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Have you been denied unemployment benefits due to Legal Fraud? Did you know you have rights?

CASE: Can the Spanish Public Employment Service (SEPE) deny unemployment benefits to a worker who voluntarily finalises a contract of indefinite duration and is immediately hired by another company with a temporary contract of short duration, and who is simply claiming these benefits due to contractual succession?

According to the Jurisprudence of our highest Court “It cannot be established that the mere succession of contracts, an indefinite one followed by a temporary one with three months duration, is equivalent to a situation of legal fraud, given that the voluntary resignation could have been due to many reasons. Fraudulent intent in the new contract requires full evidence (by who alleges fraud, SEPE), proving the inexistence of the rendering of services or that the second contract was simply a formality, so that there is full proof of the existence of fraud. “

SOLUTION: No, it can´t. SEPE must provide full proof or evidence of the inexistence of the rendering of services in the second contract. Otherwise, it will be necessary to file the corresponding claim, and if they persist in their refusal to grant you the benefits, then you have the right to bring civil action before the Labour Courts, since it is a clear violation of articles 6.4 and 1.214 of the Civil Code, 203 and 208.1 of the General Social Security Law, and of the jurisprudence applicable to the case.

Legal Fraud and unemployment benefits

The Labour Chamber of the Supreme Court, regarding Legal Fraud and unemployment benefits, has stated on many occasions that it is not possible to establish a general theory that can respond to all specific situations, and that detailed analysis and precise factual elements will be required for each individual case, determining the existence or lack of fraud. Such circumstances, when they are not clearly substantiated by verifiable evidence, may be considered as valid through presumptions or evidence that share a link, according to the rules of human judgment, between the proven fact and the one that is being deduced, as per the now not applicable art. 1253 of the Civil Code, and its new regulation by art. 386 of the Civil Procedure Rules, so that they can be accepted as proof.

Our highest Court has set the following general guidelines concerning Legal Fraud regarding unemployment benefits:

1.- The existence of the voluntary termination of a contract of indefinite duration, followed by a temporary one, cannot be regarded as a Legal Fraud. It is the unreality of the second contract, or its mere instrumental appearance for the sole purpose of accessing unemployment, what makes such fraudulent title.

If the Legislator thought that “the mere succession of labour contracts, the first of indefinite duration and the second of temporary and of relatively short duration, was a clear evasion of the law, it would have been included in one of the reforms carried out in the regulations on unemployment. But it has not been included even in the most recent ones.

Therefore, the legislator´s omission on this point suggests that a succession of contracts is not, in itself, fraudulent.

Thus, to be able to say that Legal Fraud has been committed, it is necessary for who alleges fraud (SEPE) to prove that the last contract was mere appearance, implemented with the sole purpose of accessing a situation of unemployment. But in no case can the extinction of a contract of indefinite duration be construed as a case of simulation.

2.- Fraud cannot be presumed, it must be proven by the person submitting it, and the burden of proof cannot be imposed on the worker requesting unemployment benefits. There is no reason why the worker should have to justify why they voluntarily left the previous company.

Therefore, and in view of the fact that Legal Fraud cannot be inferred from mere presumptions, according to what is established in art. 6.4 of the Civil Code, to accept such fraud it is required that the Spanish Public Employment Service, which is the party making the claim, proves that the temporary hiring was in fact fictional, demonstrating that part of the elements constituting the contract were broken. For example, the services were not provided, the salary had not been paid, etc.

The SEPE cannot deny unemployment benefits based on the simple assumption that the second contract, concluded after the resignation of an indefinite one, has not existed and has been created out of mere appearance aimed at obtaining a benefit. Although it may be true in many cases, this can never be taken as a general rule to infer a result that can be completely negative for those who have acted in good faith and legitimately aim to perceive a benefit that, let us not forget, is contributory, meaning that the worker has paid his or her contributions long enough.

If the only facts of the case are the voluntary resignation and subsequent temporary contract, without any conclusive proof that there were no rendering of services with the second company, then it is not possible to declare the existence of Legal Fraud. And this is in response to the following reasons:

a)       such a statement cannot be done without proof, it must be based on facts;

b)      it may not be construed as circumstantial facts of fraud either voluntary resignation, which is nothing more than the exercise of a power that the law gives to the worker, “ex” article 4.1 a) and 49.1 d) of the Statute of Workers, nor the subsequent formalisation of a new temporary employment contract. The worker has the right to work and the company the right to hire, prevailing in the field of labour relations, exercised in this case according to the article 15 as amended by Law 63/1997, in line with the Royal Decree 2546/1994.

To declare that a worker, with the simple behaviour of a contractual succession, becomes a defrauder and must then suffer the burden of having to prove a personal crisis or the reasons why they left the previous job, which are often difficult to demonstrate, would somehow mean lacking the slightest support in our current legal system. Moreover, the unemployment regulations evidence the intent of the legislator, certainly in tune with the requirement of “adequate protection” imposed by art. 41 of the CE, of reducing the cases of Legal Fraud to exceptional situations in which the contract was simulated, without there being any rendering of services.

Legal Fraud must be accredited by who alleges it, providing data which shows, at least circumstantially, that final purpose. If the only data available is the formalisation of a temporary contract after voluntarily resigning the previous indefinite contract, we cannot conclude that there was Legal Fraud and that the second contract was a mere instrument to access unemployment benefits.

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