A bakery in Spain is accused of turfing out an employee after his arm was ripped off in machinery — and then dumping the severed limb into a rubbish bin.

The Spanish government says the Rovira bakery in eastern Valencia will face "the full weight of the law" over its alleged treatment of Bolivian worker Franns Rilles.

In a story that has shocked the world, Mr Rilles was abandoned 100m from a hospital after his left arm was severed by a kneading machine on May 28.

The bakery owner's son allegedly warned Mr Rilles not to tell doctors where the shocking accident took place.

By the time police located the 33-year-old immigrant's arm in a bin the following day, it was too late for it to be reattached by surgeons.

Mr Rilles was bleeding heavily when discovered near the hospital.

He said he worked 12-hour days at the bakery for the past 18 months, earning under A$40 a day.

Both the Spanish police and Spain’s Workers Commissions union are investigating the incident, while the bakery has been shut down and two bosses detained.

The government is considering granting Mr Rilles temporary residency on humanitarian grounds, Spain's El Pais newspaper reported.