Take someone with a regulatory base of €1,400 a month and 1,080 days contributed, with no dependent children. On duration, those 1,080 days entitle them to 360 days of benefit — a full year. On amount, for the first 180 days they receive 70% of €1,400, that is €980 a month; from day 181 they move to 60%, around €840 a month. Neither figure touches the caps, so both apply in full. Over the year, the benefit totals roughly €10,920 gross.

The word «gross» deserves emphasis. Income tax withholding — lower than on a payslip, but present — is deducted, as is the worker's share of social security contributions, since the employment service keeps your contribution record running while you claim. What actually lands in your account will therefore be somewhat less.

Application deadline and what happens if you are late

You have 15 working days from the day after your employment ends. You can apply through the SEPE electronic office with a digital certificate or Cl@ve, via the pre-application form without digital ID, by phone, or in person by appointment. Applying late does not shorten the total duration you are entitled to, but you do lose the days elapsed since the deadline passed: days you will not be paid for and will not recover at the end.

Common mistakes

• •Confusing gross salary with the regulatory base: they are not the same, and a calculator fed the former will be somewhat off
• •Assuming 70% applies throughout, when it drops to 60% from the seventh month
• •Forgetting that the IPREM caps trim benefits for higher salaries
• •Failing to register as a jobseeker before applying
• •Believing part-time work ends the claim: it reduces the amount proportionally, but also consumes your days more slowly

The deadlines that start on your last day

Counting days looks like the simplest operation in the world until a legal deadline depends on it. Then the questions arrive: do Saturdays count? which day do you start from? what if it falls on a holiday? Getting any of the three wrong can cost an entire right, because limitation periods admit neither extension nor excuse.

Calendar days vs. working days

Calendar days are all days, including Saturdays, Sundays and public holidays. Working days are only business days, excluding Saturdays, Sundays and official public holidays. Most deadlines in private law (contracts, insurance) count in calendar days; many administrative and procedural deadlines use working days.

There is a third concept worth keeping separate: administrative working days. Since Spain's Law 39/2015, Saturdays are not working days for administrative purposes, whereas previously they were. That is why guides written before 2015 give different counts, and why it is always worth checking which type of deadline is in play before counting.

When the count starts

The general rule is that the first day does not count: the period starts running the day after notification or after the triggering event. If you are notified of a dismissal on a Monday, the first day of the period is Tuesday. This detail, seemingly minor, accounts for a good share of claims filed one single day late.

Most common employment deadlines

• •Resignation notice: 15 calendar days (or as set by collective agreement)
• •Challenging dismissal: 20 working days from notification
• •Applying for unemployment benefit: 15 working days after termination
• •Probation period: calendar days per agreement (typically 6 months for technical staff, 2 months for others)

What if the deadline falls on a public holiday?

In procedural and administrative law, if the last day of a deadline is a Saturday, Sunday or national public holiday, the deadline is automatically extended to the next working day. For calendar day deadlines in private law, this does not happen automatically — it depends on the contract.

Public holidays to know

Spain has national, regional and municipal public holidays. National holidays are the same throughout the country (New Year, Epiphany, Holy Thursday and Friday, National Day, All Saints, Constitution Day, Immaculate Conception, Christmas). Regional and municipal ones vary and together total up to 14 public holidays per year.

That holidays are territorial complicates the count more than it appears, because the relevant holiday is the one where the matter is being handled. A deadline before a Barcelona court follows the Catalan calendar and that town's own, even if you live in Seville. On tight deadlines, checking the official calendar of the relevant municipality stops being a precaution and becomes essential.

Deadlines in months: the date-to-date rule

When a period is expressed in months or years it is not converted into days: it runs date to date. A one-month period starting on 15 March expires on 15 April, whether that month has 30 or 31 days. If the expiry month lacks that date — for instance a one-month period starting on 31 January — it expires on the last day of that month.