Severance Pay Calculator

When should you use this calculator?

The finiquito is the final economic settlement an employer must pay an employee when the employment relationship ends, whether due to dismissal, resignation or contract expiry. It includes all outstanding amounts: salary for days worked since the last payslip, unused holidays, prorated extra payments and, where applicable, the legal compensation.

How it is calculated

The calculation starts from the daily salary, obtained by multiplying the monthly gross salary by 12 and dividing by 365. Two groups of items are then calculated from that daily salary: the compensation, if the type of termination entitles the worker to it (33 days of salary per year of service, capped at 24 monthly payments, for unfair dismissal; 12 days per year for the end of a fixed-term contract), and the amounts owed regardless of the type of termination: salary for the days worked in the last month, accrued and unused holidays, and the proportional part of extra payments not yet received.

Practical example

A numeric example: a worker with a €2,000/month gross salary, 5 years of service, unfairly dismissed, with 10 days of unused holidays and half an extra payment pending, has a daily salary of €65.75. Compensation comes to €10,849.32 (33 days — 5 years, below the 24-month cap). Adding €986.30 for the days worked in the last month, €657.53 for unused holidays and €1,000 for the pending extra payment gives a gross total of €13,493.15. After deducting income tax withholding on the taxable items (€557.59, an effective rate of 21.09% on those items), the net settlement comes to €12,935.56.

Legal and tax context

The type of contract termination determines whether compensation is owed, and how much. Unfair dismissal entitles the worker to 33 days of salary per year worked (capped at 24 monthly payments) for contracts signed after the 2012 labour reform; the end of a fixed-term contract entitles the worker to 12 days per year worked; voluntary resignation and fair dismissal generally do not generate a right to compensation, unless the applicable collective agreement sets more favourable terms for the worker.

On the total settlement, the tax authority distinguishes between items: the minimum legal dismissal compensation is usually exempt from income tax up to the limits set by Spanish labour law, while outstanding salary, unused holidays and prorated extra payments are taxed as employment income, with withholding calculated according to the worker's effective income tax rate for their annual salary.

Common mistakes

A common mistake is confusing the settlement with the compensation: the settlement covers all amounts owed when the employment relationship ends (salary, holidays, extra payments), while compensation is an additional item that only applies to certain types of termination, such as unfair dismissal or the end of a fixed-term contract. Another frequent mistake is signing the settlement without reviewing the breakdown of items, or without adding "not in agreement" next to the signature when there are doubts about the amount, which allows a later claim without losing the right to what has already been paid.

Practical tips

The settlement must be paid at the moment the contract ends. If the employer doesn't pay on time, the worker can first file a claim with the labour conciliation body (SMAC or the equivalent in their region) and, failing agreement, before the labour court, with a right to late-payment interest on the amount owed. For specific cases, especially where a collective agreement offers more favourable terms than the general rules, it's worth consulting a labour consultant or employment lawyer before signing.

Other calculators you may find useful

If you found this calculator useful, you might also want to check out:

• Net salary
• Income tax / Payslip
• Pension

Frequently asked questions