In an increasingly globalized environment, the international labor market has ceased to be an exception and has become the norm. Cross-border employment relationships, remote work, and international employee mobility are now part of today’s business reality.
However, this new reality also brings significant legal challenges particularly when it comes to foreign employees whose residence and work permits may expire or lose validity.
In this article, we analyze the proper way to proceed when an employee’s residence and work permit expires, according to the doctrine established by the Spanish Supreme Court, and examine the legal and labor implications for companies.
1. The challenge of managing employees with residence and work permits
More and more companies in Spain are hiring foreign professionals with highly qualified or specialized profiles. Although these employees are fully integrated into the workforce, they depend on the validity of their administrative residence and work authorization to continue performing their duties legally.
When such authorization expires or is not renewed in time, the company faces a delicate situation: keeping an employee without a valid permit may lead to administrative sanctions and corporate liability, but dismissing them without following the proper procedure may also have judicial consequences.
2. What happens when an employee’s work permit expires?
The expiration of a residence and work permit does not automatically terminate the employment relationship. In fact, the Spanish Supreme Court has made it clear that the company cannot unilaterally terminate the contract or deregister the employee without following due process.
In its Judgment of June 23, 2021, the Court analyzed a case where a company, upon discovering that an employee’s permit had expired, treated this as an automatic condition for termination of the employment contract. The company therefore deregistered the employee from Social Security without initiating a formal dismissal or paying any severance.
The employee, whose residence and work authorization had expired, challenged the company’s decision in court.
3. The Supreme Court’s doctrine: objective dismissal is the correct procedure
The Supreme Court ruled that the company’s actions were incorrect. The loss of validity of a work permit does not constitute an automatic cause for termination of the contract; rather, it must be treated as a case of supervening ineptitude under Article 52(a) of the Workers’ Statute.
This means that when an employee loses their authorization to work in Spain, the company must process an objective dismissal.
An objective dismissal based on supervening ineptitude requires compliance with the following legal requirements:
- A written communication to the employee explaining the reasons for the dismissal.
- A minimum notice period of 15 calendar days, unless replaced by an equivalent payment in lieu of notice.
- Payment of compensation equal to 20 days’ salary per year of service, up to a maximum of 12 months.
In this way, the company fulfills its legal obligations and avoids the risk of the dismissal being classified as unfair or null.
4. Why deregistering the employee without dismissal is not valid
The Supreme Court’s decision emphasizes that the company cannot simply deregister the employee from Social Security on the grounds of permit expiration.
Although it might seem like an administrative solution, this practice is considered an unilateral and unjustified termination, violating the employee’s right to receive formal notice, compensation, and the opportunity to challenge the decision.
Therefore, direct deregistration without a dismissal letter amounts to an unfair dismissal, with all the economic and reputational consequences that this entails for the company.
5. The company’s liability in case of permit expiration
When a foreign employee loses their residence and work authorization, the company must act diligently and proportionately.
The fact that the employee lacks a valid permit does not exempt the company from following the proper legal procedure. The Supreme Court stresses that the expiration of the permit does not automatically extinguish the employment relationship; rather, it must be regularized through an objective dismissal.
Moreover, if the company keeps an employee registered without valid authorization, it may face serious or very serious administrative penalties under immigration and Social Security law.
For this reason, preventive and coordinated management between the Human Resources department and the legal team is essential to minimize risks.
6. How to act when a work permit expires
To handle this situation correctly, companies should establish an internal protocol that includes the following steps:
- Periodic verification of the validity of all foreign employees’ residence and work permits.
- Preventive communication to the employee as the expiration date approaches, reminding them to begin the renewal process.
- Documentation of all communications made to the employee on this matter.
- If renewal is not achieved, initiation of an objective dismissal procedure in compliance with Article 52(a) of the Workers’ Statute.
- Archiving of all documentation related to the process to prevent future legal claims.
7. Practical recommendations for HR departments
Human Resources departments should anticipate these scenarios through migration compliance policies and documentary control systems.
It is advisable to implement automatic alert systems for permit expiration dates, coordinate with legal advisors specialized in immigration law, and maintain transparent and documented communication with employees.
These best practices not only reduce the risk of sanctions but also demonstrate good faith on the part of the company, a factor that courts consider in litigation.
The expiration of an employee’s residence and work permit does not automatically terminate their contract. The only legally valid way to end the employment relationship in these cases is through objective dismissal due to supervening ineptitude, as established in Article 52(a) of the Workers’ Statute.
At Suárez de Vivero, we advise national and international companies on managing foreign employees, processing objective dismissals correctly, and preventing risks arising from immigration-related situations.
Contact our team for specialized advice and to ensure the legal security of your business decisions.
