Inici » What is compensation and settlement? What the company owes you when it terminates your contract

What is compensation and settlement? What the company owes you when it terminates your contract

by premium.cat
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If you are an employee and the company terminates your contract, you will probably wonder what your financial rights are. Many confuse compensation and liquidation, two concepts that are not the same and that depend on the circumstances of the termination of the employment relationship.

What is liquidation?

The liquidation is the set of amounts that the company owes you when the contract is terminated. These amounts can be of different concepts, such as:

  • The proportional part of the payroll for the month in which the termination takes place.
  • The proportional part of the extra payments.
  • The proportional part of the unused holidays.< /LI>
  • Overtime worked and not paid.
  • Other concepts that may be agreed in the collective agreement or in the individual contract.

The settlement does not have a fixed amount, but depends on what you have earned and how much you have worked. In addition, the settlement can be negative if you owe the company money, for example, if you received a pay advance or if you took more vacation days than you were entitled to.

What is compensation?

Compensation is financial compensation that the company pays you when it terminates your contract unfairly, objectively or collectively. The purpose of the compensation is to repair the damage caused to you by the termination and facilitate your re-placement in the labor market.

Compensation is calculated according to criteria established by law or by collective bargaining. These criteria may vary according to the type of termination and the type of contract. These are the most common cases and the corresponding compensations:

  • Unreasonable termination: occurs when the company cannot justify the reason for the termination or does not respect the legal procedure. Compensation is 33 days’ salary per year worked, with a maximum of 24 monthly payments.
  • Objective termination: occurs when the company alleges economic, technical, organizational or production reasons to terminate the contract The compensation is 20 days’ salary per year worked, with a maximum of 12 monthly payments.
  • Collective termination: occurs when the company terminates the contract of a certain number of workers for economic reasons, technical, organizational or production. Compensation is the same as in the case of targeted termination, but may be increased by collective bargaining.

As you can see, severance and settlement are two different concepts that you need to consider when you end your employment with the company. If you have doubts about your rights, you can consult with a labor lawyer or a trade union.

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