Are you wondering how the declaration of permanent disability affects your employment contract? Do you need expert advice and support during this critical time? Contact Fernanda Vargas via WhatsApp or book an appointment on Calendly to get the guidance you need.

What Changed on May 1, 2025: Permanent Disability No Longer Automatically Terminates the Contract

Since May 1, 2025, significant changes have been implemented in the treatment of permanent disability in Spain, as set forth by Law 2/2025. Previously, a declaration of total, absolute, or severe permanent disability automatically resulted in the termination of the employment contract. However, the reform has redefined this process through the new article 49.1.n) of the Workers’ Statute. This means that employees are no longer automatically dismissed when declared permanently disabled; instead, they are given the opportunity to continue their employment subject to following the required notification and adjustment procedures.

The Four Degrees of Permanent Disability and Who Is Affected by the Reform

The new legislation distinguishes between four degrees of permanent disability: total, absolute, severe, and another degree that, depending on the circumstances, may require different adjustment measures. The reform mainly affects the first three degrees, which previously led to automatic contract termination. Now, these conditions are viewed under a more inclusive approach, allowing affected individuals to retain their employment if they meet the established procedures. The assessment involves technical and economic criteria, including determining whether the required adjustments impose an undue burden on the company and if there is an available suitable position.

Your Ten-Day Notification Period: How and Whom to Inform About Your Desire to Continue

One of the key changes under Law 2/2025 is the establishment of a ten natural day period during which the employee must inform the employer in writing of their wish to continue the contract once the INSS resolution is received. This short period is crucial as it triggers the subsequent protective procedures, ensuring that the contract does not terminate automatically. The worker should communicate this decision to the HR department or the designated person within the company, ensuring that the notification is properly documented.

What the Company Must Do: Prevention Services, Reasonable Adjustments, and Available Positions

Under the new rules, the company is required to take several actions within a maximum period of three months from the INSS resolution. This includes obtaining an assessment from the prevention service regarding the necessary adjustments in the workplace, implementing reasonable modifications to the job, or, if adaptations are not feasible, offering an available position that matches the employee’s professional profile and specific circumstances. This process not only safeguards the employee’s rights but also ensures that the company complies with non-discriminatory principles, as reinforced by both European and national legislation.

The Three-Month Company Period and the Written Motivated Decision

Once the employee initiates the process, the company has three months to either implement the necessary adjustments or offer a suitable alternative position. Should the company be unable to accommodate the adjustment, any decision to terminate the contract must be both motivated and communicated in writing. This requirement means the company must demonstrate that all accommodation options have been exhausted or that accepting the adjustments would impose an undue burden. This new process is designed to protect vulnerable employees and promote fairness in line with current equality and non-discrimination legislation.

When Can the Company Terminate the Contract: Excessive Burden, No Vacant Position, and Rejection of Reassignment

Termination of the contract remains possible under specific conditions. These include situations where the necessary adjustments represent an excessive burden for the company, where no suitable alternative position is available, or when the employee rejects a properly offered reassignment. It is crucial that the company justifies its decision thoroughly and in writing, ensuring that any termination is not discriminatory or arbitrary. This aligns with the legal stipulations outlined in Law 15/2022 and the consolidated rights of persons with disabilities.

How to Assess the Excessive Burden and What Happens in Companies with Fewer Than 25 Employees

The concept of excessive burden is a cornerstone of this reform. Companies must evaluate whether the costs involved in making reasonable adjustments exceed their financial and operational capacities. This assessment takes into account the size of the company, its economic situation, and its overall business volume. Specifically, for companies with fewer than 25 employees, an excessive burden is determined when the cost of the adaptation exceeds either the legally mandated indemnity or the sum equivalent to six months’ salary of the affected employee. This measure helps balance the economic feasibility for smaller businesses while protecting employee rights.

Pension and Salary: Compatibility, Pension Suspension, and Degree Review

An equally important aspect addressed by the reform is the compatibility between the permanent disability pension and the worker’s salary. Under the new regulations, if an employee continues working in an appropriately adjusted role, their pension may be suspended or recalibrated in accordance with the degree of disability and the adjusted working conditions. Furthermore, provisions for retroactive economic effects ensure that the pension reflects the worker’s actual needs once the transitional period of temporary disability ends. This holistic approach strengthens social security and ensures fairness for both the employer and the employee.

If the Company Dismisses You Without Following the Procedure: Nullity, Discrimination, and Claim Deadlines

Should the company choose to terminate the contract without following the mandated procedure, the employee has the right to challenge the decision. Any procedural breaches may result in the dismissal being declared null and void, or may be deemed discriminatory practices, particularly given the special protection afforded to disabled individuals. It is imperative for the worker to act promptly, as the legal framework stipulates strict deadlines for filing claims—specifically, a twenty working day period as per article 59.3 of the Workers’ Statute, in addition to following the pre-conciliation requirements.

Foreign Workers: Effects on Residency and Employment

This reform also has implications for foreign workers. When declared permanently disabled, these employees must be particularly aware of how the new regulations might impact their residency status and work permits. The law aims to protect all workers regardless of nationality, ensuring that maintaining the employment relationship becomes a viable option, thereby safeguarding against additional legal vulnerabilities that could affect an individual’s right to live and work in Spain.

Checklist for Companies and HR Departments

• Confirm the receipt of the INSS notification and the activation of the ten-day period for the employee’s response.
• Obtain and review the prevention service report to assess the feasibility of reasonable adjustments.
• Evaluate the possibility of adapting the current role or, alternatively, offer a compatible vacant position.
• Document all decisions in writing with a clear and justified rationale.
• Assess whether the costs of the required adjustments constitute an excessive burden, especially for smaller companies.
• Ensure that every measure taken complies with current employment and non-discrimination laws.

Frequently Asked Questions

Q: What should an employee do if they disagree with the company’s decision?
A: The employee must notify the company in writing within the stipulated ten-day period and, if dismissed unlawfully, file a claim within the twenty working day period following the pre-conciliation process.

Q: How is the excessive burden determined for a company?
A: The assessment depends on the company’s economic capacity, size, and financial situation, with special considerations in companies with fewer than 25 employees where predefined thresholds (legal indemnity or six months’ salary) are used as benchmarks.

For more detailed information and personalized legal advice regarding these important changes, do not hesitate to contact Fernanda Vargas through WhatsApp or by booking an appointment via Calendly.