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Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Andorra

Notice period

In Andorra, labor law stipulates that employers must provide notice periods when terminating employment contracts, unless the employee has committed serious misconduct. The duration of the notice period is contingent on the employee's length of service.

Minimum Notice Period

The minimum notice period is influenced by two factors:

  • Collective Bargaining Agreements: These agreements, established by industry or company, may set a baseline notice period that applies to all employers within that scope.

  • Absence of Collective Agreement: In the absence of a relevant agreement, the legal minimum notice period is one day per month of service, capped at a maximum of 30 days.

Additional Notice for Long Service

In addition to the minimum notice period, Andorran law provides an extra notice period for employees with longer service:

  • Five Days Per Year: Employees accrue an additional five days' notice for each year of service, up to a maximum of 90 days.

For example, an employee who has worked for a company for five years would be entitled to the minimum notice period (potentially 30 days based on a collective agreement) plus an additional 25 days (five days per year for five years), resulting in a total notice period of 55 days.

Important Points to Remember

  • The probationary period, typically ranging from one to three months, is not included when calculating the notice period.
  • Employers must provide written notice of termination, specifying the effective date and, ideally, the reason for termination.

Severance pay

In Andorra, labor law stipulates that employees are entitled to severance pay under certain conditions.

Dismissals Without Cause

If an employee is dismissed without cause, they are entitled to severance pay. The prerequisites for this type of severance include a minimum tenure of at least six months with the same employer and the dismissal cannot be due to serious misconduct by the employee.

Calculation of Severance Pay

The calculation of severance pay is based on fifteen days' wages for each year of service worked. The employee's last received salary is used as the basis for this calculation.

Specific Work Contracts

Employees with certain types of work contracts may also be entitled to severance pay upon termination, regardless of the cause. For instance, fixed-term contracts that end upon expiration require employers to fulfill a severance obligation. Similarly, contracts tied to the completion of a specific project have comparable severance obligations. The calculation of severance pay for terminated fixed-term and project-based contracts is typically twenty-five days' salary per year worked.

Additional Severance Entitlements

In situations related to economic downsizing or company restructuring, employees may be entitled to additional severance pay provisions. These are usually established through collective bargaining agreements or individual employment contracts.

Termination process

Termination of employment contracts in Andorra can occur under several circumstances. It's essential to understand the legal reasons and processes surrounding termination to ensure compliance.

Types of Termination

  • Mutual Agreement: Both the employer and employee agree to end the employment contract, often with specific terms outlined in a termination agreement.
  • Expiration of a Fixed-Term Contract: If the employment contract had a specific end date, the contract terminates automatically upon reaching that date.
  • Completion of Specific Task: If a worker was hired for a particular project or task, the contract terminates once the task is completed.
  • Resignation by the Employee: The employee formally ends the employment relationship by submitting written notice.
  • Dismissal by the Employer: The employer can terminate the employee with or without cause.

Dismissal by the Employer

Employers in Andorra have the right to dismiss an employee, but they must follow established legal procedures:

Dismissal with Cause

An employer can dismiss an employee with cause for reasons such as:

  • Repeated and unjustified absences or delays
  • Serious misconduct or breach of contract
  • Force Majeure (unforeseeable circumstances preventing work)
  • Economic or company-related grounds

Dismissal without Cause

An employer can also dismiss an employee without cause.

Probationary Period

Andorran employment contracts often include probationary periods. These periods, usually ranging from one month to three months depending on the role, allow for termination without notice.

Additional Considerations

  • Written Notice: Dismissal must be communicated in writing, stating the reasons for the termination.
  • Collective Dismissals: Specific rules apply for large-scale dismissals affecting multiple employees.
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