Dismissing an employee with a permanent contract is one of the most delicate employment decisions for any company. Simply wanting to end the employment relationship isn't enough: you have to choose the right type of dismissal, prepare the necessary paperwork, calculate the costs, check for any applicable legal protections, and deliver a technically sound dismissal letter. A mistake can turn what seemed like a controlled outcome into a costly, lengthy, and reputationally damaging legal battle.
At MGI Àmbit, a law and economics firm in Barcelona specializing in labor law consulting for companies, we help companies, HR departments, and executives prepare dismissals of permanent employees with legal sound judgment, economic insight, and risk management. The goal is not to dismiss quickly, but to dismiss properly: with cause, with proper documentation, and with a strategy tailored to the specific case.
Quick summary
- Yes, it is possible to dismiss a permanent employee, but there must be an appropriate legal procedure: disciplinary, objective, collective or agreed upon.
- Disciplinary dismissal requires a serious and culpable breach by the employee and does not entail compensation if it is appropriate.
- Objective dismissal requires an economic, technical, organizational, productive or other legal cause, a written letter, prior notice and compensation of 20 days per year.
- If the cause is weak or the form fails, the dismissal may end up being declared unfair.
- If it affects a protected person or violates fundamental rights, the risk may be annulment, with mandatory readmission.
- Before delivering the letter, it is advisable to review the contract, agreement, seniority, base salary, tests, personal situation and collective dismissal thresholds.
Can you fire a worker with a permanent contract?
Yes. An open-ended contract doesn't mean the employee is untouchable or that the company can't terminate the employment relationship. It simply means the relationship doesn't have a pre-agreed end date, and therefore the company must justify the termination with a legal reason or bear the economic and legal consequences of a poorly conceived decision.
In Spain, a company should not treat the dismissal of an employee with a permanent contract as a simple administrative matter. It is a decision with labor, economic, and procedural implications. Therefore, before taking any action, it is advisable to answer a key question: what type of dismissal is truly appropriate in this case?
The three main paths that the company should consider
| Exit route |
When is it used? |
Main risk |
| Disciplinary dismissal |
When there is a serious and culpable breach: offenses, disobedience, abuse of trust, willful underperformance, harassment or other causes. |
Failure to prove the facts or to skip formal requirements such as a letter, agreement or prior hearing. |
| Dismissal for objective reasons |
When there are economic, technical, organizational or productive causes, supervening ineptitude or other legal causes. |
Failure to sufficiently prove the cause, miscalculating the compensation, or failing to comply with the notice period. |
| Agreed exit |
When the company wants to minimize conflict and both parties are willing to reach an agreement. |
Drafting an unclear agreement, not properly closing amounts, or creating problems with unemployment/severance pay. |
Do you need to dismiss a permanent employee and want to avoid mistakes in the dismissal letter, severance pay, or procedure? At MGI Àmbit we analyze your case before you make a decision to reduce the risk of unfair dismissal or invalidity.
First step: do not write the letter without a prior diagnosis
One of the most common mistakes is starting with the dismissal letter. The letter is the last document, not the first. Before drafting it, the company must conduct a thorough workplace assessment to determine if there is cause for dismissal, what evidence exists, what the termination will cost, and what risks might arise if the employee challenges the decision.
Information that the labor advisor needs before recommending a strategy
- Employment contract and signed annexes.
- Exact seniority of the worker and professional category.
- Applicable collective agreement.
- Gross annual salary, variable pay, bonus, in-kind compensation and extra payments.
- Recent payslips and employment history if necessary.
- Disciplinary history, warnings, sanctions or previous communications.
- Documentary evidence of the facts: emails, records, reports, witnesses, or metrics.
- Protected personal situation: pregnancy, reduced working hours, sick leave, permits, legal representation, prior claims or internal complaints.
- Possible recent or planned layoffs to check if collective dismissal thresholds are exceeded.
- Business objective: immediate departure, negotiated departure, restructuring, job replacement or cost savings.
This information allows you to decide whether a disciplinary dismissal, a dismissal for objective reasons, prior negotiation, or even a less risky alternative is appropriate. Dismissing an employee without this analysis is like acting blindly.
Disciplinary dismissal of a permanent employee
Disciplinary dismissal is used when the company believes that an employee has committed a serious and culpable breach of contract. It is the most decisive course of action because, if the dismissal is upheld, there is no obligation to pay severance. For this very reason, the courts require solid evidence and a very specific letter of justification.
Common causes of disciplinary dismissal
Among the most frequent reasons are repeated and unjustified absences or lateness, disobedience, verbal or physical offenses, transgression of contractual good faith, abuse of trust, continuous and voluntary decrease in performance, drunkenness or drug addiction with repercussions at work and certain harassment behaviors.
