The Superior Court of Justice of Madrid has allowed a worker to use the capitalization of unemployment benefits (the single payment of unemployment benefits) to pay a loan. The State Public Employment Service (SEPE) had demanded reimbursement of the aid, arguing that it had financed part of its investment through a loan instead of exclusively using the single payment received.
However, the court rules in favor of the employee, establishing that what is essential is that the real investment in the professional activity has actually occurred. The interesting thing about the ruling is that the court points out that the objective of this regulation is to promote self-employment and should not be hindered by “excessively rigid or formalistic” administrative interpretations.
The SEPE, at first, recognized the affected person to be able to capitalize the unemployment, of 12,475.67 euros, to start an activity as a delivery person. Thanks to this, the worker acquired a vehicle to carry out his activity for 22,230.01 euros. To pay it, he paid 7,000 euros directly and requested a loan of 15,008 euros for the rest.
After this, in March 2023, the SEPE initiated a file of “improper perception”, demanding the return of the entire aid (12,475.67 euros). The reason is that the worker had not justified the total impact of the amount received on the investment, given that he had financed a large part through a loan instead of using all the capitalization money immediately.
The man goes to court to not return the help
Not satisfied with this claim, the worker decided to file a claim through the courts, with the Social Court No. 20 of Madrid upholding his claim. This annulled the SEPE resolution and allowed him to keep the benefit.
The State Public Employment Service decided to appeal the sentence, presenting an appeal before the Superior Court of Justice of Madrid, alleging a violation of articles 4 and 7 of Royal Decree 1044/1985.
The TSJ of Madrid confirms that you have the right to keep the aid
The Superior Court of Justice of Madrid dismissed the SEPE’s appeal and once again ruled in favor of the employee. This court recalled that the objective of the single payment is to promote employment and self-employment, preventing workers from remaining inactive.
Thus, they point out that the interpretation of the rule cannot be so literal and rigid that it ends up discouraging workers from starting a business, since this would go against the spirit of the law. In this case, they indicate that it was proven that the worker started the activity and made the investment, as well as that the cost of the vehicle (more than 22,000 euros) far exceeded the amount of the aid (12,475.67 euros).
Based on the facts, the TSJ considered that there was no irregularity due to the fact that a loan had been requested to acquire the material means, explaining that it is logical and sometimes necessary when the cost of the investment exceeds the capitalized benefit. The court understood that financing through a loan does not distort the purpose of the aid when the total investment exceeds the amount received.
In line with the above, he stated that an excessively formal interpretation by the SEPE would clash with the constitutional mandate of social protection (article 41 of the Spanish Constitution) of maintaining a public regime that protects in situations of need.
For all these reasons, the TSJ of Madrid concluded that the worker had made a significant disbursement (greater than the aid received) and had acted in good faith to start his activity, so there was no reason to demand reimbursement.