Spain: The Pension for Absolute Permanent Incapacity and Major Disability and its Incompatibility with Work Under Employee Status

The Supreme Court and the INSS (National Institute of Social Security) have recently ruled on whether the Pension for Absolute Permanent Incapacity or Major Disability can be paid at the same time as being employed.

As an introduction, the purpose of the Social Security System is to provide help in situations of need to citizens, offering protection through public benefits that seek to protect them from possible social hardship.

Specifically, permanent incapacity benefits replace the sudden lack of income from work due to the incapacitating situation that prevents the employee from working.

This is why, initially, the Spanish system would not allow a person to work and, at the same time, receive a pension for incapacity to work.

Although this issue would seem non-controversial, the Spanish Supreme Court had to rule recently on the matter.

Specifically, it dealt with the issue of a person who had become unable to work due to supervening blindness and was, therefore, receiving a recognised major disability pension. This person, moreover, intended to provide his services by selling ONCE (the Spanish National Organisation for the Blind) tickets.

The High Court ruled against the compatibility of a salary for work and a pension for an absolute permanent disability or major disability.

The reasoning is as follows: although the General Social Security Act provides for the possibility of working and receiving a pension for inability to work, this work must be “of a marginal and inconsequential nature, of minimal significance and importance.”

The INSS has also ruled on the matter, establishing the following rules:

• The incompatibility between working as an employee and receiving a pension for an absolute permanent disability or major disability is confirmed.

 

• To this effect, payment of the absolute permanent disability or major disability pension will be suspended during the performance of such work or activities, and will resume when such work or activity ceases.

 

• If the pensioner combines the pension for absolute permanent incapacity and major disability with self-employment, this compatibility will be maintained. However, a review procedure may be initiated to determine whether the degree of incapacity is maintained, provided that the person concerned has not reached retirement age and that this procedure has not already been initiated when it became known that the person concerned was working.

 

In conclusion, although the issue has been formally settled, it continues to give rise to debate in the labour sector and doctrine.