Woman who won ‘lifetime income’ in prize draw forced to repay €17,000 in dole money

doleA woman who won a competition where the prize was an after-tax €1,200 monthly salary for the rest of her life has been forced to refund over €17,000 in dole money over a total of four years during which she was out of work.

The woman had registered for unemployment benefits payable for jobseekers aged 52 and over and received these between March 2011 and July 2014.

Her appeal against the initial verdict has now been turned down by the regional high court of the Balearic Islands, where she lives, but she is expected to continue to fight it through the Spanish legal system.

The defendant is calling for the amount refunded to be reduced to three months rather than four years, based upon the ‘excessive and unreasonable delays’ in investigating her case.

Also, she stresses that she has never tried to hide her income, but explained the situation in full when signing on at the dole office.

And she has always filed correct tax returns which clearly set out the source of her income.

The employee who attended to her in the dole office has admitted that she ‘mistakenly’ told the defendant she would be entitled to the monthly benefit for the over-52s even whilst in receipt of the €1,200-a-month prize money.

Based upon this, the defendant is citing the fact that she was claiming the dole money in good faith, duly spending it relying upon the advice she had been given from the unemployment office, meaning she no longer has it to be able to refund it.

She had signed on when she was made redundant, as is a legal requirement unless the ex-worker plans to go self-employed immediately and pay his or her monthly social security contributions, since it ensures the newly-unemployed still have their ‘stamp’ paid.

What went wrong?
Signing on automatically means cash accumulated as dole allowance has to be claimed and cannot be ‘saved for later’, or stored in a bank account in case of not finding a job in time for when the maximum entitlement of two years expires.

But once registered with the dole office, the claimant cannot earn any money at all from working, even where this is not as an employee with a contract – earning any income for paid work, however sporadic, means having to de-register and either go legally self-employed and pay social security at a monthly flat rate of €267.

However, a claimant can earn income from other sources whilst on the dole, such as from renting out a second home, up to certain limits – provided this is not from any type of pension or other State benefit such as sickness or maternity pay.

The limit is said to be around 75% of the minimum wage, currently €645 a month based upon a full-time, 40-hour week, meaning the maximum income from non-work sources permitted for dole claimants is about €483 – but anyone planning to register should check at their local job centre and be prepared to show proof of this income.

Some changes have been made in recent years, rendering the dole system more flexible, including allowing a partial allowance for those with some paid work or who are gradually setting themselves up as self-employed, or even letting them take their entire dole entitlement in one lump sum to help them start their own business.

Unemployment payments are a contribution-based benefit in Spain, with one month’s worth of cash accumulated per four months worked, at 80% of the claimant’s gross salary for the first six months and 60% thereafter up to a maximum of two years.

Always hailed as an excellent system which protects against abuse by the work-shy but allows redundant employees to recover from the shock and work on finding the right job and, if necessary, retraining, without having to worry about paying for bills in the meantime, cracks are now starting to show in the scheme as two years is frequently not enough to find work again.

Once dole money has expired, a means-tested €426 a month can be claimed, which the government reviews and normally decides to renew every six months.

Published Think Spain 26 September 2016

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