However, simply stating a generic reason is not enough. The company must describe specific facts: dates, actions, consequences, prior warnings, available evidence, and the relationship between the breach and the severity of the action. A vague letter can overturn a dismissal even if the company internally believes it is in the right.
Preliminary hearing before disciplinary dismissal
In current disciplinary dismissals, companies must exercise extreme caution with the preliminary hearing. Recent Supreme Court rulings have reinforced the need for employees to be able to defend themselves against the charges before the company makes the final decision to dismiss them.
In practice, this involves communicating the alleged facts, granting a reasonable time for submissions, reviewing the response, and only then deciding whether or not dismissal is warranted. It should not be treated as an empty formality, but as a genuine phase of the procedure.
Objective dismissal of a permanent employee
Objective dismissal is used when the cause is not a culpable breach of contract by the employee, but rather an objective reason related to the position, the company, or the organization. It is common in restructurings, downturns in activity, production changes, losses, internal reorganizations, or the elimination of functions.
Basic requirements for objective dismissal
| Requirement |
What should the company do? |
Common mistake |
| Written letter |
Clearly explain the cause and why it affects the specific position. |
Using generic phrases like "internal restructuring" without data or connection to the position. |
| Compensation |
Make available 20 days of salary per year worked, with a maximum of 12 monthly payments. |
Calculating the regulatory salary incorrectly or not including relevant salary concepts. |
| Notice |
Give 15 days' notice or pay for the days not given notice. |
Forgetting to give notice or not correctly reflecting your compensation. |
| Documentation |
Provide reports, economic data, organizational charts or evidence that proves the need to eliminate that position. |
Do not prepare the evidence until the demand arrives. |
The most sensitive point is usually the connection between the cause and the affected worker. It's not enough to demonstrate that the company is experiencing difficulties or wants to reorganize: it must justify why that position is being eliminated and not another.
Unfair dismissal: what happens if the cause cannot be proven
A dismissal can be declared unfair when the company fails to prove the alleged cause or when it fails to comply with essential formal requirements. In that scenario, the company must normally choose between reinstating the employee or paying the corresponding legal compensation.
The general guideline for severance pay in cases of unfair dismissal is 33 days' salary per year of service, with a maximum of 24 months' salary. For employees with seniority prior to February 2012, transitional rules may apply that require calculating an earlier period using different criteria; therefore, it is advisable to review each case individually.
When might it be worthwhile to negotiate a mutually agreed exit?
When the cause is debatable, the evidence is weak, or the employee may be in a particularly vulnerable situation, many companies prefer to explore a negotiated solution. It's not always the cheapest option, but it can be the most efficient if it avoids litigation, reduces uncertainty, and allows for an orderly termination of the employment relationship.
The negotiation must be handled carefully. It's advisable to clearly define amounts, terms, departure date, final settlement, vacation time, document delivery, and closing terms. Poor wording can lead to future claims.
Before issuing a dismissal letter, check that you have just cause, sufficient evidence, and the correct calculations. At MGI Àmbit we help you decide on the safest course of action: disciplinary, objective, or a negotiated departure.
When can a dismissal be considered invalid?
The biggest risk for a company isn't always unfair dismissal. In some cases, the real problem is the dismissal being declared invalid. If a court declares the dismissal invalid, the consequence isn't simply paying compensation: the company must reinstate the employee and pay back wages.
Especially sensitive situations before dismissal
| Worker situation |
Risk |
What to check before acting |
| Pregnancy, birth, adoption, breastfeeding or parental leave |
High risk of nullity if there is no valid cause unrelated to that situation. |
Real reason for dismissal, objective evidence and concrete connection with the position. |
| Reduced working hours, work-life balance leave or leave of absence for care |
Risk of it being interpreted as retaliation or discrimination. |
Dates, prior communications, selection criteria and alternatives. |
| Legal or union representative |
Additional formalities and priority of permanence in certain cases. |
Contradictory file, agreement, communications and representation rights. |
| sick leave or previous claims |
Risk if there is a connection with discrimination, retaliation or violation of rights. |
Real motivation, documented history, and criteria applied to other workers. |
| Internal complaints, grievances, or previous conflicts |
Possible claim of indemnity guarantee. |
Time sequence, communications and independent cause evidence. |
If an employee is in a protected situation, it doesn't mean the company can never dismiss them. It means the reason for dismissal must be exceptionally well-founded and completely unrelated to their protected status.
How to properly prepare for dismissal, step by step
A company that needs to dismiss a permanent employee must act methodically. Improvisation is often the cause of many unsuccessful dismissals.
1. Analyze the real cause
The first step is to identify why the contract is being terminated. Is there a breach of contract by the employee? Is there deliberate underperformance? Is there a genuine reorganization underway? Does the company need to eliminate the position? Is the goal simply to replace that person? The answer will determine the entire strategy.
