Termination of Contract due to Retirement of the Employer

According to article 49 of the Workers' Statute in Spain, the employment relationship can be terminated due to retirement (also due to death or disability) in accordance with the Social Security regulations, that is, when the individual employer is entitled to the corresponding retirement pension. In this case, the employer cannot be a limited or joint-stock company, or a different commercial company, but must be a self-employed worker. Therefore, labor legislation allows the individual employer to terminate employment contracts in a cheaper and easier way than in a commercial company.

But for this, it is essential that the termination is motivated by retirement and that there is an absolute coincidence between the time of the same and the contractual termination. Exceptionally, a small period of time has been allowed between, for example, retirement and termination, if it is proven that that time has been used only for closing the company, such as the sale of the assets in the business. It is not possible to establish an objective time for the cessation of the business, however a period of seven months has been considered by the jurisprudence as excessive, especially when during those months it has not been demonstrated by the employer that activities have been carried out aimed at the closing of the business. deal.

However, if the business continues after retirement (also death or disability are causes for termination) either because it has been transferred to another person or entity, or because the retiree appoints a manager or somebody to direct it, the employment relationship cannot be terminated, as business continues. This is what is known as business succession.

If that was the case, the new employer is subrogated in the labor and Social Security rights and obligations of the previous one, and consequently, must respect all the working conditions of the workers, and must also be liable for salary debts if they exist.

In case this subrogation of the workers is not carried out, the two companies must be sued, both the one that had hired and the company that entered.