On 27 April, Royal Decree-Law 2/2003 on economic reform measures came into force. This new legislation introduces several amendments to the special scheme for self-employed workers, with the aim of improving protection for self-employed individuals and encouraging their activity.
Written by Josep Conesa
Employment and insolvency lawyer
KEY AMENDMENTS INTRODUCED:
1. Reduced contribution base for young workers and women newly registering under the self-employed scheme:
Workers aged 30 or under will be able to choose a contribution base of between 75% of the minimum base and up to the maximum base, as set by the General State Budget Act for each financial year, for the three years immediately following the date on which registration takes effect.
This provision will also apply to women who are aged 45 or over at the time of their initial registration under the said special scheme.
2. Exemption from Social Security contributions for self-employed workers aged 65 or over:
Self-employed workers will be exempt from making Social Security contributions — except, where applicable, for temporary disability (IT) and occupational contingencies — provided they are aged 65 or over and can demonstrate 35 or more years of actual contributions to Social Security, not counting the proportional parts of extra payments.
If, upon reaching the age of 65, the employee does not yet meet the required condition, the exemption will apply from the date on which that condition is met.
For the purpose of determining the regulatory base for benefits excluded from contributions, the contribution bases corresponding to the months of each financial year that are exempt from contributions will be equivalent to the result of increasing the average contribution bases from the immediately preceding calendar year by the known average percentage change in the CPI for that year. The bases calculated in this way may not be lower than the minimum contribution base amounts set by the General State Budget Act for self-employed workers included in the Special Scheme of Social Security.
3. Contributions for occupational contingencies for workers registered under the Special Scheme for Self-Employed Workers (RETA):
Coverage for work-related accidents and occupational illnesses across the various economic sectors shall be provided by applying the rates set out at the end of this article, according to the relevant activity sector heading (*).
4. Extended temporary disability (IT) protection for self-employed workers:
Entitlement to temporary disability (IT) benefit shall arise, under the terms and conditions established by regulation, from the fourth day of cessation of the relevant activity, except where the person concerned has opted for coverage of occupational contingencies and the subsidy arises as a result of a work-related accident or occupational illness, in which case the benefit shall commence from the day following cessation.
5. Effect of overlapping contributions across multiple schemes on Social Security pensions.
Where contributions to more than one scheme are established but no entitlement to a pension arises under one of them, the contribution bases accrued under that scheme may be added to those of the scheme under which the pension is claimed, solely for the purpose of calculating the regulatory base of that pension, provided that the combined bases do not exceed the maximum contribution ceiling in force at any given time.
For the purpose of calculating the regulatory base of the retirement pension, it must be demonstrated that the person was engaged in multiple activities during the 10 years immediately preceding the triggering event. Otherwise, only the proportional part of the contribution bases corresponding to the period actually contributed shall be accumulated.
6. Additional contribution for extended temporary disability (IT) protection:
Under the Special Scheme for Self-Employed Workers (RETA), where the person concerned has opted for temporary disability (IT) coverage, the contribution rate shall be 29.80%.
7. Employment promotion for female workers in cases of maternity:
Employment contracts — whether permanent, fixed-term, or temporary — held by female workers that are suspended due to maternity leave or leave of absence to care for a child, as well as the conversion of fixed-term or temporary contracts into permanent ones, shall entitle the employer to the applicable contribution rebates upon the woman's effective return to work within the 2 years following the date of birth, provided that the birth occurred after the entry into force of these new regulations.
The employment contracts and relationships mentioned above will entitle employers to a reduction of 100% on employer Social Security contributions for common contingencies for the 12 months following the employee's effective return to work after a period of contract suspension due to maternity leave or parental leave for childcare.
In the case of fixed-term or temporary contracts concluded before this legislation came into force, where the employee returns to work within 2 years of giving birth and, before one year has elapsed since their return, the contract is converted to a permanent one, the reduction will apply for 18 months.
The reduction referred to above cannot be combined with other reductions applicable to contract conversions.
Employment contracts covered by this stable employment promotion programme must be formalised using the official model form provided by the National Employment Institute.
These provisions shall not apply to employer contributions in respect of employees working in Public Administrations or in public bodies governed by the rules on the Organisation and Operation of the General State Administration.
8. Lump-sum payment of unemployment benefit:
The current capital value of unemployment benefit may be paid in a single lump sum to benefit recipients who intend to join, on a permanent basis, as working members of cooperatives or worker-owned companies (sociedades laborales), provided they have not previously held a contractual relationship with those entities for more than 12 months.
Alternatively, this option is available where the recipients intend to become self-employed and have a disability equal to or greater than 33%.
9. Promotion of employment for women with disabilities:
Where a woman with a disability is hired, employers will be entitled to a 90% reduction in employer Social Security contributions for common contingencies if the woman is aged 45 or over, or a 80% reduction if she is under that age.
(*) APPLICABLE CONTRIBUTION RATES %:
| CATEGORY | IT | IMS | TOTAL |
| 01 | 0.65 | 0.55 | 1.20 |
| 02 | 0.95 | 0.70 | 1.65 |
| 03 | 1.25 | 1.00 | 2.25 |
| 04 | 1.40 | 1.25 | 2.65 |
| 05 | 2.00 | 2.55 | 4.55 |
| 06 | 3.65 | 3.60 | 7.25 |
| 07 | 4.00 | 4.95 | 8.95 |
* To determine which heading applies to each sector of activity, please refer to the annexes included in the Royal Decree-Law mentioned above.
