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End of employment contract: What procedures need to be done?
Do you know all the procedures and documents to be completed at the end of an employment contract? When should you start the process and how should you communicate it?
Marcos Lopez
HR Consultant
10 of April, 2025
In Spain, as of today and following the implementation of Labor Reform, only two types of dismissal are considered: objective and disciplinary dismissal. The difference between the two is that, in the first case, the company cannot fire an employee on discriminatory grounds, while disciplinary dismissal can be based on personal misconduct or lack of merit in the worker. So, what happens when it comes to a temporary contract? Let’s discuss the steps to take at the end of the labor contract.
When can the process of ending an employment contract be initiated?
The termination of the employment contract represents the end of the labor relationship between the company and the worker. The company should accompany the notification of the end of the labor contract with an estimate of the amounts that the company may owe to the worker (the well-known “final payment”).
If a worker wishes to request the presence of a trade union or works council representative during the signing of these owed amounts, they can do so by notifying their employer in advance.
The reasons for terminating an employment contract may be external, internal or result directly from the action or inaction of the worker:
- The worker leaves the company of their own accord (mutual agreement between the parties). The company will pay all outstanding fees, but the employee will not be able to claim any compensation from the company. Compensation would only be due if this resignation was due to non-compliance with the contract by the employer.
- Causes stipulated in the contract. Provided they are legal and not considered abusive.
- End of the employment contract due to the expiration of time or project. Unless it is a training or interim contract, the company shall pay a compensation of 12 days per year worked.>
- Death of the worker or the employer.
- Disability or incapacity of the worker. Regardless of the reason for the leave, the company can choose to sign the termination of the labor contract or offer a job position that fits the worker’s capabilities.
- The employee or the employer (or both) retire.
- Collective dismissal for economic reasons.
- Workers who are victims of gender violence.
The termination of the employment contract can have many different causes, as we have seen earlier. The end of a labor contract can sometimes lead to disputes. The termination of the labor relationship must always be based on justified, fair and legal reasons.
How to communicate the end of the employment relationship
The idea of terminating an employment contract can be quite daunting for both the employee and the employer.
The end of a labor contract requires significant preparation, planning and risk analysis. Here are some things that you may find useful to know before breaking the news to your employees.
An employee, who isn’t on training or interim contract, and who has completed more than one year of service, may terminate their employment contract with a one-month notice.
If the contract is terminated due to non-compliance with the task in question, as stipulated in a collective agreement, or because the subcontractor has declared bankruptcy, this notice period will be reduced to two days.
Also, in the event of breaches by the employer, such as refusal to pay wages or non-compliance with regulations regarding pay periods and social security contributions, this notice period will be sharply reduced:
- When wages are owed for three months or more of work, it will be one week.
- If salaries are due for between six months and one year, it will be two weeks.
- If unpaid wages go back between a year and three years, it will be three weeks.
- However, if the debt goes back more than three years, it will be four weeks.
Steps to terminate a contract
Regardless of whether it is a small business or a large corporation, these steps must be followed in the right order to ensure the necessary legal compliance for the termination of the employment contract.
The employer is required to give notice to the worker 15 days in advance before formalizing the end of the contract according to 53.1c of the Workers’ Statute if the contract has exceeded one year in duration.
It is recommended to do so with a dismissal letter, which is presented to the worker; otherwise, the employer will have to pay the unreported notice days.
Formal written communication with the temporary worker is not necessary in case of termination by reaching the agreed term if the employment relationship between the parties is less than 12 months.
Documents to process at the end of the employment contract
Depending on the reason for the termination of the employment relationship between the worker and the company, as we have seen above, a different notification or document will be processed:
- The company terminates an indefinite or temporary contract before the date agreed in the contract: the employer is obliged to communicate the dismissal.
- If the end of the employment relationship occurs because the company chooses not to renew, it must also communicate the end of the contract to the worker.
- In the event that the employee wishes to end their work with the company, they must formalize the communication of voluntary leave.
After this step, the company must give their former worker the payment receipt and settlement (the final payment). Here the account balance and the payment due for services are specified. Both parties must sign this document at the end of the relationship using their respective signatures.
How much time does the company have to pay the settlement after the end of the employment contract? There is no set period: it will be delivered on the same day the contract terminates.
On the other hand, the employer will send the company certificate within 10 days following the end of the employment contract. This step is completed using the Certific@2 telematics system and the RED System of the General Treasury of Social Security.
The deadline will be one month for discontinuous permanent workers or those temporary workers who chain contracts that last one month. Moreover, in this case, the certificate is handed directly to the worker.
Along with the company certificate, the employer will communicate to Social Security the request to deregister the worker. The employer will do this within the 3 natural days following the end of the labor contract.
Do you think it’s complicated to create all the documentation and have it ready in time for each case of termination of employment? With the Sesame HR payroll preparation system, you only have to select the different types of payment.
The software automatically calculates the amount, generates documents by choosing from our adaptable templates, and sends them with just the push of a button… voilà!
Need help?
I'm Marcos López, HR consultant at Sesame HR. Book a meeting with my team to help you.