Key points of the reform on the termination of contracts due to permanent disability

The entry into force of Law 2/2025, of April 29, on May 1, 2025, marked a significant change in Spanish labor regulations. This law modifies the Workers' Statute and the General Social Security Law, eliminating the automatic termination of employment contracts due to permanent disability .

What does this reform mean for businesses?

Until now, the declaration of permanent total, absolute, or severe disability could lead to the automatic termination of an employment contract. With the new regulations, this termination is no longer automatic. The company must consider making reasonable adjustments or relocating the employee to another position compatible with their situation before terminating the contract.

Procedure to follow after the declaration of permanent disability

• Employee notification: The employee has 10 calendar days from the notification of the permanent disability decision to express his or her willingness to continue working for the company.
• Company evaluation: The company has three months to evaluate and, if appropriate, implement reasonable adjustments to the job or relocate the employee to another suitable position.
• Termination of the contract: If it is not possible to make reasonable adjustments or relocate the employee without excessive hardship for the company, the contract may be terminated, with reasons for this decision.

What is meant by "reasonable adjustments"?

Reasonable accommodations are necessary and appropriate modifications or adaptations to the work environment to ensure that a person with a disability can perform their job equally. These adjustments should not impose an undue burden on the employer.

The law establishes criteria for determining when a burden is undue, especially in the case of small businesses with fewer than 25 employees. In these cases, the burden will be considered undue when the cost of adaptation exceeds the statutory severance pay or the equivalent of six months' salary, without taking into account any public aid or subsidies.

Implications for business owners and entrepreneurs

This reform places greater responsibility on companies in managing permanent disability situations. It is essential that business owners and entrepreneurs:

• Evaluate the possibility of making reasonable adjustments to your job, considering available aid and subsidies.
• Properly document the entire assessment and adaptation process to justify your decisions in the event of an inspection or litigation.

Law 2/2025 represents a step forward in the protection of the labor rights of people with disabilities, aligning itself with the principles of equality and non-discrimination. For companies, it represents both a challenge and an opportunity to improve their labor practices and foster a more inclusive work environment.

At Puigverd Assessors , we are committed to advising our clients on adapting to this new regulation, offering customized solutions that guarantee legal compliance and promote labor inclusion.