Is it possible to collect unemployment benefits and work part-time?

Is it possible to collect unemployment benefits and work part-time? This is a question that crosses the minds of many Spaniards when they find themselves unemployed and receive an offer to work part-time. For this reason, and taking into account the number of doubts it generates, here we would like to offer you an answer.

What does social security say about collecting unemployment benefit and working at the same time?

You should start from the premise that social security is a protective body. In fact, its purpose, in terms of unemployment benefits, is to protect people who, although willing and able to work, are made redundant by their employer or, failing that, see their working hours significantly reduced. To this end, it offers them a financial benefit that is commonly known as unemployment.

That said, unemployment benefits are compatible with the possibility of working part-time, although with certain nuances. The most important of all is that it must be in its contributory form, i.e. the unemployment benefit to which you are entitled for having paid contributions for at least 360 days over the last 6 years.

Worker's options regarding unemployment benefit and part-time work

The State Public Employment Service (SEPE) is the body that regulates everything related to unemployment benefit and unemployment benefit. When the moment comes when a worker, who is receiving the relevant benefit, receives an offer of part-time work, he/she is offered two options. In both cases, however, they are obliged to inform their nearest employment office that they are going to start working.

Suspension of unemployment benefit payments

The worker has the right to apply to the SEPE to suspend unemployment benefit during the months of the temporary part-time contract, with a view to resuming payment once it expires. Here again, two cases must be taken into account:

• The part-time contract has a duration of less than one year: the person who requested the interruption will again receive the full amount of the benefit for the remaining months at the time of the interruption.
• The part-time contract has a duration of more than one year: in these cases, the worker has the so-called right of option, whereby he can choose between receiving the interrupted benefit again or, failing that, requesting that his benefit be recalculated, taking into account the new contributions made during the duration of the contract.

Compatibility of unemployment benefit with part-time work

A prerequisite for the compatibility of unemployment benefit with part-time work is that the working hours specified in the contract must not be more than 50% of the maximum working hours specified in the relevant sectoral agreement. Once certified, the worker will be entitled to continue receiving unemployment benefit reduced by the proportional part established for the purpose of supplementing the salary received for the performance of his or her professional activity.

At the end of the contract, the interested party, if he/she has not exhausted the unemployment benefit, must go to the nearest SEPE office and request its full reactivation, so that he/she will start receiving again the full amount that he/she received before starting work.

It is necessary to crunch the numbers to see if this option is really cost-effective. This is mainly because, once started, the unemployment clock does not stop. By this we mean that, despite having received unemployment benefit partially for a certain number of months, this time will count in total terms as if it had been received in full.

What happens in the case of the self-employed?

Self-employment, as always, is subject to separate regulations. Of course, this also applies if you want to combine unemployment benefit and starting your own business. Let's take a look at how.

First of all, it must be said that it is possible to collect unemployment benefit as a self-employed person in Spain. That is to say, any worker who, after being made redundant or having seen their contract end, starts receiving unemployment benefit can combine it with the income obtained if they start a business and register as self-employed.

Before October 2015, this option was reserved for entrepreneurs under the age of 30, but nowadays, anyone can take advantage of it. However, the maximum period of time during which you can combine unemployment with self-employment is 9 months. This means that, once this period has elapsed from the start of the activity, the worker will cease to receive the benefit regardless of whether or not they have any monthly payments left to collect.

On the other hand, if the business does not turn out as the entrepreneur expected, he/she will be entitled to resume receiving the unemployment benefit suspended for the start of the self-employed activity up to 5 years after registering as a self-employed person with the social security.

Other options available to the self-employed

The truth is that, nowadays, opting to continue receiving unemployment benefit during the first 9 months of self-employment is not the most common option. In this sense, self-employed workers tend to opt for the capitalisation of their unemployment benefit, i.e. to receive in full and in a single monthly payment all the money they would be entitled to receive. 

This is undoubtedly another way of making unemployment compatible with self-employment, which is why we would like to briefly mention it. Specifically, this capitalisation can be requested in the following cases:

• Capitalisation of 100% of the unemployment benefit for starting a business: previously, only women under 35 and men under 30 could apply for this benefit (the rest could only claim 60% of the total), but nowadays, anyone is entitled to it without age restrictions. However, the expenses financed by receiving the corresponding amount must be documented at an SEPE office.
• Capitalisation of 100 % of the unemployment benefit to set up a company: this option was also not possible before October 2015. Now it is allowed as long as the applicant will exercise effective control of the company he/she wants to set up.

On the other hand, although it is very rare, self-employed workers who are entitled to receive severance benefit can combine it with the benefit accrued from their previous work as an employee. This is valid both in terms of capitalisation and pro-rata receipt.

In short, it is possible to combine unemployment with part-time work. In fact, the Social Security, through the SEPE, provides facilities for this. You can even apply if you want to start a business. This is a very interesting measure that should be taken into account by all workers who are unemployed and receive a job offer that is not full-time.

 If you would like more information, please contact us for a consultation.