Are the self-employed entitled to unemployment benefits?
You are unemployed and looking for a job, but the instability and the scarce job opportunities are not helping you. You decide to look for another way and you decide to become an entrepreneur, to open that business you have been thinking about for some time.
When you start your business, if you were previously registered as a jobseeker, you can benefit from many advantages that will help you get off to a good start. Thanks to the latest reforms implemented to encourage self-employment, you are eligible for grants and subsidies that can help you to obtain financing for your new business or access facilities that allow you to reduce those initial costs.
Even so, your tax obligations are going to change, and with that comes the most important question in these cases:
Will I lose my unemployment benefit if I stop working?
This is something that many people take for granted, but in reality the self-employed are entitled to unemployment benefits if they close their business, only that in this case it is called ‘cessation of activity’. This may be colloquially referred to as unemployment for the self-employed, but it does not work in exactly the same way as for employees. It is true that both are financed by the contributions that each person makes to the Social Security, but it has some peculiarities that limit the self-employed's access to it.
For the self-employed, access to these benefits has to be linked to certain causes that ‘grant’ them this right. It may sound extreme, but it requires certain requirements to be met. Since the approval of Law 32/2010, which regulates it, and the entry into force of the new system of contributions based on real income, these assumptions have been extended and there are now several scenarios in which we could apply for unemployment benefits for the self-employed:
1. Access to unemployment for ETOP reasons (economic, technical, organizational or productive causes).
In this situation, the self-employed would have access to a benefit if he/she is forced to close the business or transfer it to third parties for any of these four reasons, which he/she will have to justify upon meeting these requirements:
Having had losses during a year of more than 10% of the income obtained during that period.
To have reduced 60% of the total working day of the staff, due to a decrease of 75% in its income with respect to the two previous fiscal quarters.
To obtain a net monthly income that does not reach the minimum interprofessional salary (SMI).
The cause of the closing is due to judicial or administrative executions to collect recognized debts.
The closure derives from the issuance of a judicial or administrative foreclosure that involves at least 30% of the income of the previous fiscal year.
Being in possession of debts with private creditors and that their amount exceeds 150% of ordinary income.
2. Access to unemployment when issuing the closure of the business for reasons of force majeure.
These can recognize unforeseeable events that are completely beyond the control of the self-employed, such as a pandemic or a natural disaster.
However, thanks to the new regulations, it is no longer strictly necessary to close the business, but a temporary cessation could be carried out for a period of time, where the unemployment benefit could be accessed until the usual activity is recovered.
3. Access to unemployment after a loss of leave
For any reason that prevents you from carrying out your usual activity.
4. Access to unemployment for personal reasons
In the case of a divorce or separation carried out judicially, this cessation of activity could be accessed if one of them or both decide not to collaborate. It could also be available to self-employed victims of gender violence.
What requirements must be met to be able to access these benefits?
In addition to the requirements previously mentioned in each situation, there are some parameters that all self-employed workers must fulfil in order to be eligible for unemployment benefits:
- Be affiliated and registered with the RETA.
- Have paid contributions for a minimum period of 12 months.
- Be in a legal situation of cessation of activity, committing to participate in training, vocational guidance and promotion of entrepreneurship activities called by the Public Employment Service (SEPE) and demonstrate active availability to reintegrate into the labour market.
- Be up to date with the payment of social security contributions.
- Comply with labour regulations if the self-employed person has employees.
- Not having reached the ordinary age for accessing the contributory retirement pension, unless the required contribution period has been reached.
In short, entrepreneurship is a valuable alternative for those facing job instability and limited employment opportunities.