In an increasingly globalised environment, the international labour market has moved from being an exception to becoming 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 raises significant legal challenges, especially when dealing with foreign employees whose residence and work permits may expire or lose validity.
In this article, we analyse the correct way to proceed when an employee’s residence and work permit loses validity, according to Supreme Court doctrine, and the implications this has for companies from a legal and employment perspective.
1. The Challenge of Managing Employees with Residence and Work Authorisation
More and more companies in Spain are hiring foreign professionals with highly qualified or specialised profiles. These employees may be fully integrated into the workforce, but they depend on the validity of their administrative residence and work authorisation in order to continue performing their duties legally.
When that authorisation expires or is not renewed on time, the company faces a delicate situation. Keeping an employee without a valid permit may lead to administrative sanctions and corporate liability. However, dismissing them without following the proper procedure may also have judicial consequences.
2. What Happens When an Employee’s Work Permit Expires?
The loss of validity of a residence and work permit does not automatically terminate the employment relationship. In fact, the Supreme Court has made clear that the company cannot automatically terminate the contract or deregister the employee without following a procedure.
In its Judgment of 23 June 2021, the Court analysed a case in which the company, after detecting that the employee’s permit had lost validity, considered this to be a termination condition of the employment contract. As a result, it deregistered the employee from Social Security without processing a dismissal or paying any compensation.
The employee, who no longer had a valid work or residence permit, challenged the company’s decision before the courts.
3. Supreme Court Doctrine: Objective Dismissal Is the Correct Route
The Supreme Court resolved the case by declaring that the company’s actions were incorrect. The loss of validity of the permit does not constitute an automatic ground for termination of the contract. Instead, it must be treated as a case of supervening incapacity, under Article 52.a of the Spanish Workers’ Statute.
This means that, when an employee loses their authorisation to work in Spain, the company must process an objective dismissal.
Objective dismissal for supervening incapacity requires compliance with the following legal requirements:
- Written notice to the employee explaining the reasons for the dismissal.
- A minimum notice period of 15 calendar days, unless the company chooses to replace it with equivalent financial compensation.
- Payment of compensation equivalent to 20 days’ salary per year of service, capped at 12 monthly payments.
In this way, the company complies with its legal obligations and reduces the risk that the decision may be classified as unfair or even null.
4. Why Deregistering the Employee Without Dismissal Is Not Valid
The Supreme Court ruling emphasises that the company cannot simply deregister the employee from Social Security on the grounds that their permit has expired or lost validity.
Although this may appear to be an administrative solution, it is considered a unilateral and unjustified termination. It fails to respect the employee’s right to receive formal notice, compensation and the opportunity to challenge the decision.
Therefore, direct deregistration without a dismissal letter is equivalent to unfair dismissal, with all the financial and reputational consequences this entails for the company.
5. The Company’s Responsibility When the Permit Loses Validity
When a foreign employee loses the validity of their residence and work permit, the company must act with diligence and proportionality.
The fact that the employee no longer has valid authorisation does not release the company from following the correct legal route. In fact, the Supreme Court warns that the loss of the permit does not cause the employment relationship to disappear. It creates a situation that must be addressed through objective dismissal.
In addition, if the company keeps an employee registered without valid authorisation, it may face sanctions for serious or very serious infringements in immigration and Social Security matters.
For this reason, preventive and coordinated management between the Human Resources department and the legal team is essential to minimise risks.
6. How to Act When a Permit Loses Validity
To manage this situation correctly, companies should adopt an internal protocol covering the following steps:
- Periodic verification of the validity of residence and work permits for all foreign employees.
- Preventive communication with the employee as the expiry date approaches, reminding them of the need to process the renewal.
- Documentation of all communications sent to the employee on this matter.
- If the permit is not renewed, initiation of the objective dismissal procedure in compliance with Article 52.a of the Spanish Workers’ Statute.
- Filing and preservation of all documentation related to the process, in order to prevent future legal claims.
7. Practical Recommendations for HR Departments
Human Resources departments should anticipate these situations through immigration compliance policies and document control systems.
It is advisable to implement automatic alerts for permit expiry dates, coordinate with legal advisers specialised in immigration law and maintain transparent, documented communication with the employee.
These good practices not only reduce the risk of sanctions, but also demonstrate the company’s good faith. This is an element that courts may value in the event of litigation.
The expiry or loss of validity of an employee’s residence and work permit does not automatically terminate the employment contract. The only legally valid route to end the employment relationship in these cases is objective dismissal for supervening incapacity, under Article 52.a of the Spanish Workers’ Statute.
At Suárez de Vivero, we advise national and international companies on the management of foreign employees, the proper processing of objective dismissals and the prevention of risks arising from immigration-related situations.
Contact our team for specialised advice and to ensure the legal certainty of your business decisions.