Should expatriation bonuses or allowances be included in the calculation of the daily wage used to determine severance pay in the context of international worker mobility?
As a general rule, to determine the daily salary used to calculate severance pay, the salary that the worker actually received in the last month worked at the company must be taken into consideration, including the pro rata of the extraordinary payments, unless there are special circumstances, such as successive variations in the working day or the presence of variable remuneration concepts (overtime, commissions and other irregular accrual bonuses), in which case the average salary received during the year prior to dismissal must be taken into consideration.
Therefore, all monetary and in-kind payments that are considered salary in accordance with Article 26.1 of the Workers' Statute must be included in the calculation module of the daily regulatory salary, with the only exclusions being those other non-salary concepts that, in accordance with Article 26.2 of the Workers' Statute, are received by the worker as compensation or reimbursement for expenses incurred as a result of their work activity (per diems, mileage, transport allowance, etc.), Social Security benefits and compensation (as well as voluntary improvements such as contributions to pension plans, IT supplements and other social aid) and compensation corresponding to transfers, suspensions or dismissals.
But having said all of the above: Are expatriation bonuses or allowances considered salary or non-salary compensation? The answer that the Courts have given to this question is that the amounts intended to compensate – through various items – for the greater burden that international mobility represents for workers, have an evident salary nature, the rationale for which lies in the recognition of the personal effort involved in having to change residence to provide services in another country and adapt to its specific peculiarities, even though they are intended to compensate the expatriate worker for the higher cost of living between their country of origin and the destination country.
However, it should not be forgotten that, as stated at the beginning, the regulatory salary for the purposes of severance pay must be the one corresponding to all the salary payments made to the worker at the time of dismissal. Therefore, if the dismissal occurs after the worker's repatriation and he ceases to receive the corresponding "expatriation bonus," it should not be included in the calculation module of the daily regulatory salary for severance pay. Thus, the salary that should apply in such a case for compensation purposes would be the one paid in Spain, once the worker's expatriate status and the economic conditions inherent to it have ceased.
As an exception to the previous general rule, the Courts have given special treatment to those cases in which it has been found that the company has proceeded to the repatriation of the worker with the sole instrumental purpose of proceeding with his dismissal, considering that in such cases, the salary supplement for mobility abroad must be included regardless of its name (expatriation bonus or supplement) in the calculation module of the daily salary regulating the compensation for dismissal.
Therefore, we are faced with an eminently case-specific matter in which it is essential to examine the circumstances of each particular case in order to assess whether the salary supplements for mobility abroad received by the worker should, or should not, be included in the calculation of the daily salary used to determine the severance pay when the dismissal occurs after the worker's return to Spain.
Martí Milán Romera,
Labor Law Area
Àmbit Assesor
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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