The Supreme Court clarifies: termination after 545 days of temporary incapacity is not a disguised dismissal
The Supreme Court ruling of 27 November 2025 addresses the actions of a company in terminating a worker's Social Security coverage after she had exhausted her 545 days of temporary disability, in accordance with Article 174 of the General Social Security Law, and whether this can be interpreted as a tacit dismissal. Once the maximum period of temporary disability had expired, the company proceeded to process the termination of the employee's Social Security coverage and provided her with a settlement and severance document indicating that the employment relationship had been terminated. Subsequently, the National Social Security Institute recognised total permanent disability.
The central element of the debate is whether these actions constitute a clear and unequivocal manifestation of the company's intention to terminate the employment relationship. The Supreme Court affirms that they do not. The Chamber's position is based on the fact that deregistration from Social Security, once the legal limit of 545 days has been exceeded, constitutes strict compliance with the regulations and does not in itself have any effects on termination, given that the employment relationship is in a state of suspension and not termination. The judicial interpretation holds that the company is obliged to report the termination exclusively for contribution purposes and that this does not necessarily imply a decision to terminate the contract. This conclusion is reinforced by the finding that, at the conciliation hearing, the company denied that there was any intention to terminate the employment relationship and claimed that it had merely applied the relevant legal provision.
The ruling also examines the legal impact of the severance pay given to the employee. Although the document contained references typical of a final settlement, the Court considers that its existence is not sufficient to prove an intention to terminate the contract, as it is considered an inappropriate or confusing use of standard documentation rather than an express and conscious manifestation of the intention to terminate the employment relationship. For there to be tacit dismissal, the Chamber recalls, it is essential that the company's conduct conclusively reveals a willingness to terminate the contract, which it does not find in the case under analysis.
The Supreme Court, after overcoming the contradiction, concludes that in this specific case there are not sufficient elements to affirm the existence of a dismissal, given that the company's action is legally explainable as formal compliance with Article 174 of the LGSS and not as an intentional manifestation of terminating the contract. The delivery of ambiguous documentation is not sufficient, on its own, to transform an ex lege suspension into a tacit dismissal, especially when there is no express communication from the company indicating such an intention to terminate the contract.
In short, the underlying issue is resolved in the sense that the expiry of the 545 days of temporary incapacity and the consequent withdrawal from Social Security do not entail the termination of the employment relationship.
Article prepared by the Employment Law Department of ECIJA Madrid.