2. Review contract, agreement and category
The permanent contract, the collective bargaining agreement, and the professional category determine rights, obligations, possible additional formalities, and the base salary. In some sectors, the agreement requires specific procedures before disciplinary action or dismissal.
3. Check if a protected situation exists
Before dismissing an employee, it's essential to check if they are pregnant, working reduced hours, on leave, on unpaid leave, on sick leave, acting as a representative, or have filed claims. This analysis is crucial for assessing the risk of the dismissal being deemed invalid.
4. Gather evidence
The evidence must exist before the letter is delivered. Emails, reports, disciplinary records, time logs, communications, performance comparisons, organizational charts, or financial documentation must be organized and consistent with the alleged cause.
5. Calculate severance pay and final settlement
The calculation must include the base salary, seniority pay, outstanding vacation days, bonuses, accrued variable pay, severance pay if applicable, and final settlement. A calculation error can lead to conflict, even if the grounds for dismissal are justified.
6. Write a precise letter
The dismissal letter defines the scope of the legal proceedings. Anything not clearly explained in the letter can be difficult to introduce later. Therefore, it must be specific, well-organized, coherent, and tailored to the type of dismissal chosen.
7. Submit the documentation correctly
The delivery must be documented. If the employee refuses to sign, this should be recorded. The final settlement, company certificate, and necessary notifications to Social Security and, if applicable, to the workers' representatives must also be prepared.
Common mistakes when firing a permanent employee
Many labor disputes are lost not because the company had no grounds for a claim, but because it acted improperly. These are the most common mistakes:
- Write a generic letter without specific facts.
- Not reviewing the applicable collective agreement.
- Delivering a disciplinary dismissal without a prior hearing.
- Not calculating the regulatory salary correctly.
- Failure to verify protected worker situations.
- Using a disciplinary dismissal when there is actually an organizational cause.
- Claiming economic reasons without sufficient documentation.
- Do not check if several dismissals may exceed collective dismissal thresholds.
- Do not prepare evidence until the conciliation slip arrives.
- Signing exit agreements without properly finalizing settlement, compensation and effects.
Business checklist before firing an employee with a permanent contract
| Ask |
Why it matters |
Risk if ignored |
| Is the cause disciplinary, objective, or negotiated? |
Determine requirements, cost, and strategy. |
Poorly focused and inappropriate letter. |
| Is there enough evidence? |
The company must prove the facts or the cause. |
Unfair dismissal due to lack of evidence. |
| Does the worker have special protection? |
It may increase the risk of invalidity. |
Mandatory readmission and processing wages. |
| Does the agreement require any procedures? |
Some agreements add formalities or a gradation of offenses. |
Formal defect in the dismissal. |
| Is the compensation calculated correctly? |
The calculation depends on salary, seniority, and type of dismissal. |
Financial claims and loss of trust. |
| Are more layoffs planned? |
It may require the analysis of collective dismissal thresholds. |
Nullity due to fragmentation or fraud of law. |
How much does it cost to dismiss a worker with a permanent contract?
The cost depends on the procedure used and the final classification of the dismissal. A justified disciplinary dismissal is not the same as a justified one, an unfair dismissal, or a dismissal declared null and void.
| Result |
Usual economic consequence |
Practical commentary |
| Disciplinary proceeding |
Without compensation, with settlement of outstanding amounts. |
It requires clear proof of serious and culpable non-compliance. |
| Objective originating |
20 days per year worked, maximum 12 monthly payments, plus severance pay. |
You must comply with the cause, letter, compensation and notice. |
| Unfair |
33 days per year worked, maximum 24 monthly payments, except for transitional rules. |
It can arise from a lack of cause or formal defects. |
| Null |
Reinstatement, back pay and possible additional compensation. |
This is the riskiest scenario for the company. |
Therefore, before making a decision, it's advisable to prepare a scenario simulation: the cost if it goes well, the cost if it's declared inadmissible, and the cost if there's a risk of annulment. This comparison allows you to decide based on economic and legal criteria, not just emotional ones.
A poorly prepared dismissal can be far more expensive than a thorough review beforehand. At MGI Àmbit we calculate the cost, review the documentation, and develop the safest employment strategy for your company.
What happens if the employee challenges the dismissal?
The employee can challenge the dismissal within the legal timeframe. The process typically begins with a conciliation request and, if no agreement is reached, continues with a lawsuit in the Labor Court. From the company's perspective, the key is to have prepared the case file before the dismissal, not afterward.
What will the court review?
The court will analyze the letter, the stated reason, the available evidence, the formal compliance with the procedure, and the possible existence of a violation of fundamental rights. In a dismissal for objective reasons, it will review whether the cause exists and whether it justifies the termination of that specific position. In a disciplinary dismissal, it will review whether the events occurred, whether they are serious, whether the employee is culpable, and whether the dismissal sanction is proportionate.
