Forced retirement

Through the Labour Reform (Law 3/2012, of 6 July), the Executive modified the tenth additional provision of the Workers' Statute with the aim of rendering ineffective everything related to forced retirement. However, with the publication of Royal Decree-Law 28/2018, of 28 December, it was changed once again to include it in our legal framework. But what exactly is it? Here we would like to talk in depth about this figure.

What is forced retirement?

This is a mechanism whereby the company that employs the worker can force him or her to retire, i.e. to move from active employment to receiving a pension calculated on the basis of his or her years of contributions. The aim is to provide a solution, at least in part, to the problem of youth employment that has plagued Spain for years.

Depending on the age of the worker at the time of compulsory retirement, there are two types of pension:

Compulsory early retirement

Obviously, this is a type of compulsory retirement that takes place before the employee reaches the normal age for termination of employment. As this is at the will of the company that employs him/her, the employee must be dismissed beforehand.

In order for this to be possible, a series of requirements must be met:

• An employee wishing to take early retirement must be at least 61 years old, i.e. two years younger than the legal age for voluntary early retirement and meet the requirements for early retirement.
• If the worker does not meet the requirements for early retirement, he or she must be at least two years younger than the ordinary retirement age, i.e. 65 years.
• The worker must have paid contributions for at least 33 full years. In addition, 2 of these required years must have been contributed during the 15 years prior to the application for forced early retirement.
• The worker must be registered or in a situation assimilated to registration with the National Social Security Institute (INSS) at least 6 months before applying for forced early retirement.
• The worker must leave his or her job as a result of objective or collective dismissal.

The reduction coefficient

The main problem with this formula for forced early retirement is that, as with voluntary early retirement, a reduction coefficient must be applied to the final amount of the pension. However, this is lower as it is not a free choice of the worker. These are as follows:

• Worker with less than 38 years and 6 months of contributions: 7.5% per year (1.875% per quarter).
• Workers with between 38 years and 6 months and 41 years and 6 months of contributions: 7% p.a. (1.75% quarterly).
• Workers with between 41 years and 6 months and 44 years and 6 months of contributions: 6.5% p.a. (1.625% quarterly).
• Workers with more than 44 years and 6 months of contributions: 6% p.a. (1.5% quarterly).

How to apply for forced early retirement?

It will be the worker who must carry out this procedure at an INSS office. To do this, it is necessary to make an appointment by telephone (+34 901 10 65 70), through the official INSS application or through the Social Security Electronic Headquarters.

Now, to apply for forced early retirement, you must go to the INSS office on the date and at the time for which you made the appointment, bringing the following documents with you:

• Your National Identity Document (DNI) or Foreigner Identification Number (NIE).
• Duly completed retirement form.
• Letter of dismissal or document accrediting that the worker's company has terminated the employment contract for any of the causes attributable to this type of retirement.
• If the forced early retirement is due to dismissal, it is necessary to bring proof of receipt of the severance payment.
• If the termination of the contractual relationship has given rise to a labour lawsuit, you must bring all the necessary documentation to prove its existence.

Compulsory retirement on the basis of age

Compulsory retirement due to age or simple retirement has other requirements that are different, although similar, to compulsory early retirement. Firstly, it is essential that the collective agreement to which the worker's profession is subject includes a specific clause stating that, on reaching ordinary retirement age, the employment contract will be automatically terminated.

Currently, any worker who has paid contributions for 36 years and 9 months or more can retire at the age of 65. Likewise, if they have contributed for less time, they will have to wait until they reach 65 years and 8 months. These ordinary retirement ages will rise progressively until they reach 67 in all cases in 2027.

Requirements for this type of retirement

But there are also other requirements to take into account in order to proceed with this type of forced retirement due to age:

• The employer must decide on the retirement of his employee on the basis of a reason that is consistent with the employment policies being implemented in Spain. This could be to improve the quality of the working conditions of the rest of the employees, to create new positions within the company's organisation or to replace the employee with a younger one. It should not be forgotten that the inclusion in the Workers' Statute of this type of retirement, as we said before, has as its main purpose to fight against youth unemployment.
• The worker who wishes to retire must have contributed enough to be entitled to 100% of the amount corresponding to his or her ordinary retirement. The employer is obliged to check this beforehand. No reduction coefficients will be applied to your pension as it is not an early retirement.

The formalities to be completed by the worker in order to take this type of retirement are the same as those described above for forced early retirement. Therefore, we will not go into them again.

Conclusions on forced retirement

At present, it is very difficult for the public administration to check whether the reasons given by companies for the forced retirement of their workers are true or not. This means that in many cases this formula is used excessively and inappropriately. However, it cannot be said that this is not the norm.

It is advisable for all workers who may be subject to forced retirement by their company to seek legal advice in order to find out exactly what their rights are and thus avoid surprises when they go to the INSS office to apply for it. In this regard, we hope we have been of help.