A man will not have to return the 11,701.83 euros that the State Public Employment Service (SEPE) demanded of him after suddenly collecting unemployment benefits to start as a self-employed person, that is, what is known as capitalization of unemployment. Although the organization considered that it had failed to comply with the one-month deadline to invest the money and declared the collection improper, the Superior Court of Justice of Madrid determined that the delay does not imply irregularity, since the aid was correctly allocated to the creation of a company.
The ruling explains that the man, after becoming unemployed, requested contributory unemployment benefits in December 2019, but a few months later he asked to be able to collect the unemployment benefit at once (the capitalization of the unemployment benefit), with the intention of investing it in a commercial company and working as a self-employed person. The SEPE approved his request in October of that same year, recognizing a single payment of 11,701.83 euros, with the obligation to justify within a month that the amount had been allocated to the authorized self-employment project.
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The SEPE cannot demand the return of capitalized unemployment for investing it after the deadline: Justice rules that what is important is the purpose
After that time, the beneficiary used the benefit to carry out a capital increase in a company, whose company had already been established since July 2020. Now and where this conflict comes, is that said contribution did not materialize until June 2021, that is, more than seven months after the single payment. Due to this delay, the SEPE considered that the money had not been used for the approved purpose within the legal period, and notified him of the obligation to return the 11,701.83 euros, understanding that it was an improper charge.
Specifically, the organization applied the provisions of article 267.1 of the General Social Security Law (LGSS), which regulates the return of benefits unduly received, and in article 7 of Royal Decree 1044/1985, which explains that if the worker does not prove the investment of the money or the start of the activity in one month, it is presumed that he has not met the conditions of the single payment.
Given this resolution, the affected party presented allegations alleging that the money was allocated entirely to the company and that there was no intention of fraud, since the capital increase was carried out within the same project and in accordance with the report presented. The SEPE rejected his arguments, so he decided to go to court.
Justice rejects that the delay makes the aid undue
Both in the first instance before the Social Court No. 43 of Madrid and then later the Superior Court of Justice of Madrid, both ruled in favor of the worker. The Social Court understood that the rule does not require compliance with a rigid period of one month, but rather that the essential requirement is to allocate the benefit to the authorized self-employment project.
On the other hand, the TSJ of Madrid explained that article 7 of Royal Decree 1044/1985 does not impose that the investment must necessarily be made in one month, but rather that the benefit must be used for the activity for which it was granted. Furthermore, he stressed that the rule allows it to be proven that the activity is “in the initiation phase,” and that the beneficiary documented that the money was used to increase the company’s capital and carry out an activity on its own account.
Thus and for everything explained, the court determined that the delay in the investment does not imply that it is an improper charge, since the purpose of the aid was fulfilled and there was no fraud or irregular use of the funds. For this reason, this man will not have to return the 11,701.83 euros received for the capitalization of unemployment.