Self-employed persons or autónomos as we are accustomed to say here, are plagued with uncertainties and unpredictabilities that most would find hard to understand. Gone are the days of working a 9 to 5 job and awaiting a well earned salary that is paid at the end of the month like clockwork. No, for autónomos it’s a whole different ballgame but what are their main concerns and how can they be overcome? Well, this is exactly what this article is all about so sit back on your sun lounger and take note.
Around this time of year, most people find themselves reflecting on what they have done the last 365 days, what they wish they had done and what they plan on doing in the upcoming year. It is also a fantastic time to plot, plan and scheme so you can take your business to the next level or fulfil your dreams of finally starting your own business.
If you have had an idea in your head for some time but feel hesitant about moving forward with it, now is the time to really get serious and put your thoughts to paper. If you do not draft a business plan to map out your project, it may always remain a dream, one you may regret not pursuing further down the road, the same if you want to advance your existing business.
This is an article I have had in mind to write ever since Law 3/2014, 28th Feburary, was approved back in March of this year, however, as has been the case with numerous Government initiatives to combat the crisis, they are not always as they appear to be on face value but now this policy has been active for a few months, we can examine whether it measures up to the hype or not.
Created to incentivize business owners to give their employees indefinite or fixed contracts (full or part-time) in return of reductions on normal employee costs, the contract would only cost a mere 100 Euros per month over a 24-month period instead of 38-40% of the gross salary, it was welcome news.
All companies regardless of their size are eligible to apply and contracts must be received before the 31st December 2014 to be valid. Payable costs vary depending on the hours stipulated in contract:
- Full-time: only 100€/ month
- Part-time (at least 75% of a full-time contract workday): only 75€/month
- Part-time: (equivalent to 50% of a full-time contract workday): only 50€/month
This is the spiel the Government bombarded us with and hey, everything sounds great. Business owners can hire at a fraction of the price but when do we ever get something for nothing? So what were the other conditions that were not really explained properly or made evident?
As is the norm, there are requirements the employer must meet to benefit from this reduced rate:
- Must be up-to-date in all tax and Social Security obligations at the time of application and throughout the period in which the reduced rate will apply
- Cannot have dismissed employees in the 6 months prior to the application. Not applicable if it occurred before 25th February 2014.
- Must not have been excluded from applying due to serious labour violations in the past
Everything still sounds perfectly reasonable but some clauses of the law were not actively disclosed:
- The new contract must equate to an increase in the company’s work force and number of fixed contracts within the company. This means you cannot change an existing employee’s contract, you have to hire new blood which is risky as you cannot simply fire that person without consequences if it doesn’t work out, however, there is nothing to stop you from converting existing contracts onto the new system later.
- Maintain the same number of employees and the same number of fixed contracts in the company for a 3-year period. If the employee leaves the company, somebody else under the same contract must replace them, if not, you would be liable to pay social security back.
Another drawback that was not specified in the propaganda is that this reduced rate only applies to one concept payable to social security, namely Common Contingencies. Even though this concept is the most expensive, calculated at 23,6% of the gross salary, all other concepts such as unemployment, professional training etc. must still be paid on top so the resulting amount is not going to be the 100€ flat rate promised and if your employee receives a higher than minimum salary, expect to pay quite a bit more. The outcome is more like a 100 Euro discount, which is a completely different scenario.
Further reductions can apply after the initial 24-month period as long as there were at least 10 employees contracted to the company at the time the first fixed contract was issued but as mentioned, if all conditions are not met, the business owner is liable to return monies saved under the scheme in the manner detailed in the law.
Only 23,4% of the 292,273 new indefinite contracts registered between March and May came under the new scheme and comparisons from previous years show that the measure has not increased work stability. Before diving in, ensure you read and comprehend the Law in its entirety before making any type of decision.
As much as you may enjoy your profession, one of the downsides is definitely finding yourself chasing customers for payment for services you have already provided. How is it that the customer who was so available and responded promptly when you were developing the project or discussing the job in hand has all of a sudden disappeared off the face of the earth?
It is an unfortunate problem and one that has undeniably increased since 2008 but it is one that many business-owners face on a daily basis. Here are some tips to help prevent the problem from ever occurring and others that can be used after the event but there are steps you can take before resorting to mafia-style tactics!
It has being a long time in coming but it would appear that the Ministry of Employment has finally heard the cries of thousands of self-employed business owners in Spain with regards to their right to unemployment benefits. Due to the economy’s poor state of affairs, many self-employed people have had to say goodbye to their dreams and hard work as the current climate has made it impossible for them to maintain their businesses afloat. This is also true for thousands of workers who have lost their jobs but the difference is they at least the right to unemployment benefits until they manage to find other employment, sadly, this in not the case for those who are self-employed.
