LABOR AND SOCIAL SECURITY LAW
Recently, Law 2/2025 of April 29 was approved, amending:
- The revised text of the Workers’ Statute, approved by Royal Legislative Decree 2/2015 of October 23, regarding the termination of employment contracts due to permanent disability (IP), and
- The revised text of the General Social Security Law, approved by Royal Legislative Decree 8/2015 of October 30, also regarding permanent disability.
This law came into force on May 1, 2025, and while it may not strictly be seen as a novelty in labor matters—since courts had already been interpreting the automatic termination of employment following a declaration of permanent disability by Social Security as potentially discriminatory due to disability—it is now a legislative reality.
No More Automatic Termination
Companies can no longer automatically terminate an employment contract solely due to a declaration of permanent disability (IP), which was previously allowed under Article 49(e) of the Workers’ Statute.
To avoid discriminatory practices, employers are now required to make reasonable adjustments or offer a vacant position compatible with the worker’s new condition. This obligation applies only if the worker expresses in writing their desire to continue the employment relationship within 10 calendar days of being notified of the IP decision.
Once this is communicated, the employer has up to 3 months to implement reasonable adjustments or relocate the worker.
Exceptions and Limits
The law allows exceptions where such adjustments would impose an excessive burden on the company. Factors that may be considered in determining this burden include:
- Company size
- Financial resources
- Economic condition
- Total business volume
However, a burden will not be considered excessive if public aid or subsidies sufficiently offset it.
A special rule applies to companies with fewer than 25 employees: the burden is excessive if the cost of adjustments (excluding aid or subsidies) exceeds the higher of:
- The compensation for unfair dismissal that would apply to the worker, or
- Six months of the worker’s salary.
Legal Uncertainty
Apart from this specific threshold for small companies, the law leaves room for interpretation. We will likely have to wait for court rulings to determine the real scope of this regulation.
In May 2024, the National Disability Council published a guide on understanding and implementing reasonable adjustments as a measure of equal opportunity and non-discrimination, though it did not eliminate the uncertainties posed by the new law.
This guide emphasizes proportionality in implementing adjustments and includes criteria such as:
- The discriminatory impact of not implementing the adjustment
- The potential benefit to one or more people, regardless of who requested it
- Whether the adjustment is temporary or permanent
It even includes examples, such as:
- Flexible working hours
- Remote work
- Leave
- Reassignment
- Training in workplace technology
- Mentoring programs
Timing and Termination Options
As stated earlier, employers have a 3-month window to adapt the role or reassign the worker. If such changes are not feasible (due to excessive burden or no suitable vacancy), it seems that the company then has another 3-month period to terminate the contract.
After this period, termination cannot be based on the declaration of permanent disability. The employer must instead pursue objective dismissal under Article 52(a) of the Workers’ Statute, for supervening ineptitude.
Communication Requirements and Employer Obligations
The law clearly mandates a written and well-reasoned notice to the employee. Failure to do so poses a high risk of discrimination claims. Similarly, if the company refuses to make adjustments deemed reasonable, it may also face legal consequences.
Occupational health and safety services will play a key role in this process, helping determine:
- The nature and scope of the required adjustments
- Training, communication, and health surveillance
- Identification of suitable positions in consultation with employee representatives
Ultimately, the employer bears the final responsibility.
Suspension During Transition
Once the IP is declared, the employment contract is suspended while adjustments or relocation are in progress. Similarly, the IP benefit is also suspended during the performance of the same job with adaptations or during relocation to a new role.
Conclusion
A new employer obligation has taken effect: the automatic termination of employment upon permanent disability declaration is no longer valid. As is becoming customary with recent labor laws, we’ll need to closely follow court interpretations to fully understand the practical implications of this legislation.
