EXTENSION OF ERTE: DECREE-LAW 18/2020 OF 12TH MAY ON SOCIAL MEASURES IN FAVOUR OF THE EMPLOYMENT

As a continuation of the different resolutions that have been adopted during the evolution of the health crisis due to COVID-19, on 13th May the Royal Decree-Law 18/2020, of 12th May, on social measures in favor of the employment has been published.

Please find in the following the main news having an impact on the labour field with respect to ERTE procedures, with a schematic approach of the measures approved, taking into account that to these resolutions there will expectedly follow some complementary or explanatory ones.

 

1.- TYPES OF ERTES:

 From now on a distinction is made between these types:

  • ERTE DUE TO TOTAL FORCE MAJEURE: Those who cannot restart their activity due to the state of alarm.
  • ERTE DUE TO PARTIAL FORCE MAJEURE: Those who are allowed to restart their activity partially according to the regulations of the state of alarm.
  • ERTE ETOP (due to economic, technical, organizational and production reasons)

They are extended until 30/06/2020.

ERTE ETOP may be initiated after the termination of the ERTE DUE TO FORCE MAJEURE, provided that the

requirements are met.

The changes regarding the workers’ situation must be communicated to the labour authority and the Public

Employment Service (SEPE).

 

2.- MEASURES REGARDING CONTRIBUTIONS OF ERTES DUE TO FORCE MAJEURE:

COMPANIES WITH AN ERTE DUE TO TOTAL FORCE MAJEURE:

Companies with less than 50 workers: Total exemption from the payment of the company’s contributions during the months of May and June.

Companies with 50 or more workers: Exemption of 75% from the payment of the company’s contributions during the months of May and June.

 

COMPANIES WITH AN ERTE DUE TO PARTIAL FORCE MAJEURE:

For workers who conclude the ERTE:

1. Companies with less than 50 workers:

  • Exemption of 85% from the company’s contributions in May.
  • Exemption of 70% from the company’s contributions in June.

2. Companies with 50 or more workers:

  • Exemption of 60% from the company’s contributions in May.
  • Exemption of 45% from the company’s contributions in June.

 

For workers who do not conclude the ERTE:

Companies with less than 50 workers:

  • Exemption of 60% from the company’s contributions in May.
  • Exemption of 45% from the company’s contributions in June.

Companies of 50 or more workers:

  • Exemption of 45% from the company’s contributions in May.
  • Exemption of 30% from the company’s contributions in June.

 

3.- LIMITATIONS OF THE ERTES DUE TO FORCE MAJEURE

Those companies having their tax domicile in territories classified as tax haven may not be allowed to benefit from the ERTE DUE TO FORCE MAJEURE.

Those companies which benefit from the ERTE DUE TO FORCE MAJEURE may not proceed with the distribution of dividends corresponding to the fiscal year in which the ERTE is applied.

This shall not apply if the corresponding amount of the applicable exemption regarding the Social Security contributions is paid.

This shall not apply if the companies had less than 50 workers as of 29/02/2020.

 

4.- COMMITMENT TO PRESERVE EMPLOYMENT DURING 6 MONTHS

The term will start from the date of resumption of the activity, being understood that this will occur when the workers affected by the ERTE will return to work, even if only partially or only a part of the workers returns.

This commitment shall not be considered unfulfilled if the contract terminates due to dismissal for misconduct, resignation, death, retirement, permanent incapacity or expiration of the temporary contract.

This shall be evaluated depending on the seasonality and variability of the employment in some sectors (for example: tourism).

It shall not apply if there is a risk of bankruptcy.

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