Exceptional and temporary measure of protection of employment in the context of the COVID-19 pandemic
On march, 26, 2020, the Government published the Decree-Law 10-G/2020 (rectified by Declaration of Rectification 14/2020, of March, 28), setting out exceptional and temporary measures to protect employment, in the context of the COVID-19 pandemic, aimed to maintaining jobs and support situations of businesses crises caused by this pandemic.
Who can benefit from these measures?
These measures are applicable to employers in the private sector, including employers in the social sector and the employees at their service, affected by the COVID-19 pandemic and therefore in a business crisis situation.
What is a business crisis situation for the purposes of application of these measures?
This law provides three types of business crisis situations:
- Total or partial closure of the company or establishment caused by the obligation to close down premises and establishments, pursuant to Decree-Law A/2020, of March, 20, or by legislative or administrative order, pursuant to Decree-Law 10-A/2020, of March, 13, as amended, or under the Basic Law on Civil Protection Law approved by Law 27/2006, of July, 3, as amended, as well as under the Basic Law on Health approved by Law 95/2019, of September, 4, for the establishment or company that was closed and covering employees directly affected thereby;
- Total or partial stoppage of the activity of the company or establishment due to interruption of the global supply chains, or suspension or cancellation of orders;
- Abrupt and sharp drop in billing of 40% or more in the 30 days preceding the application before Social Security, with reference to the monthly average in the two preceding months, or in relation to the same period in the previous year or, also, for those who have initiated activity less than 12 months ago, the average for that period.
How are the above circumstances attested?
The situation provided for in a) above is attested on the basis of the company falling within the regimes therein indicated.
The situations described in (b) and (c) above are attested by a statement from the company, together with a certificate from the accountant of the company, stating that the situation of the company falls within those referred therein.
In addition, the following documents can also be required:
- Interim balance-sheet for the month of the aid, and interim balance-sheet for the same month or months in the previous last year, where applicable;
- VAT return for the month of the aid, and for the two immediately preceding months, or return for the fourth quarter of 2019 or for the first quarter of 2020, depending on whether the applicant files monthly or quarterly VAT returns respectively, evidencing intermittence or interruption in supply chains or suspension or cancellation of orders;
- For the purposes of the second paragraph of point (b) above, documents evidencing the cancellation of orders or reservations, causing the production or occupation capacity of the company or unity concerned to decrease by more than 40% in the month following that of the request for financial aid;
- Additional supporting elements to be defined by order of the Minister responsible for labour and social security matters.
Which measures have been adopted by the Government?
- Extraordinary aid for the maintenance of employment contracts, with or without training, in case of temporary reduction of the normal working period or suspension of the employment contract;
- Extraordinary training plan;
- Extraordinary financial incentive to support business resumption;
- Temporary exemption from Social Security contributions, payable by the company.
Which steps need to be taken in order to apply for the extraordinary aid for the maintenance of employment contracts, with or without training, in case of temporary reduction of normal working period or suspension of the employment contract?
Written communication to the employees of the decision to apply for this measure, indicating the foreseeable duration, after having listened to the views of the union representatives and works councils, if any;
- After this communication, immediate filing of online application before social security, accompanied by statement from the employer containing the brief description of the business crisis situation and, in the business crisis situations referred to in paragraphs (b) and (c) above, the chartered accountant certificate attesting the same, as well as list with the name of each employee covered and social security number.
What is the duration of the aid?
This aid is given for one month, exceptionally extendable on a monthly basis up to a maximum of three months.
The circumstances giving rise to requests for extension must likewise be evidenced by supporting documents.
What is this extraordinary aid for the maintenance of employment contracts in a business crisis situation?
This aid is a financial aid granted to the company, per employee, and intended exclusively for payment of salaries.
Under what circumstances is the company entitled to such extraordinary aid?
In the above described business crisis situations, the company can temporarily reduce normal working hours or suspend the employment contracts, but the rights, duties and guarantees of the parties are maintained in all circumstances, and, in the case of suspension of employment contracts, the rights, duties and guarantees of the parties not required to perform work are maintained.
