In contrast to the generalized criterion of other courts, the Galician High Court of Justice declares that the compatibility between 100% of the retirement pension and self-employment (active retirement) proceeds both when the employer is the individual self-employed and when it is a corporate self-employed with the effective control of the employer company.
Compatibility of 100% of the retirement pension with work
A self-employed person who, together with his wife, represents the company that they jointly constituted and that has 5 workers, requests active retirement to make 100% of the pension compatible with self-employment. Once the application has been denied by both the INSS and the JS Pontevedra, the worker appeals in a petition. It considers that the obligation of the pensioner who works as a self-employed person to have hired at least one employee is fulfilled when the hiring of the worker is done by the company for which the self-employed person performs a job that determines his frame in the RETA because he holds the effective control of the company.
the High Court of Justice of Galicia, without ignoring the existence of doctrine of supplication to the contrary -which will generate in a future jurisprudence of unification-, considers that given the literality of the rule, whoever contracts can be both an individual self-employed and a corporate self-employed with the effective control of the employer company.
Article 214.2 of the LGSS recognizes the possibility of reconciling 50% of the retirement pension with paid or self-employed work. However, if the activity is carried out self-employed and it is proven to have hiredat least one employee, the amount of the pension compatible with the work will reach 100%. This measure was introduced by L 6/2017 with the aim of adhering to an active ageing measure (compatibility of the retirement pension with self-employment) an employment policy measure (having hired at least one employee). For the TSJ Galicia this means distinguishing two situations,being guaranteed the purposes of the standard:
- In the event that you are a retiree who starts his activity as a freelancer: you must hire at least one worker.
- In the event that the retiree is already self-employed and continues the activity as self-employed, he must maintain the level of employment, without it being required to hire a new worker because this requirement is not contemplated in article 214.2 LGSS that only speaks of “having hired” at least one worker.
This conclusion corresponds to the literality of the rule when it says “to have hired”. It is also in line with legislative policy trends in relation to the effective protection of older persons, gradual and flexible retirement and active ageing, as reflected at international level (ILO Recommendation 162), community level (Council Recommendation 82/857/EEC) and internally and by the monitoring committee of the Toledo Pact. It is also in line with the employment policy aims of the rule aimed at maintaining employment in companies even in spite of the retirement of those who are in fact employers (regardless of whether society is formally so).
Therefore, the TSJ Galicia considers the appeal and declares the right of the self-employed to the total compatibility of his retirement pension with the work he has been doing as a self-employed person.
NOTE: The judgment contains an individual opinion which, in accordance with the criterion of DGOSS 25-7-18, considers that the possibility that the self-employed employer can access the receipt of 100% of the retirement pension, must be understood to refer exclusively to self-employed who are natural persons and are included in the RETA for this condition.
Active Retirement: Requirements
- regulated in the LGSS art.214;
- possibility of reconciling work with the receipt of the retirement pension in the following amounts
- if the activity is carried out as an employed or self-employed person without having hired any worker: 50%;
- if the activity is carried out on a self-employed and it is accredited to have hired at least one employee: 100%.
- access to the retirement pension once the ordinary retirement age has been reached, without taking into account any bonuses or anticipations of the retirement age that may correspond;
- that the percentage applicable to the regulatory base of said pension is at least 100%. It is not possible to access with a lower percentage and reach 100% through contributions during active retirement;
- that the development of the activity be carried out within the private sector.
- only in the private sector;
- prior to compatibility, not have adopted improper termination decisions in the 6 months prior to compatibility, for the coverage of those jobs of the same professional group as those affected by the termination.
- maintain during the term of the employment contract of the retirement pensioner, the level of employment existing in it before its start. In this regard:
- the average daily number of workers registered in the company in the period of the 90 days prior to compatibility is taken as a reference;
- the previous obligations to maintain employment are not considered to have been breached when the employment contract is terminated for objective reasons or by disciplinary dismissal when one or the other is declared or recognized as appropriate, nor are the terminations caused by resignation, death, retirement or total, absolute or severe permanent disability of the workers or by the expiration of the agreed time or performance of the work or service that is the subject of the contract.
100% activity and retirement
The law on self-employed persons makes it possible to reconcile a self-employed activity with the collection of the retirement pension at the rate of 100%.
In general,the retirement pension is incompatible with self-employment or employment. However, it is compatible if the following requirements are met (this modality is known as “active retirement”):
- Access to the pension must take place once the legal retirement age has been reached. Remember that this increases gradually until the age of 67 in 2027. Thus, in 2019 the retirement age is 65 years and 8 months, or 65 if you have contributed 36 years and 9 months or more.
- In addition, the worker must have contributed the minimum number of years necessary to be able to access a pension with 100% of the regulatory base (35 years and 6 months in 2019).
In these cases, the worker goes on to collect 50% of the pension. Well, with regard to the self-employed, there are improvements:
- If you are self-employed and have hired at least one employee, you can combine your activity with the collection of 100% of your pension (if you meet the rest of the age requirements and contributions indicated).
- The law only requires having an employee, without delimiting by type of contract or percentage of working day. It would therefore be valid to have a temporary part-time employee, for example (unless the INSS provides otherwise in the future).
- It is true that you must continue to be listed in the RETA. However, by fulfilling some additional requirements you may apply an exemption in your quotas (except
- by IT).
To do this, the self-employed must have hired at least one employee.
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