What to do if the company does not pay me my severance pay and deadlines for claiming it

Many workers, either because they have resigned voluntarily or because they have been dismissed, are faced with the problem that the company refuses to pay them their severance pay. A serious problem, but one that can be solved. In fact, here we will answer the question of what to do if I am not paid my severance pay.

Difference between severance pay and compensation

The first thing to bear in mind is that severance pay is a settlement, not a severance payment. Therefore, what it encompasses are labour concepts already generated that the company is obliged to pay to the worker, even if it is the worker who has voluntarily resigned from his or her job.

In order for you to understand more clearly what the severance payment consists of, we are going to explain the different concepts it covers:

• Days worked in the current month, i.e., from the period covered by the last pay slip you received.
• Overtime that you have not been paid for.
• Amount corresponding to the holidays that you have generated and that you have not taken at the date of termination of the contract.
• Proportional part of the overtime payments to which you are entitled.

Although it is less common, the severance payment can also include commissions, bonuses for objectives or incentives, if the contract that linked you to the company so stipulates.

Let's give you an example to help you understand this better. Imagine that you decide to leave the company voluntarily and, in your letter of notice, you state that your contract will be terminated on 30 June. In that case, the company would have to pay you, as a minimum, as part of your severance pay:

• The full salary for the month of June.
• A full bonus, if it was not included pro rata in the wages.
• Half of your annual holiday entitlement, if you have not taken it.

My company won't pay me my severance pay, what should I do?

Let's imagine that you have complied with the notice period for voluntary redundancy, which is 15 calendar days unless the collective agreement or your contract says otherwise, and that the company openly refuses to pay you your severance pay. In that case, there are a number of things you need to be clear about.

How long does a company have to pay the severance pay?

There is no clear rule, but the general rule is that the period for paying the severance pay for voluntary resignation begins and ends on the same day that the employment relationship expires. That is, the date on which you announced that you would leave the company.

However, there are collective agreements that provide for a longer period. There are also situations in which the company can give itself a few extra days to calculate it. It is quite easy to understand.

Imagine that you have spent part of your working hours teleworking from home and that, for this purpose, the company provided you with a computer, a monitor and other accessories so that you could carry out your tasks. If you do not return these items, or if you return them in poor condition without the cause being attributable to direct use, the company can deduct the amount from your severance pay. Of course, the calculation of the amount would result in a delay in payment.

How long does it take to receive my severance pay?

Once you sign the balance and severance document, which shows the amounts due to you, the money should reach your account within a couple of days at the most. The exact time will depend on how long it takes the financial institution to process the transfer.

How long do you have to claim your severance pay?

Don't worry about this question, as the law gives you a period of one year from the date on which your resignation became effective to claim your severance pay.

What is the process for claiming severance pay?

The procedure is known as a claim for payment. To initiate it, you need to present the conciliation paper at the Social Court, after which an act will be held in which you and your former employer will try to reach an agreement. If he refuses to pay you or makes a proposal that you do not agree with, you will have to go to court, which can take more than a year.

What you must be clear about is that, if your claim refers to the severance pay, the judge will rule in your favour and you will end up being paid. In any case, it is very important that a lawyer specialising in labour law accompanies and guides you throughout the process.

But what if the company is bankrupt?

If the company claims that it cannot pay your severance pay because it is bankrupt, the Wage Guarantee Fund (FOGASA) will be responsible for paying it. You will have a period of one year from the date of the court decision to apply for it. You should be aware that, if you exceed the limits set by law, you will not receive the full amount of your settlement.

Are there any penalties for late payment of severance pay?

Yes. Article 29.3 of the Workers' Statute states that the interest for late payment of wages is 10% of the debt, so it also applies to the severance pay.

In short, what to do if I don't get my severance pay

At this point, you know how long it takes to get your severance pay and what to do if the company you worked for refuses to pay it. A decision that is unfortunately quite common. If this has happened to you, contact one of our lawyers specialising in labour law to advise you and defend your rights.