When an employment relationship ends, the employer must settle everything the employee has earned but not yet been paid. That settlement is known in Spain as the finiquito, and in some cases it is accompanied by severance pay whose amount depends on the type of termination and length of service. Below we explain what each item includes, how it is calculated and what to check before signing.
Final settlement and severance pay: two different things
The final settlement is the document that closes the employment relationship and lists the amounts accrued but still unpaid. It is always due, whatever the reason for termination: resignation, dismissal, end of contract or retirement. Its purpose is not to compensate for losing the job, but to pay what has already been earned.
Severance pay, by contrast, compensates for the loss of the job and is only due in certain cases set out in the Workers' Statute (Estatuto de los Trabajadores). There is no statutory severance on resignation or on a disciplinary dismissal that is upheld as fair; there is on an objective, collective or unfair dismissal.
- Salary for the days worked in the final month that have not yet been paid.
- Holiday accrued but not taken, which in this case is paid in cash.
- The pro rata portion of the extra payments, if they are not already spread across monthly payslips.
- Other outstanding items: overtime, commissions, allowances or collective agreement arrears.
How each item is calculated
The calculator starts from gross annual salary and the payment pattern. With 14 payments and the extras paid separately, the monthly payslip is gross salary divided by 14; with the extras spread across payslips or a salary in 12 payments, it is gross salary divided by 12. Outstanding salary for the final month uses the actual days in that month: monthly pay x days worked in the month / calendar days in the month (28, 29, 30 or 31). Holiday is the leave accrued in the calendar year of termination, in proportion to the days worked since 1 January (or since the start date), less days already taken; you can count it in calendar or working days, and each day is valued at monthly pay divided by 30 for calendar days or by 22 for working days. If you have taken more days than you accrued, the excess is deducted.
Extra payments accrue day by day over their reference period, which is set by the collective agreement. The tool supports annual accrual (summer payment from 1 July to 30 June, Christmas payment from 1 January to 31 December) and half-yearly accrual (summer from January to June, Christmas from July to December). With 14 payments, each extra payment equals one fourteenth of gross annual salary, and the employee is entitled to the fraction corresponding to the days accrued in the current period; if that period's payment has already been received in full in advance, the part not yet accrued is deducted. With the extras spread across payslips or a salary in 12 payments, this item generates no additional amount.
As for severance, which the calculator adds according to the type of termination selected, the general rule is 20 days' salary per year of service, capped at 12 months' pay, for objective or collective dismissal; 33 days per year, capped at 720 days' salary, for unfair dismissal; and 12 days per year at the end of a fixed-term contract. The daily salary is gross annual salary divided by 365, service is worked out from the start and termination dates, and periods of less than a year are prorated by months, with any part of a month counting as a full month. If the contract began before 12 February 2012 and the dismissal is unfair, the two-tier 45/33-day calculation is applied automatically.
Worked example
Take an employee earning 25,200 euros gross in 14 payments with the extras paid separately (1,800 euros each), who joined on 1 April 2021 and is dismissed on 31 March 2026, with the dismissal accepted as unfair. She has taken no holiday in 2026, is entitled to the statutory minimum of 22 working days, and her collective agreement uses annual accrual for the extra payments: summer from July to June and Christmas from January to December; neither has been paid yet.
Final settlement: unpaid March salary (31 of 31 days), 1,800 euros; holiday accrued from 1 January to 31 March, 22 x 90 / 365 = 5.42 working days valued at 1,800 / 22 = 81.82 euros, about 443.84 euros (the same amount as 7.40 calendar days at 60 euros); pro rata summer payment (274 of 365 days), 1,351.23 euros, and Christmas payment (90 of 365 days), 443.84 euros. Total settlement: 4,038.90 euros gross.
Severance: the daily salary is 25,200 / 365 = 69.04 euros. Sixty months of service, that is five years at 33 days, amount to 165 days' salary, about 11,391.78 euros. In total she would receive around 15,430.68 euros gross; the statutory severance is exempt from income tax (IRPF), while the settlement is taxable.
Rules in force in 2026
Severance rules are set out in the Workers' Statute: Article 51 covers collective redundancy, Articles 52 and 53 dismissal on objective grounds and Article 56 unfair dismissal. In an unfair dismissal there is a choice between reinstatement and severance pay; the choice lies with the employer, unless the collective agreement provides otherwise or the employee is a legal workers' representative.
For contracts that began before 12 February 2012 a two-tier calculation applies: 45 days per year up to that date and 33 days per year afterwards. The general cap is 720 days' salary, unless the pre-2012 portion already exceeds that figure, in which case that amount is kept, up to a maximum of 42 months' pay. In objective dismissals the employer must also give 15 days' notice or pay the equivalent.
For tax purposes, severance pay is exempt from income tax up to the mandatory amount set by the Statute, with a ceiling of 180,000 euros. The final settlement is taxed as employment income and is subject to the usual withholding.
Deadlines and common mistakes
The deadline to challenge a dismissal is 20 working days from the day after it takes effect. It is a strict time limit that cannot be interrupted, although filing a conciliation request suspends it. Claims for unpaid settlement amounts can be brought within one year.
Common mistakes include signing the settlement without checking it, forgetting outstanding holiday, counting service only from the latest contract when several contracts have been chained, and leaving fixed allowances or pro rata extra payments out of the salary used for the calculation.
- If you disagree, sign stating that you do not agree (no conforme) and add the date of receipt.
- Ask for the dismissal letter in writing and check the stated grounds and effective date.
- Check your collective agreement: it may improve accrual periods or severance.