Complete Guide on the Self-Employed Workers' Cessation of Activity Benefit

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Running your own business is an exciting adventure, but things don't always go according to plan. When things take a turn for the worse and a self-employed person is forced to close their business, there's a safety net designed to soften the blow: the self-employment cessation benefit . This system is essentially mandatory insurance that provides financial support and maintains social security coverage while you look for a new career path.

This isn't just any kind of aid; it's a right linked to prior contributions. Depending on whether the closure is permanent or temporary , and the reasons for it, the process and the amount of money received can vary considerably. It's essential to understand the intricacies of these regulations to avoid missing deadlines and take advantage of all available benefits.

Who can apply for this aid and what do they need?

To enter the system, the first requirement is to be a self-employed worker registered with the RETA (Special Regime for Self-Employed Workers) . This also includes those who are part of the SETA (agricultural workers) who began contributing under this scheme in 2012, as well as economically dependent self-employed workers (TRADE) and maritime professionals.

But being self-employed isn't enough; you have to meet a series of strict conditions. It's essential to be registered with Social Security and to have contributed for at least twelve months within the two years immediately preceding the closure. Furthermore, you must demonstrate that the cessation is legal and justified, and generally, you must have requested to be deregistered from the Special Scheme for Self-Employed Workers (REM), unless there are very specific cases of force majeure or specific economic reasons.

Another key point is that the beneficiary must sign a commitment to activity . This means that the self-employed individual makes themselves available to the public employment service of their autonomous community to receive training or professional advice. They must also be up-to-date with all their Social Security payments and have no legal incompatibilities. In the case of self-employed maritime workers with employees, they must have previously fulfilled all their labor obligations.

Legal reasons for the cessation of activity

Not every closure entitles you to compensation. The law divides situations into several categories. The most common is for economic, technical, production, or organizational reasons . This includes cases such as losses exceeding 10% of revenue in a year (excluding the first), court-ordered foreclosures representing 30% of the previous year's revenue, or a court declaration of the company's insolvency.

There are more specific situations where revenue is analyzed. For example, if there are employees, it is considered grounds for closure if working hours are reduced by 60% of the workforce or contracts are suspended for the same percentage, provided that revenue has fallen by more than 25% compared to the previous year. If the self-employed individual works alone, it is examined whether debts to creditors exceed 150% of the revenue of the last two quarters, coinciding with a 75% drop in sales.

On the other hand, there are cases of force majeure , which can be total or partial. This occurs, for example, in the event of a declaration of emergency by public authorities or a drastic drop in income of 75%. It also includes the loss of the necessary administrative license to work (provided it is not due to criminal activity), situations of gender-based or sexual violence , and cases of divorce or separation when the self-employed individual was assisting in the business of their former partner.

Amount, duration and how the money is calculated

The amount received is not arbitrary; it is based on a regulatory base which is the average of the contribution bases for the last 12 months. Generally, 70% of this base is received , although in cases of reduced working hours or temporary partial force majeure, the percentage drops to 50%.

To ensure no one is left with nothing or receives an exorbitant amount, there are limits. The maximum amount is usually 175% of the IPREM (Public Indicator of Multiple Effects Income), but it rises to 200% or 225% if the worker has dependent children . Similarly, there are minimum amounts that range between 80% and 107% of the IPREM depending on family size. It's important to note that if contributions were made on a base lower than the minimum, these minimum amounts do not apply.

As for the duration, this is determined by looking at the contribution periods in the last 48 months . There is a specific scale that defines how many months of benefit are due based on the years of contributions. An interesting detail is that, if the self-employed individual decides to start a business again or invest the money in a new company, they can request a lump sum payment for the remaining months (minimum six months), provided they can prove their professional activity.

Application management and deadlines

If you wish to claim benefits, you must contact the mutual insurance company that covers your occupational accidents or, if applicable, the Social Institute of the Navy. You have until the last day of the month following your termination to do so. If you miss the deadline, you will not lose your entitlement, but the days between the deadline and the actual application will be deducted from your benefit payment.

The start date for receiving payments varies. In cases of standard business closures, it's the day after the leave begins . In cases of reduced working hours, it's usually the first day of the month following official notification. If the closure is due to force majeure, the entitlement begins when the incident is documented. In all other situations, payments start on the first day of the month following the leave.

Regarding Social Security, the mutual insurance company usually covers the common contingencies contribution while you receive benefits. The only exception is in cases of reduced turnover, where the mutual insurance company pays 50% and the self-employed worker must cover the other 50%. In cases of gender-based violence, there is an exemption from contributions for the first six months.

Special situations: Sick leave and maternity leave

Sometimes life gets complicated, and the cessation of activity coincides with illness. If the self-employed worker is on sick leave , they will continue to receive 70% of their unemployment benefit. Once the sick leave ends, if the unemployment benefit has already been exhausted, they will resume receiving 75% of their sick benefit. The time spent ill is deducted from the total unemployment benefit period.

In the case of maternity or paternity leave , the process is simpler: you receive the birth benefit until it ends, and then you resume receiving the unemployment benefit. If the birth occurs while you are already receiving the unemployment benefit, the latter is suspended so you can receive the maternity/paternity benefit, and once it ends, you recover the remaining time of the unemployment benefit.

When is the right to collect suspended or terminated?

The benefit is neither permanent nor unconditional. It is suspended if the self-employed worker begins working for someone else or for themselves for a period of less than 12 months (except in cases of reduced working hours or partial force majeure), if they receive a penalty for a labor violation, or if they serve a prison sentence. It can also be suspended for moving abroad for less than a year to look for work.

The benefit is permanently terminated when the duration expires , if you obtain stable employment (more than 12 months), upon retirement, death, voluntary resignation, or permanent relocation abroad. It is vital to report any changes in your employment status to avoid having to repay benefits received improperly.

To complete the picture, it's important to remember that ceasing operations in a business entity (such as a limited liability company) is different from liquidating the company. Cessation can be processed through CIRCE , while the complete liquidation of the company follows a different legal and administrative process, as it involves the total extinction of the company's legal personality.

This protection for the self-employed combines an economic subsidy based on the regulatory base, health coverage through contributions to common contingencies and a professional reintegration plan managed by the SEPE or the ISM, ensuring that the professional can recover their financial stability and return to the labor market in an assisted manner after a forced closure.