The Supreme Court has clarified that the decision handed down by the body that declares the total or absolute permanent disability of an employee is sufficient to terminate the employment contract without the need for any other formalities.
Article 49.1.e) of the Workers’ Statute provides that a declaration of total or absolute permanent disability of an employee constitutes a ground for termination of the employment contract, but does this declaration mean that the employment relationship is automatically terminated? What formalities must the company fulfill for the contract to be terminated in these cases?
A declaration of total or absolute permanent disability of an employee terminates the employment contract, according to said article, “notwithstanding the provisions of article 48.2”. This last provision establishes that, where the employee’s situation may be reviewed due to an improvement that enables him/her to return to work, the employment relationship will be suspended and the job position reserved, for a period of two years from the date of the decision declaring the permanent disability. All of this must be expressly provided in the decision.
Consequently, where the employment contract cannot be suspended and after ruling out any possibility of relocation in the actual company due to an express provision in the law or collective labor agreement, it would be necessary to address how to terminate the employment contract of an employee, who has been declared to be in a situation of total or absolute permanent disability and the formalities and terms with which the company carrying out the termination would have to comply.
This was the main issue addressed by the Supreme Court in its judgment of February 3, 2021 handed down in a case for a ruling on a point of law. In this case, the plaintiff had been declared to be in a situation of permanent disability for her job position and she had filed a claim arguing that the termination was unjustified because the company had not notified her in writing of the termination of her contract and had only done so verbally, notifying her termination directly to the Social Security authorities.
After reviewing the case and assessing the parties’ arguments, the Supreme Court concluded that the company’s termination of the contract was valid and justified. According to the judgment, legislation does not establish any formalities to terminate an employment contract due to an employee’s total permanent disability, while the formalities established in article 55 of the Workers’ Statute for a disciplinary dismissal (i.e. notification in writing, among others), or the need for prior notice, are not applicable in this case.
The judgment concluded that, in general, unless the suspension of the employment contract was applicable in accordance with article 48.2 of the Workers’ Statute, or the collective labor agreement or worker’s contract contained an obligation to relocate the employee in another position within the company, the decision issued by the body declaring the total or absolute permanent disability of the employee was sufficient in itself, once it had become final, to terminate the contract automatically, without the need for any subsequent notification or formalities by the company, which was in turn obliged to comply with the terms of that decision (terminating the employment contract).
The case law cited by the judgment sheds some light on a matter, which was at times controversial and gave rise to considerable doubts between both parties. It ratifies the absence of formal requirements to terminate the employment contracts of employees who have been declared in a situation of total or absolute permanent disability, and concludes that the decision issued by the competent body is in itself sufficient, once it becomes final, to terminate the employment contract automatically.
