Permanent disability and dismissal: what changes and when can the employment contract be terminated
The end of the automatic termination of employment contracts due to permanent disability
For years, there has been an almost automatic rule: an employee became ill or suffered a limitation, was recognised as having a permanent disability, and their employment relationship with the company automatically came to an end.
→ Without further assessment.
→ Without exploring alternatives.
→ Without considering whether they could continue working in another available position within the company.
However, with the approval of Law 2/2025, of 29 April, a significant change has been introduced into the Spanish labour system through a reform of the Workers’ Statute: permanent disability no longer automatically implies the termination of the employment contract.
Why is this change taking place?
This new approach responds to European case law and the need to strengthen the protection and non-discrimination of people with disabilities.
The key issue was the analysis of Article 49.1 of the Workers’ Statute, which allowed contracts to be terminated automatically, in order to determine whether this regulation complied with European legislation.
What changes for companies?
As of 1 May 2025, a declaration of permanent disability no longer automatically implies the termination of the employment contract. Instead, companies will be required to implement a series of measures to try to maintain the employment relationship whenever possible.
New procedure following permanent disability
1. Employee’s decision
Following the resolution, the employee has 10 calendar days to communicate their intention to remain with the company.
- If no response is provided, such “silence” may be interpreted as a waiver, resulting in the termination of the employment relationship.
- If the employee expresses their intention to continue, the process is activated.
2. Company obligations
The company has a period of three months in which it must:
- Analyse reasonable adjustments to adapt the employee’s role.
- Assess the possibility of relocation to a compatible position.
The Occupational Risk Prevention Service must assess the adaptation of duties or identify redeployment to another position compatible with the employee’s new circumstances.
3. When can the contract be terminated?
The contract may only be terminated when:
- The adaptation would represent an excessive burden for the company.
- There is no vacant position compatible with the employee’s conditions.
- The employee rejects the proposed relocation.
In all cases, the company must objectively justify that the adjustments are not reasonable or would impose a disproportionate burden.
4. Situation during the process
During the period in which the company is assessing alternatives, the employment contract will be suspended, while maintaining the reservation of the position or the expectation of redeployment.
In practice, for companies, this involves several challenges:
- Greater responsibility in decision-making.
- Higher legal risk if action is not taken correctly.
- An approach more closely aligned with inclusion and non-discrimination in employment.
The key lies in failing to analyse alternatives or rejecting reasonable adjustments following a declaration of permanent disability, as this may imply discrimination in the termination process and could result in an unfair dismissal or even a null dismissal.
What changes for employees?
Relevant changes are also introduced:
- Possible suspension of the pension if the employee continues in the same role or in an incompatible one.
- Compatibility between pension and employment if the employee performs a different role adapted to their limitations.
- Permanent disability no longer implies leaving the labour market.
Law 2/2025 not only modifies a contractual termination procedure, but also represents a step towards a change in mindset and a more inclusive labour model, aligned with European regulations on the rights of people with disabilities.
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