The compatibility between the retirement pension and the position of administrator of a company continues to generate doubts. This is due to different criteria, although the Supreme Court has already ruled on some situations in active retirement.
In this article we try to clarify the different treatment depending on the case.
Compatibility between the retirement pension and the position of administrator
To put in context, we must begin by analyzing the existence of two types of self-employed.
The classic self-employed
The “classic self-employed” who are those individuals who habitually, personally, directly, on their own account and outside the scope of management and organization of another person, carry out an economic or professional activity for profit. Referred to as “self-employed or self-employed activity” insofar as the profit of the exploitation is involved in the personal and direct work of the self-employed person.
Art. 305.1 of the LGSS establishes that the following are compulsorily included in the field of application of the Special Social Security Regime for Self-Employed or Self-Employed Workers (RETA):
“individuals over eighteen years of age who habitually, personally, directly, on their own account and outside the scope of management and organization of another person, carry out an economic or professional activity for profit, whether or not they employ workers for others, under the terms and conditions determined in this law and in its rules of application and development.”
Corporate self-employed
On the other hand we have the “corporate self-employed” in which they are included:
- industrial partners of general partnerships and limited partnerships.
- the co-owners of community of property
- and those who exercise the functions of direction and management that entails the performance of the position of director or administrator. Or render other services for a capitalist mercantile company, for profit and in a habitual, personal and direct manner. When they have effective, direct or indirect control of the company.
Its regulation is found in art. 305.2 b) of the LGSS, they are expressly declared to be included in this special regime:
“Those who exercise the functions of direction and management that entails the performance of the position of director or administrator, or render other services for a capital company, for profit and in a habitual, personal and direct manner, provided that they have effective control, direct or indirect, of that company. It will be understood, in any case, that such circumstance occurs when the worker’s shares or participations represent at least half of the capital stock”.
Liability of the self-employed
This differentiation also affects the scope of their liability.
Thus, while the former (classic self-employed) personally assume the risk and risk of the business activity and are therefore liable for their debts, including the salary debts with the contracted workers and the social security contributions, with all their present and future assets.
However, in the case of the latter (corporate self-employed) the liability, in principle, does not affect their personal assets, but rather the corporate assets, and they are not personally liable for the salary debts, nor for the Social Security contributions, and therefore are not personally liable for the debts of their employees.
This dichotomy is reflected in the different treatment of the compatibility of the provision of services with access to full retirement.
We therefore leave out of this analysis the case of active and partial retirement.
Compatibility
Thus, while the classic self-employed have traditionally been allowed the compatibility of the pension with the mere ownership of the business. However, the corporate self-employed have been vetoed until now this option. However, there are already judicial pronouncements, which we will analyze below, that extend this compatibility of both situations to the latter group.
For the classic self-employed
It has always been understood that the functions inherent to the ownership of the business were compatible with the retirement pension.
“The enjoyment of the old-age pension will be compatible with the maintenance of the ownership of the business in question and with the performance of the functions inherent to such ownership”.
The problem arose in determining when the retired self-employed is limited to maintaining the ownership of the business. And when the performance of functions inherent to the same. And it was our SC that came to the aid of the legislator. Clarifying and clarifying that the functions inherent to the ownership of the business are:
- Those of an administrative nature. Of relation with official organisms, city councils, tributary, etc. In which the pensioner continues being the owner of the business and as such, pays taxes, signs contracts, holds the representation of the company, etc…
- As opposed to those that involve personally running the business. With physical presence in it throughout the day. Office work, office work or other types of work, which do give rise to a situation of incompatibility.
As for the corporate self-employed
The fact that the self-employed person is necessarily included in the RETA if he/she owns a certain shareholding and performs management functions. This does not mean that this legal provision for the purposes of inclusion in the system must necessarily be extrapolated to the area of incompatibilities between pension and work.
Inclusion in the RETA presupposes that an economic activity is carried out on a regular, personal and direct basis for profit. Without being subject to an employment contract. And whether or not the paid service of other people is used. But it will always be possible to prove that there are exceptions, whose proof is the responsibility of the self-employed. Consistent in that they hold the mere ownership of the business and that they make their situation compatible with the receipt of the pension.
What the rulings to date say
There are rulings that declare the compatibility of the retirement pension with the non-remunerated activity and formal ownership in the company.
- This was the understanding of the STSJ Galicia of October 16, 2017 (Rec. no. 548/2017). When analyzing a case of a corporate self-employed person who was the holder of a bank account where collections and payments were managed on behalf of the business entity. And formally subscribed the employment contracts. However, he did not receive any income for such activity, nor was there any evidence of the execution of the powers of direction and management of the establishment. Rather, it was merely a formal administration, given that those powers of management were effectively carried out by his daughter-in-law.
- Another recent judgment of November 16, of the Social Chamber No. 1 of the Superior Court of Justice of Galicia (Judgment 04503/2021). It has determined that the enjoyment of the retirement pension is “compatible with the mere maintenance of the ownership of a business”. As long as that person performs only “the functions inherent to that ownership that do not imply a dedication of a professional nature.
And in the case of corporate administrators. The functions inherent to the ownership of the business comprise exclusively dictating direct instructions and criteria for action to the persons entrusted with the management and administration of the company. Moreover, this action through other persons may even include the granting of a general power of attorney. To manage, direct and contract on the establishment
And the Chamber adds that the full compatibility of the registration in the RETA with the receipt of the retirement pension must be admitted. Provided that the pensioner maintains the mere ownership of the business. Thus, the legal presumption (which corresponds to the worker) is rebutted. Since the registration in the RETA implies a presumption of being self-employed. In the terms required to be registered in said Special Regime of the Social Security. This presumption can be rebutted by evidence to the contrary by the employee.
In conclusion
and in view of these latest judicial criteria. The corporate self-employed could make the retirement pension compatible with the mere ownership of the company. However, the burden of proof to prove that no work is carried out in the company will correspond to the self-employed.
Arrabe Integra
Labour Consulting