When should a labor advisor intervene?
The role of a labor consultancy should not be limited to calculating severance pay or preparing the termination of employment with Social Security. In the case of the dismissal of a permanent employee, the value lies in anticipating the conflict, organizing the evidence, and designing the strategy.
Cases in which it is advisable to ask for help before acting
- The worker has a long tenure and the potential cost is high.
- There is sick leave, pregnancy, reduced working hours, permits or prior claims.
- The company wants to claim poor performance, but it doesn't have clear metrics.
- There are economic or organizational reasons, but the documentation is not ready.
- The worker is a legal representative, union representative, or holds a sensitive position.
- Other layoffs have been made or are expected in the next 90 days.
- The company wants to negotiate an amicable exit without creating further problems.
How MGI Àmbit helps companies that need to dismiss a permanent employee
At MGI Àmbit we assist companies in Barcelona and throughout Spain in the preparation, execution, and defense of individual dismissals. Our approach combines labor law advice, legal review, economic analysis, and practical negotiation strategies.
We can help you review the feasibility of dismissal, choose the appropriate path, prepare the letter, calculate compensation and final settlement, organize the evidence, review the collective agreement, design a negotiated exit, or defend the company if the employee files a conciliation request or lawsuit.
Conclusion: Firing an employee with a permanent contract requires strategy, not improvisation
Dismissing an employee with a permanent contract is possible, but doing it poorly can turn a necessary business decision into a much bigger labor problem. The key is not to rush: first, analyze the cause, then review the risk, calculate the cost, prepare the evidence, and finally, implement the decision with a solid letter and the correct procedure.
If your company needs to dismiss a permanent employee, seeking prior advice can make the difference between an orderly exit and a costly conflict. At MGI Àmbit we help you make the decision with confidence, rigor, and business acumen.
Contact MGI Àmbit, labor consultants for companies in Barcelona
MGI Àmbit is a Barcelona-based law and economics firm specializing in labor, tax, accounting, and legal advice for businesses. Our labor team advises companies on hiring, payroll, restructuring, dismissals, disciplinary actions, employee relations, and defense in labor disputes.
If you need help dismissing an employee with a permanent contract, contact MGI Àmbit before sending the dismissal letter. We will analyze your case, review the documentation, and advise you on the safest way to protect your company.
Do you need to dismiss a permanent employee? Avoid improvisation. Talk to our labor team and prepare the dismissal with legal certainty from the very beginning.
Frequently asked questions about dismissing an employee with a permanent contract
Can I dismiss a permanent employee without cause?+
The company can terminate the contract, but if there is no valid reason or it cannot prove it, the dismissal may be declared unfair or even null and void if it affects fundamental rights or protected situations. Therefore, it is advisable to analyze the case before delivering the dismissal letter.
Which is better: dismissal for objective reasons or disciplinary dismissal?+
It depends on the cause. Disciplinary action is based on a serious and culpable breach of contract by the employee. Objective action is based on economic, technical, organizational, production-related, or other legal grounds. Using the wrong approach increases the risk of losing the case.
How much does it cost to dismiss a permanent employee?+
It depends on the type of dismissal and its classification. A fair dismissal entails 20 days' pay per year of service, with a maximum of 12 months' salary. An unfair dismissal is typically calculated at 33 days' pay per year of service, with a maximum of 24 months' salary. A fair disciplinary dismissal does not generate severance pay, but it does entitle the employee to a final settlement.
What documents do I need to prepare for dismissal?+
It is advisable to gather the contract, agreement, payroll, seniority, category, annual salary, prior communications, evidence of the facts, previous sanctions, economic or organizational documentation and any information on protected situations of the worker.
What happens if the worker is on medical leave?+
Sick leave requires special caution. It doesn't mean you can never be dismissed, but if the decision is linked to the illness, disability, or retaliation, it could be considered invalid. It is essential to prove a genuine reason unrelated to the leave.
Do I have to hold a preliminary hearing before a disciplinary dismissal?+
Following the recent Supreme Court ruling, it is highly recommended to initiate a preliminary hearing process so that the employee can defend themselves against the allegations before a final decision is made. Furthermore, it is always necessary to check whether the collective bargaining agreement requires any additional procedures.
How long does the worker have to file a claim?+
The general deadline for challenging a dismissal is 20 working days. Filing a conciliation request suspends this period, but the company must be prepared from the outset to defend the reason given in the dismissal letter.
CanMGI Àmbit prepare the dismissal letter?+
Yes. At MGI Àmbit we review the documentation, calculate the cost, assess risks, recommend the most appropriate course of action, and prepare the letter or negotiation strategy so that the company can act with legal certainty.
Do you have any questions about this topic?
Our team of expert advisors will help you resolve any issues related to our services.
Contact us now
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