In case of suspension of the employment contract, the employee will be entitled to retributive compensation of 2/3 of the gross remuneration or to the guaranteed minimum monthly wage corresponding to the normal working period, whichever is higher, up to a maximum of three times the guaranteed minimum monthly wage.
In the event of reduction of the normal working period, the employee will be entitled to receive remuneration pro rata to the hours of work performed. In this case, the employee will receive a retributive compensation that will, together with the salary for the work performed at the company, ensure the minimum amount equal to 2/3 of the gross remuneration or the guaranteed minimum monthly wage corresponding to the normal working period, whichever is higher, with an upper limit of three times the guaranteed minimum monthly wage (1 905.00€).
For as long as these measures are in place, the company will be entitled to a financial aid for purposes of payment of the retributive compensation, corresponding to 70% thereof, to be paid by the Social Security.
The retributive compensation is calculated with reference to the gross remuneration for the work performed at the company.
Notwithstanding this financial aid, the remuneration and retributive compensation must be paid in full by the company, who will later be refunded by the Social Security.
It should be noted that, if the employee is engaged in a remunerated activity outside the company, he/she must notify the employer within five days of commencement of this activity, for purposes of a possible reduction of the retributive compensation. In this case, the employer shall inform the Social Security accordingly within two days after being informed by the employee.
What is the extraordinary training plan?
Companies which have not applied for the extraordinary aid for the maintenance of employment in a business crisis situation can still apply for the extraordinary aid for part-time vocational training, provided that they have a training plan aimed at maintaining the relevant job positions and building employee skills, as a preventive measure against unemployment.
This plan must: (a) be implemented in conjunction with the entity, while organised by IEFP, I.P., and can be developed remotely whenever possible and conditions allow it; (b) contribute to improving the professional skills of employees, when possible by increasing their qualifications, and to enhancing the competitiveness of the company; (c) correspond to the qualification modalities provided for in the National Qualifications System; and (d) the training actions must not exceed 50% of the normal work period, during the period in which it takes place.
The duration of this aid is one month, it is granted by IEFP according to the number of training hours attended, up to a limit of 50% of the net remuneration of the employee benefitting from the same, up to the maximum of the guaranteed minimum monthly wage.
After the end of the measures, will the companies be entitled to any other aid?
The Companies that benefit from the above referred measures are entitled to an extraordinary financial incentive to support business resumption, to be granted by IEFP, in a one-off payment equal to the gross minimum monthly wage (€ 635,00) per employee.
During the time in which the measures are in place will the company be exempt from making contributions to the Social Security?
The companies that benefit from any of the measures provided for in this Decree-Law will be exempt from Social Security contributions, in relation to the employees covered and members of statutory bodies, for as long as the measures shall remain in force and with respect to the remunerations for the months during which the same have applied.
However, employees will not be exempt from their contributions, and the companies are required to submit separate remuneration returns with respect to employees covered.
Is there any prohibition of dismissal while the measures are in force?
For as long as the measures are in force and for a period of 60 days thereafter, the company cannot terminate employment contracts by any form of collective dismissal or redundancy.
To be eligible for these measures is it necessary not to have Social Security and tax debts?
In order to have access to these measures, companies must demonstrate not to have any outstanding debts to the Social Security and the Customs and Tax Authority.
However, until 30 April 2020, any debts incurred during the month in March will not be taken into account.
In what circumstances is the company obliged to repay the aid?
Failure by the employer to comply with its obligations with respect to the aids will cause immediate termination of the same, and the obligation to repay or pay, in whole or in part, as the case may be, the amounts received or exempted, in any of the following situations:
- Dismissal, except for a cause attributable to the employee;
- Failure to comply with the payment of the remunerations to employees in due time;
- Failure by the company to comply with its legal and tax obligations and contributions to the Social Security;
- Distribution of profits during the obligations arising from the grant of incentive, in whichever form, in particular, as advance withdrawal;
- Failure by the company to comply with its obligations within the established deadlines;
- Making false statements;
- Performance of work to the company by an employee covered by the measures of extraordinary aid for maintenance of the employment contract in the form of suspension of the contract, or beyond the established working hours, in the form of temporary reduction of the normal working period.