Your last day at a job is usually a bit strange. Half goodbye, half paperwork, and at some point someone from HR puts a sheet with a number in front of you and says "sign here". That sheet is the finiquito, the final settlement, and it shows up exactly when you're in a hurry and least in the mood to check numbers. Bad combo.
First thing to get straight: the final settlement and severance pay are not the same thing. The finiquito is always owed, however you leave (dismissal, end of contract or resignation). Severance (indemnización) only exists in some cases.
What goes into the finiquito
It settles everything the company owes you up to your last day:
- Days worked in your final month that haven't been paid yet.
- Holiday earned but not taken. With the legal minimum of 30 calendar days a year, you earn 2.5 days per month worked. Leave in October having taken just one week off and they owe you quite a few.
- The pro-rata share of the extra payments (Spain usually pays 14 salaries a year), unless you were already getting them spread across your monthly pay.
- Anything else outstanding: overtime, commissions, bonuses, expenses you fronted.
If you took more holiday than you'd earned, the company can deduct the difference. And if you leave without giving the notice set in your contract or collective agreement, it can deduct those days too.
Severance, on top (when it applies)
Severance comes on top of the finiquito and depends on how the job ends:
- End of a temporary contract: 12 days' pay per year worked.
- Objective dismissal: 20 days per year, capped at 12 months' pay.
- Unfair dismissal: 33 days per year, capped at 24 months' pay.
- Resignation or a justified disciplinary dismissal: nothing.
The details of each kind are in the post on types of dismissal in Spain.
An example with numbers
Say you earn €1,800 gross a month in 14 payments (extras in June and December) and your last day is 15 October. You've taken 15 days of holiday this year.
- October days: 1,800 / 30 × 15 = €900.
- Unused holiday: January to mid-October is 9.5 months × 2.5 = 23.75 days. Minus the 15 taken, 8.75 days remain. With a daily salary of 1,800 × 14 / 365 = €69.04, that's €604.11.
- December extra payment: if it accrues July to December, you've done 3.5 of 6 months: 1,800 × 3.5 / 6 = €1,050.
Total: about €2,554 gross. How holiday days are valued and when the extra payments accrue depend on your collective agreement, so treat this as a guide. The severance pay calculator runs these numbers with your own data.
What people miss: income tax and unemployment benefit
The finiquito is taxed like any payslip, and because the company recalculates your withholding when closing the year with you, that last month's withholding can be higher than usual. That's not necessarily a mistake; it evens out in your tax return. Statutory severance, on the other hand, is tax-free up to the legal minimum amount.
Another common surprise: if you're paid for unused holiday, unemployment benefit doesn't start the day after you leave, but when that holiday period would have ended. You keep paying contributions during those days as if you were on holiday.
Before you sign
The important bit:
- Ask for the document in advance and check it at home if you can. Nobody can force you to sign on the spot.
- If you disagree, sign "recibí, no conforme" ("received, not in agreement") with the date. That acknowledges you got it without accepting the numbers are right.
- You can ask for a workers' representative to be present when signing, if your company has one.
- Mind the deadlines: you have one year to claim money you're owed, but only 20 working days to challenge a dismissal. Don't sleep on it.
My take: signing the finiquito without looking is one of those things you do so as not to seem distrustful, and it can cost you hundreds of euros. Checking it calmly isn't rude. It's your money.