Spain's Labor Ministry has tasked unions with preparing a proposal in three weeks to reform unfair dismissal, despite the Supreme Court's rejection. The move aims to comply with the European Social Charter, which deems the current 33 days per year compensation inadequate. Unions UGT and CCOO are leading the effort, driven by rulings from the European Committee of Social Rights.
On Monday, October 20, 2025, Spain's Labor Ministry, led by Deputy Prime Minister Yolanda Díaz, tasked unions UGT and CCOO with drafting a joint proposal within three weeks to overhaul unfair dismissal regulations. The reform seeks to align Spanish law with the European Social Charter, following favorable rulings by the European Committee of Social Rights (CEDS) in Strasbourg on collective complaints filed by both unions.
The unions contended that the current compensation of 33 days per year worked is not 'adequate,' neither fully repairing the harm from an unjust dismissal nor deterring companies from using it without justification. The CEDS upheld these claims and urged Spain to amend its laws, potentially allowing variable compensations based on personal factors like age, family burdens, or sector.
However, in July 2025, the Supreme Court ruled that the Charter is not binding and that existing compensations are adequate, providing legal certainty and uniformity. In its judgment, the Court stated: 'Constitutional doctrine has indicated that the fixed compensation established by our legislation is an adequate compensation. This legal formula has provided legal certainty and uniformity for all workers'. It further noted that CEDS decisions are not enforceable or directly applicable but could necessitate legislative action.
UGT plans to appeal this ruling to the Constitutional Court. Fernando Luján, UGT's deputy general secretary for Union Action, outlined that the proposal will focus on four pillars: making compensation reparatory and deterrent; reinstating processing wages abolished in 2012; considering reinstatement, currently at employers' sole discretion; and accounting for moral damages and harms, as indicated by the Court of Justice of the EU.
Employers' groups defend the current system, warning that untaxed compensation would create legal uncertainty.