Extension of the extraordinary benefit for cessation of activity
Patrick Gordinne Perez2025-01-17T08:52:36+00:00On 27 January, Royal Decree-Law 2/2021 of 26 January on the reinforcement and consolidation of social measures in favour of employment was published. It regulates the new extension of the extraordinary redundancy payment for self-employed workers until 31 May 2021.
The Royal Decree contains a series of measures in favour of self-employed workers, including the new extension of compensation for cessation of activity or reduction in turnover. These allowances can be claimed from 1 February until 21 February.
Extension of the extraordinary termination benefit.
The current extraordinary indemnity for cessation of activity will be extended until 31 May 2021 under the same conditions as those currently in force. It is intended for self-employed workers affected by a temporary suspension of all their activity following a resolution by the competent administrative authorities to contain Covid19, provided that they meet the following conditions:
– They must be affiliated and registered with the special scheme for self-employed workers or self-employed persons (RETA) or the special scheme for sea workers (REMAR) before 1 January 2021.
– Be up to date with payment of social security contributions. If, on the date of suspension of activity, this condition has not been met, the management body will ask the self-employed person to pay the contributions due within a non-extendable period of thirty calendar days.
The amount of the benefit is 50% of the minimum contribution base, increased by 20% if the self-employed person is a member of a large family. However, this only applies if the income of the family unit comes solely from this self-employed activity. In addition, if two or more members of the family unit are entitled to this benefit, they will receive only 40% of the contribution base, with no entitlement to a further 20% if they are a large family.
The amount of the benefit will therefore depend on the contribution base, but will be a minimum of 760 euros per month. Similarly, the self-employed person will be exempt from paying social security contributions, although this period will be counted as having been paid.
This benefit will be compatible with income from work for others up to 1.25 times the minimum wage, with the pursuit of another self-employed activity, with the receipt of income from the business whose activity has been affected by the closure, and with the receipt of a social security benefit other than that which the beneficiary receives.
For it to be compatible with working as an employee, it will be necessary to accredit, in the first half of 2021, a reduction in taxable income from self-employment of more than 50% of that in the second half of 2019, as well as not having obtained a net taxable income of more than €7,980 in the aforementioned half of 2021. For the purposes of calculating the reduction in income, the period in the second half of 2019 will be taken into account and compared with the proportional part of the income obtained in the first half of 2021 in the same proportion.
This benefit, which will be managed by the mutual insurers, must be claimed within 21 calendar days of the entry into force of the agreement or resolution to close the business.
Extension of the income reduction benefit
The income reduction benefit has also been extended to self-employed workers whose income has been reduced and who do not meet the conditions for access to the old benefit. They will be able to claim the income reduction allowance if they meet the following conditions:
– Be registered and up to date with payment of RETA or REMAR contributions before 1 April 2020. If, on the date the application is submitted, the obligation to be up to date with the payment of contributions has not been met, the management body will ask the self-employed person to pay the contributions due within a non-extendable period of thirty calendar days.
– Not have a net taxable income from self-employment in the first half of 2021 in excess of €6,650.
– Have a taxable income from self-employment in the first half of 2021 that is lower than that for the first quarter of 2020. To calculate the reduction in income, the period of registration in the first quarter of 2020 will be taken into account and compared with the proportional part of the income for the first half of 2021 in the same proportion.
The amount of the benefit is 50% of the minimum contribution base. However, if two or more members of the family unit are entitled to this benefit, they will receive only 40% of the contribution base. The amount of the benefit will be at least €760 per month.
The benefit for reduced income will be incompatible with the receipt of remuneration for salaried work, unless the income from salaried work is less than 1.25 times the minimum wage; with the pursuit of another self-employed activity; with the receipt of income from a company; with the receipt of a social security benefit other than that which the beneficiary was receiving because it was compatible with the pursuit of the activity he or she was carrying out.
Self-employed workers entitled to this benefit will be exempt from paying the monthly contribution, which will be counted as a contribution period.
This benefit, which will be managed by the mutual insurance companies, must be claimed within 21 calendar days of the entry into force of the agreement or the termination resolution.
Extraordinary severance pay for seasonal self-employed workers
The government has also extended the extraordinary severance pay for seasonal self-employed workers, which is equivalent to 70% of the minimum contribution base and requires an income not exceeding €6,650 in the first half of 2021. The amount will be at least €660 per month.
The conditions for access to the extraordinary cessation allowance for seasonal self-employed workers are as follows:
– To have been registered with and contributed to RETA or REMAR for a minimum of four months and a maximum of six months for each of the years 2018 and 2019, provided that this period covers a minimum of two months during the first six months of the year.
– Not to have been registered or deemed to be registered as an employee under the relevant social security scheme for more than 60 days during the first six months of 2021.
– Not have obtained net taxable income in excess of €6,650 during the first six months of 2021.
– Be up to date with payment of social security contributions. If this condition is not met, the managing body will ask the self-employed person to pay the contributions due within a non-extendable period of thirty calendar days.
Similarly, the self-employed person may make a request from 1 February 2021 and benefit from it until 31 May 2021. He or she will be exempt from paying the monthly contribution and this period will be considered as having paid contributions.