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An employer may not dismiss an employee without a legally valid cause.
Dismissal may be based on personal grounds (e.g. disciplinary dismissal, dismissal due to professional inadequacy, dismissal due to incapacity) or economic grounds (e.g. economic difficulties, technological changes), or subject to specific conditions, without stating a specific motive.
Broadly speaking, under Spanish employment law dismissals must be based on disciplinary reasons or on objective reasons.
Disciplinary dismissals must be based on gross misconduct, defined as a significant and intentional breach of employment duties. This may include:
The applicable Collective Bargaining Agreement may establish additional lawful reasons for disciplinary dismissal.
Alternatively, an employee may be dismissed on objective grounds such as:
In cases of permanent employment contracts, when the purpose of the employment is to provide services in relation to a public programme and there is a funding shortfall.
The employee must be notified of the dismissal in writing.
Both disciplinary and objective dismissals require certain formalities.
Disciplinary dismissals require written notification to the employee detailing:
The applicable Collective Bargaining Agreement may establish additional formal requirements. Likewise, there may be additional requirements depending on the type of employee affected. For instance, Spanish Law also sets forth the obligation to initiate contradictory proceedings in relation to dismissals affecting the employees’ legal representatives.
Objective dismissals include the following requirements:
In the event of dismissal, the law provides that an employee is entitled to a notice of a duration which varies depending on his seniority as follows:
For any dismissal, the employer may choose whether the employee works during the notice period.
In either case, employee is entitled to receive the same salary, including any benefits.
Disciplinary dismissal does not require any notice period.
The Law stipulates a 15-calendar-day notice period for dismissals due to objective causes. The employer may substitute this obligation by paying salaries in lieu of notice.
Works councils do not exist in Monaco. A staff representative (if established) must be properly informed prior to a collective redundancies.
The Works Council must be informed of every dismissal taking place in the company based on disciplinary grounds or for economical, technical, organisational or production-related reasons.
No involvement for dismissals.
The union has a right to be heard prior to the dismissal of an employee belonging to the union.
Mandatory for employees with legal protection because of their private life or their mandate.
This protection applies to staff representatives, union delegates, pregnant women, employees taking maternity leave, paternity leave, adoption leave or family support leave, members of the Labour Court, harassment referents.
The relevant Labour Authority has to be informed of projected collective redundancies prior to their dismissal, and grant prior approval.
Neither disciplinary dismissal nor individual objective dismissal require any approval from the state authorities.
The implementation of collective redundancies is mainly regulated by law and the National Collective Bargaining Agreement, which imposes some procedural steps prior to implementing any such decision.
Three main issues must be considered regarding the preparation and implementation of a collective social plan:
regarding the decision to restructure, its motivation, its implementation and the measures taken by the employer to minimise any adverse impacts on employees;
‘Collective Redundancies’ are dismissals executed by an employer for economical, technical, organisational or production-related reasons where, over a period of 90 days, the number of redundancies is:
Although under Spanish labour regulations only the company as a whole is considered in order to verify the number of redundancies implemented for the collective redundancies procedure to apply, according to some judicial precedents from the Court of Justice of the European Union the thresholds above are considered in both the company as a whole and the relevant establishment or workplace in which more than 20 employees are employed.
Spanish employment law states that a collective redundancy may also refer to the dismissal of every member of staff when the company employs more than five workers and ceases its operations due to financial, technical, organisational or production-related reasons.
The collective redundancy procedure starts with a consultation period with the employees’ representatives which may not last any longer than one month (15 days in companies with fewer than 50 employees). Although the parties are bound to negotiate in good faith, this does not entail the obligation to reach an agreement to implement the dismissals.
The Employment Authorities must also be notified about the start and result of the collective redundancy procedure.
If the parties do not reach an agreement during the consultation period, the employer may implement the dismissals. If this happens, employees are entitled to receive compensation of 20 days’ salary per year of service up to a maximum of 12 months. However, the employees have the right to challenge the dismissal before the Labour Courts.
Dismissal without notice is only possible in case of gross misconduct. In such a case, the employee receives no dismissal indemnity or notice period indemnity. The employee is still entitled to unemployment insurance benefits.
Not applicable. Disciplinary dismissals with immediate effects are similar.
Should the employer dismiss an employee on personal or economic grounds without a valid cause, the employer would have to pay a dismissal indemnity.
In addition, the employee could claim damages for injuries suffered due to his / her wrongful dismissal.
Disciplinary dismissals and objective dismissals may be declared unfair if the legal requirements are not met and / or the termination is not grounded on fair reasons.
Unfair dismissal entitles the employee to receive compensation or to be reinstated to his / her previous position with the retrospective payment of salaries.
On the other hand, disciplinary / objective dismissals may be declared null and void if:
Collective redundancies are also void if the legal procedure is not followed.
