MEASURES IN RELATION TO ERTES AND COVID 19

New measures in relation to Ertes, and contract suspensions, adopted by RD 18/20 of 13 May to avoid unemployment

a) ERTES FOR FORCE MAJEURE.

The most important modification adopted by the aforementioned resolution is that while the activity continues to be suspended, the approved ERTE due to force majeure will continue until the activity is resumed and until 30 June 2020 at the latest.

On the other hand, until 30 June, companies are allowed to gradually reinstate people, in whole or in part, depending on the needs of the business. The reincorporation of personnel must be reported to the Labour Authority and the Public Employment Service.

In terms of exemption from Social Security contributions, those companies that are still unable to resume their activity in the months of May and June will continue with the current exemption from contributions: total exemption for companies with less than 50 workers and 75% for companies with 50 or more.

In the case of companies that are able to resume their activity in the different phases of the so-called de-escalation, the exemption percentages are modified, giving priority to the incorporation of workers:

In these cases, the company will be exempted from the payment of social security contributions as follows:

i) - With respect to workers who are reinstated and if the company has less than 50 workers:

- Exemption of 85% of the company contribution corresponding to the month of May 2020.

- Exemption of 70% of the employer's contribution for the month of June 2020.

ii) - In respect of workers who are reinstated and if the company has 50 or more workers:

- Exemption of 60% of the employer's contribution corresponding to the month of May.

- Exemption of 45% of the employer's contribution for the month of June.

iii) - With respect to workers who continue in the ERTE and if the company has less than 50 workers:

- Exemption of 60% of the employer's contribution corresponding to the month of May.

- Exemption of 45% of the employer's contribution corresponding to the month of June.

iv) - With respect to workers who continue in the ERTE and if the company has 50 or more workers:

- Exemption of 45% of the company contribution corresponding to the month of May.

- Exemption of 30% of the employer's contribution corresponding to the month of June.

Companies and entities that have their tax domicile in tax havens will not be able to take advantage of force majeure ERTES, with exemption of quotas.

Companies that have benefited from a force majeure ERTE may not distribute dividends corresponding to the fiscal year in which the ERTES are applied. This limitation will not be applicable to those entities that have less than 50 employees.

As regards the commitment to maintain employment for six months, the following is indicated:

- This commitment is only applicable to force majeure ERTES that entail exemption from Social Security contributions.

- It shall start to run, for all contracts, from the date of resumption of activity, understood as the return to work of any worker, whether full or part-time.

- The contract is not considered not to have been fulfilled when the contract is terminated due to fair disciplinary dismissal, resignation, death, retirement or total, absolute or severe permanent disability of the worker, or due to the end of the call of discontinuous permanent employees. In the case of temporary contracts, they may be terminated, without breaching the commitment, when the agreed period has expired or when the work or service that constitutes the object of the contract has been carried out.

- This commitment to maintain employment shall not apply to companies where there is a risk of bankruptcy.

- Companies that fail to comply with this commitment will have to reimburse the full amount of the exempted contributions, with the corresponding surcharge and interest for late payment.

In our view, this issue is not closed, as it will be difficult to force a company to maintain employment if it cannot pay its employees.

B) LAY-OFFS FOR ECONOMIC, TECHNICAL, ORGANISATIONAL OR PRODUCTION REASONS (ETOP)

The ETOPs, linked to COVID-19, which are negotiated until 30 June, will continue to be governed by the particularities contained in article 23 of Royal Decree-Law 8/2020 (reduced periods for setting up the Negotiating Committee and the duration of the consultation period).

It is foreseen that when the force majeure ERTEs end, the ETOPs will begin and therefore allow their processing and negotiation to begin, while a force majeure ERTE is in force. If the ETOP RTE is initiated after the end of the force majeure RTE, the effective date of the former will be backdated to the date of the end of the latter (allowing one to be applied after the other).

The ETOP lay-offs in force at the date of entry into force of the new Royal Decree-Law will not be modified, and will be applicable under the terms set out in the company's final communication.

c) OTHER MEASURES

The unemployment protection measures already provided for in the regulation and referring to the non-requirement of a qualifying period for the payment of unemployment benefits, as well as the replacement of unemployment benefits consumed during the ERTES, will be in force until 30 June 2020.

The impossibility of carrying out dismissals on grounds of force majeure or ETOP causes derived from COVID-19 is extended until 30 June, as well as the extension of the duration of fixed-term contracts of workers who have been included in an ERTE.

Finally, a tripartite Labour Monitoring Commission is created, made up of the Government and the social partners, to monitor the measures to be adopted in the phase of attenuated exceptionality in which we find ourselves.

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