Sense and extent of compensation in case of unfair dismissal

Abstract

The dismissal awards are conceived as one of the main cause of distortions in the spanish labour market, as shows the content of the last reform of the Worker’s Statute. The regulation of this institution has major implications from a juridical perspective but also from the economic analysis. This research examines the logics and the inconsistences of the consequences established in the law for one specific situation: the dismissal legally descripted as «improcedente» (unlawful). To this end, economic implications of this payout are explained, in order to a better comprehension of the precise rules and practices in this aspect of labour law, which are systematically expounded. This paper states several deviations of the logic that is supposed to inspire the regulations of those awards. It also shows how judicial reviews and law reforms have caused incongruences when trying to solve concrete problems.