Navigating employment termination in Andorra requires careful adherence to local labor laws to ensure compliance and avoid potential disputes. The process involves specific requirements regarding notice periods, grounds for dismissal, procedural steps, and severance pay entitlements, all designed to protect both employers and employees.
Understanding these regulations is crucial for companies operating in Andorra, whether they are establishing a local presence or managing remote employees through an Employer of Record. Proper execution of termination procedures is essential for legal compliance and maintaining fair labor practices within the Principality.
Notice Period Requirements
Andorran labor law mandates specific minimum notice periods for employment termination without cause. The required notice period typically depends on the employee's length of service with the company. These periods are designed to provide employees with time to seek new employment.
The minimum notice periods are generally as follows:
| Length of Service | Minimum Notice Period |
|---|---|
| Up to 1 year | 15 days |
| From 1 year up to 5 years | 30 days |
| Over 5 years | 60 days |
It is important to note that employment contracts or collective bargaining agreements may stipulate longer notice periods than the statutory minimums. The notice must be given in writing.
Severance Pay Calculations
Severance pay (indemnización por despido) is generally due to an employee in cases of termination without just cause (objective reasons or mutual agreement). It is calculated based on the employee's salary and length of service.
The standard calculation for severance pay is typically:
- 15 days of salary per year of service, prorated for periods less than a year.
There is often a cap on the total amount of severance pay, which may be equivalent to a certain number of months' salary or a specific maximum amount, though the 15 days per year is the common formula for standard cases. Severance is not typically payable in cases of termination with just cause (disciplinary dismissal) or during the probationary period.
Grounds for Termination
Employment contracts in Andorra can be terminated based on several grounds, broadly categorized as termination with cause and termination without cause.
Termination with Cause (Disciplinary Dismissal)
Termination with cause occurs when an employee commits serious misconduct or breaches their contractual obligations. Valid grounds for disciplinary dismissal may include:
- Repeated and unjustified absence or lateness.
- Disobedience or insubordination.
- Breach of good faith or abuse of trust.
- Persistent decrease in performance.
- Physical or verbal aggression towards the employer, colleagues, or clients.
- Harassment (sexual, moral, etc.).
- Drunkness or drug addiction affecting work performance.
- Violation of company rules or policies.
For a disciplinary dismissal to be lawful, the employer must have clear evidence of the misconduct and follow the correct procedure.
Termination Without Cause (Objective Reasons or Mutual Agreement)
Termination without cause can occur due to objective reasons related to the company's operational needs or through mutual agreement between the employer and employee.
Objective reasons may include:
- Economic, technical, organizational, or production reasons (e.g., restructuring, redundancy).
- Employee's unsuitability for the job (after reasonable attempts to adapt or relocate).
- Employee's absence from work exceeding a certain threshold due to illness (under specific conditions).
Termination by mutual agreement requires a clear written agreement signed by both parties, outlining the terms of separation, including any agreed-upon compensation.
Procedural Requirements for Lawful Termination
Adhering to strict procedural requirements is essential for a lawful termination in Andorra, regardless of the grounds. Failure to follow the correct process can render a dismissal unfair or void.
Key procedural steps typically include:
- Written Notice: The employee must receive written notice of termination.
- Statement of Grounds: The notice must clearly state the specific reasons for termination (especially crucial for termination with cause). For disciplinary dismissal, the notice must detail the facts constituting the misconduct and the date(s) they occurred.
- Effective Date: The notice must specify the effective date of termination, respecting the required notice period.
- Final Settlement: The employer must provide the employee with a final settlement document detailing all payments due, including salary up to the termination date, accrued and unused holiday pay, and severance pay (if applicable).
- Delivery: The notice and final settlement should be delivered to the employee in a manner that provides proof of receipt (e.g., registered mail with acknowledgment of receipt, hand delivery with signature).
Common pitfalls include insufficient detail in the termination notice, incorrect calculation of notice periods or severance, and lack of proper documentation or proof of delivery.
Employee Protections Against Wrongful Dismissal
Andorran law provides employees with protection against wrongful or unfair dismissal. An employee who believes their termination was unlawful can challenge it before the labor court.
A dismissal may be deemed wrongful if:
- It lacks a valid legal ground (either just cause or a valid objective reason).
- The employer failed to follow the correct procedural requirements (e.g., insufficient notice, lack of written notice, failure to state reasons).
- It is discriminatory or violates fundamental rights.
If a court finds a dismissal to be wrongful, the employer may be ordered to either:
- Reinstate the employee to their position under the same conditions.
- Pay the employee compensation in addition to the standard severance pay. This additional compensation is typically higher than the standard severance and is determined by the court based on factors like the employee's tenure, age, and difficulty in finding new employment.
Employers must maintain thorough documentation throughout the employment relationship and the termination process to defend against potential claims of wrongful dismissal.
