An employee’s permanent disability as a cause for termination or suspension of the employment contract

Written on 18 Dec 2018

The permanent disablement or serious invalidity of an employee may lead either to the termination of the employment contract on the basis of Article 49.1.e) of the Workers' Statute, or simply to the suspension of the contract with reservation of the job, under Article 48 of the Statute. The differentiation of both assumptions is fundamental, because if the contract is terminated at the request of the employer, without meeting the requirements necessary to operate the cause of legal termination of the contract, it could be qualified as unfair dismissal.

The situation of temporary disablement of an employee has an initial duration of 365 days, extendable, for a maximum of a further 180 days. Once this maximum duration of 545 days has elapsed, the situation of temporary disability is extinguished and the National Institute of Social Security (hereinafter, the NISS) must choose between registering the employee, with the consequent return of the latter to work, or initiating a permanent disablement file.

Once the permanent disablement file has been initiated, the INSS must decide whether or not to declare the employee’s permanent disability, and may delay this decision up to a maximum of 730 calendar days from the employee’s date of leave (date of start of temporary disability). Throughout this period, the effects of the employee’s temporary disability are extended.

Now, if at the time of qualification, the INSS decides to qualify the employee’s permanent disability, what options does the company have?

On the one hand, article 49.1.e) of the Workers’ Statute determines that that the employment contract will be extinguished due to serious invalidity or total or complete permanent disability of the employee, extinction which, unless otherwise specified in the applicable Collective Bargaining Agreement or in the employment contract, does not give rise to the right to compensation. For its part, article 48.2 of the Workers Statute, establishes that in the event of temporary disabilty, after this situation is extinguished by the declaration of permanent disability to the degrees of total and permanent incapacity for the usual occupation, complete incapacity for any work, or serious invalidity, when, in the judgment of the rating organ, the situation of the employees’ incapacity will foreseeably be subject to revision owing to improvement permitting his/her reinstatement in the work post, the suspension of the labour relationship shall subsist with reservation of the work post for a period of two years to be counted from the date of the resolution by which permanent disability was declared.

Consequently, it is essential for the company to pay attention to the specific content of the resolution of the rating body, in order to be able to decide with legal certainty whether to terminate the employment contract with the employee or whether, on the contrary, to maintain the suspended contract, with reservation of position, for a further two years.

The employment contract will be terminated in the event of the following circumstances:

  1. That the employee’s situation is qualified as a serious invalidity, complete and permanent disability, or total and permanent disability, since partial disability does not justify an extinction due to this cause;
  2. Such a situation should be qualified as “foreseeably definitive” or with no provision for review for improvement.

On the other hand, the suspension of the contract with reservation of employment will be extended when the following requirements are met:

  1. That the decision recognises the employee in one of the aforementioned degrees of disability (total permanent disability, complete permanent disability or serious invalidity).
  2. That it expressly states in such resolution, a possible revision for improvement within the two years following the resolution. If this improvement becomes effective within the term, accrediting the improvement of the employee in his sufferings and sequels, he/she will proceed to return to work.

If, under these circumstances, the employer terminates the employment contract in accordance with 49.1.e) of the Workers’ Statute, instead of extending the suspension of the contract provided for in article 48.2, in the event of a legal claim by the employee, the termination of the contract would be classified as unfair dismissal. A possible declaration of nullity could even be considered if there were circumstances that could determine the existence of a discriminatory motive. In this case, due to the employee’s disability. Notwithstanding the foregoing, this possible declaration of nullity in cases of long-term incapacities (which have been equated by certain judgments, with the situation of disability), is still very rare in Spain, according to the jurisprudence of the Supreme Court.

Finally, to briefly mention the existence of Collective Bargaining Agreements that recognize the right of the employee to receive compensation in the event of termination of the contract for this reason. These also recognise the employee’s right to request a change of job in the company, in the event of a declaration of total permanent disability and if there is a vacancy for which he is considered fit, physically and psychologically.

Consequently, it is essential that the employer, before proceeding with the termination of an employment contract under Article 49.1.c) of the Workers’ Statute, has adequate advice to help him properly assess all concurrent circumstances, as well as the rules and collective bargaining agreement that is applicable.