The consequence of a void dismissal is the reinstatement of the employee in the company and the retrospective payment of salaries.
Dismissal indemnity is payable unless the dismissal is for gross misconduct. The amount payable is mainly set by the collective bargaining agreement, but must not be less than the French legal dismissal indemnity (since 27 September 2017: 25% of the monthly gross salary until ten years of seniority and one third of the monthly salary as of the tenth‘s year). A higher indemnity is payable in case of dismissal without a stated motive. Indemnity is also payable for unused accrued paid holidays and for the notice period if the employer chooses to release the employee from performing it.
In cases of justified and fair objective dismissals or collective redundancies the minimum severance pay is 20 days’ salary per year of service capped at 12 months. In addition, employees are entitled to 15 days’ notice, which can be substituted by payment of salaries in lieu.
An unfair dismissal results in a severance pay of 45 days’ salary per year of service until 12 February 2012 and 33 days’ salary per year of service from 12 February 2012 capped at 24 months’ salary or at the severance accrued as of 12 February 2012, if higher, with a cap of 42 months’ salary.
Non-competition clauses are enforceable in Monaco provided they are appropriately restricted.
A non-competition clause must comply with five cumulative conditions:
Independent consideration is required for a non-competition clause.
During the employment it is forbidden for an employee to compete with his / her employer. Additionally, both parties may agree full dedication in exchange for monetary compensation.
A post-contractual non-compete clause may also be included in the contract. The following limitations and requirements apply:
Not applicable.
Not applicable.
Under Spanish law, managing directors and other members of the board of directors have a commercial relationship with the company and, therefore, are beyond the scope of employment law. The table below deals with ‘senior executives’, who have a special employment relationship governed by Royal Decree 1382 / 1985 of 1 August. It should be noted that senior managers are exclusively those who exercise powers inherent to the ownership of the company, with independent authority (reporting directly to the board of directors) and full responsibility for the company’s general objectives.
A company may generally revoke the appointment of the managing director without cause, unless stated otherwise in the by-laws of the company or the resolution of appointment. This is particularly the case for limited companies (‘SA‘). However, a just cause is legally required in limited liability companies (‘SARL’) when revoking a managing director who is also a shareholder of the company. In any event, revocation must follow mandatory steps to be declared valid.
Disciplinary dismissals must be based on gross misconduct, defined as a significant and intentional breach of employment duties.
On the other hand, the employment contract of senior executives may be terminated by withdrawal, where no reason is required (lack of confidence).
Likewise, the contract may be terminated based on legal grounds and following the legal procedures set out in the Spanish Workers’ Statute for common employees (e.g. objective dismissal based on economical, technical, organisational and production-related grounds).
A resolution is taken by the shareholders and / or board of directors, depending on the form of the company and the internal organisation of the management. The managing director must be given the opportunity to explain himself or herself and the revocation must not be made vexatiously.
Notwithstanding the type of termination, it is necessary to notify the senior executive of the employer’s decision in writing. In the event of dismissal, the employer must explain the reasons for termination and state the date on which it will take effect.
No notice period, except where one is provided by the by-laws of the company or in the resolution of appointment of the managing director.
No notice period is required in case of disciplinary dismissal.
In case of withdrawal, by contrast, senior executives are entitled to three months’ notice unless otherwise agreed up to six months. The employer may substitute this obligation with the payment of salary in lieu.
No involvement.
No involvement.
No involvement.
No involvement.
For limited liability companies (‘SARL’), appointment of a new director is subject to government approval. For all companies, the change of director must be registered in the Monaco Companies Register.
Not applicable.
Not applicable.
Common regulations shall apply.
Not applicable.
Not applicable.
Damages may be claimed, mainly:
In the event of a disciplinary dismissal or withdrawal, failure to comply with the formal requirements above may lead to the dismissal being declared unfair.
Not applicable.
Disciplinary dismissal: if the dismissal is declared or acknowledged as unfair or wrongful, the senior executive is entitled to severance pay of 20 days’ salary in cash per year of service, with a maximum of 12 monthly payments, unless otherwise agreed in the employment contract.
Withdrawal: severance of seven days’ salary in cash per year of service, with a maximum of six monthly payments, unless otherwise agreed in the employment contract.
Non competition clauses are only valid insofar as they specify a restricted application in time and space. They also have to include financial compensation in order to compensate the director for the loss of revenue they cause him or her. If the clause does not include those elements, it is null and void. In that case, the director may still be held liable for unfair competition towards the company if it is demonstrated that the director resorted to fraudulent practices intended to disturb the company’s activity such as denigrating it or employing key members of its staff.
A non-compete clause after termination of the employment contract can be agreed at any time of the relationship, or even upon termination.
The following limitations and requirements apply:
Not applicable.
Not applicable.
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