Navigating employment termination in Andorra requires a thorough understanding of local labor laws to ensure compliance and mitigate risks. Both employers and employees are subject to specific regulations governing the end of an employment relationship, whether initiated by the employer or the employee. These regulations cover various aspects, including the reasons for termination, required notice periods, and potential severance entitlements.
Properly managing the termination process is crucial for businesses operating in Andorra. Failure to adhere to the established legal framework can lead to disputes, legal challenges, and financial penalties. Understanding the nuances of notice requirements, valid grounds for dismissal, and the correct procedural steps is essential for a lawful and smooth termination process.
Notice Period Requirements
The required notice period for terminating an employment contract in Andorra depends primarily on the employee's length of service with the company. These minimum periods are established by law and must be respected unless termination is for serious disciplinary cause.
| Length of Service | Minimum Notice Period |
|---|---|
| Less than 1 year | 7 days |
| 1 year to less than 5 years | 15 days |
| 5 years or more | 1 month |
It is important to note that collective bargaining agreements or individual employment contracts may stipulate longer notice periods than the statutory minimums. Employers must always apply the most favorable notice period to the employee. Notice must be given in writing.
Severance Pay
Severance pay in Andorra is generally applicable in cases of termination without just cause (i.e., objective or economic reasons) or in cases of wrongful dismissal. It is typically not required for terminations based on serious disciplinary misconduct by the employee, provided the dismissal is deemed just cause.
The calculation of severance pay is based on the employee's length of service and their salary. The standard formula for calculating severance pay for termination without just cause is:
15 days of salary per year of service, prorated for periods less than a year.
The salary used for this calculation is typically the average salary received by the employee over a specific period prior to termination, often the last 12 months, including all regular components. There is usually a cap on the total amount of severance pay, often linked to a maximum number of years of service (e.g., 12 years).
In cases of wrongful dismissal, a labor court may order higher compensation than the standard severance, potentially up to 30 days of salary per year of service, depending on the circumstances and the court's decision.
Grounds for Termination
Employment contracts in Andorra can be terminated for various reasons, which are broadly categorized as termination with cause (disciplinary) or termination without cause (objective).
Termination with Cause (Disciplinary)
This occurs when an employee commits serious misconduct that justifies immediate dismissal. Valid grounds typically include:
- Repeated and unjustified absence or lateness.
- Disobedience or insubordination.
- Breach of contractual good faith or abuse of trust.
- Reduction in work performance that is voluntary and persistent.
- Physical or verbal offenses towards the employer, colleagues, or family members.
- Habitual drunkenness or drug addiction affecting work performance.
- Harassment (sexual, based on origin, race, religion, disability, age, sexual orientation).
For a disciplinary dismissal to be lawful, the employer must be able to prove the employee's misconduct.
Termination Without Cause (Objective)
This type of termination is based on reasons related to the company's operational needs rather than the employee's conduct. Valid grounds typically include:
- Economic, technical, organizational, or production-related reasons affecting the company.
- The employee's inability to adapt to technical modifications in their job.
- The employee's absence from work, even if justified, exceeding a certain threshold (e.g., 20% of working days in two consecutive months, or 25% in four non-consecutive months within a year), provided other employees in the same situation exceed a certain percentage of the total workforce absences.
Termination without cause requires the payment of statutory severance pay and adherence to the required notice period.
Procedural Requirements for Lawful Termination
Regardless of the grounds for termination, employers must follow specific procedural steps to ensure the dismissal is lawful. Failure to comply with these requirements can render the termination null and void or be considered wrongful dismissal.
| Step | Description | Documentation Required |
|---|---|---|
| 1. Written Communication | The employer must notify the employee of the termination in writing. | Termination letter |
| 2. Statement of Grounds | The termination letter must clearly state the specific, detailed reasons for the dismissal. | Termination letter must include detailed justification. |
| 3. Effective Date | The letter must specify the effective date of termination. | Termination letter |
| 4. Notice Period | If applicable (termination without cause), the letter must indicate the notice period given or compensation in lieu. | Termination letter |
| 5. Severance Pay | If applicable (termination without cause), the letter should mention the severance pay calculation and payment. | Termination letter, final settlement statement. |
| 6. Final Settlement | Prepare the final settlement, including outstanding salary, accrued holiday pay, and severance (if applicable). | Final settlement statement, payslip. |
| 7. Delivery of Documents | Ensure the employee receives the termination letter and final settlement documents. Obtain proof of receipt. | Signed copy of termination letter, proof of delivery. |
| 8. Social Security | Notify the relevant social security authorities of the termination. | Required social security forms. |
For disciplinary dismissals, the letter must be delivered promptly after the employer becomes aware of the misconduct. Common pitfalls include vague or insufficient reasons stated in the termination letter, failure to provide the correct notice or severance, and not following the required written procedure.
Employee Protections and Wrongful Dismissal
Andorran law provides employees with protections against unfair or wrongful dismissal. An employee who believes their termination was unlawful can challenge it before the labor court.
A dismissal may be deemed wrongful if:
- It is based on discriminatory grounds (e.g., gender, race, religion, disability, union membership).
- The employer fails to follow the correct procedural requirements (e.g., not providing written notice, not stating valid grounds).
- The stated grounds for termination are not sufficiently proven or do not constitute valid cause under the law.
If a labor court finds a dismissal to be wrongful, it can order the employer to either reinstate the employee or pay compensation. As mentioned, compensation for wrongful dismissal is typically higher than standard severance pay for termination without cause, potentially reaching 30 days of salary per year of service. The court's decision will depend on the specific circumstances of the case. Employees typically have a limited time frame (e.g., 15 working days) to challenge a dismissal in court.
