Consequences of Breaching the Flat-Rate Requirements in Spain

The Royal Decree Law 3/2014 of February 28 on urgent measures to promote employment and contracts of indefinite duration, approved on March 1, will not affect the amount of economic benefits to which concerned employees are entitled. The calculation of these benefits will apply the full amount of the base contribution that is appropriate to them.

Incompatibility of the Flat Rate

The flat rate that the Royal Decree Law regulates is incompatible with any other benefits in Social Security contributions for the same contract — regardless of the concepts that these benefits might concern.

Consequences of Breaching the Flat-Rate Requirements

In case of wrongful application of the respective reduction by breaching the conditions established in Royal Decree Law 3/2014, the business must reimburse the remaining amounts with late fees and interest on late payments according to the provisions of the collection regulations of the Spanish Social Security System.

In case of breach of the requirement to maintain the level of employment of indefinite duration and the level of total employment reached with the contract eligible for the flat rate for 36 months, the business must refund the difference between the amounts the business would have paid for their contribution for common contingencies if the reduction had not applied and the contributions already made from the start date of implementation of the reduction contribution in the following terms:

  • If the breach occurs within 12 months of the contract, the business must refund 100% of the difference
  • If the breach occurs within 24 months from the contract, the business must refund 50% of the difference
  • If the breach occurs within 36 months from the contract, the business must refund 33% of the difference

The Royal Decree Law does not require late fees and interest on late payments in cases of refund for the breach of the requirement to maintain the level of employment of indefinite duration and the level of total employment reached with the contract eligible for the flat rate for 36 months, which take place according to the rules of the Collection Regulations of the Spanish Social Security System.

Finally, the Royal Decree Law states that the repayment obligation is without prejudice to the provisions of the revised text of the Law on Offenses and Sanctions in the Social Order.

Contributions for Additional Hours

Under this Royal Decree Law, the reduction will not apply to the contributions for additional for part-time workers whose contracts entitle them to the reduction.

This article is not considered as legal advice

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