COVID-19 ERTE Regulations Extended After 30.6.2020

Information from the Royal Decree, published in the State Gazette on the the 27th of June.

Extended ERTEs

Valid for companies that applied for an ERTE for COVID Force Majeure before this new Royal Decree came into force (the 27th of June 2020) and lasting till the end of September 2020, at maximum. They will need to incorporate their workers gradually, giving preference to calling back more workers part-time, over just a few full-time and leaving others full-time in ERTE.

Companies that are in an ERTE situation due to partial force majeure (see this earlier article), with less than 50 workers, will enjoy a 60% exemption from the social security contributions of those who rejoin in the months of July, August and September, and 35% for workers who continue with their suspended employment. In the case of companies with more than 50 workers, these exemptions will be 40% for those who are activated and 25% for those who remain suspended.

For companies that are in total ERTE, a transitional period is established during which they will benefit from decreasing exemptions. Those with less than 50 workers will get a discount on social security contributions of 70% in July, 60% in August and 35% in September. From 50 employees, this bonus percentage will be 50%, 40% and 25% respectively.

The minister has highlighted, as a novelty, that, in the event of COVID-19 outbreaks and new containment measures from the government that prevents them from carrying out their regular activities, companies could resort to a new ERTE of force majeure, with exemptions of around 80% for companies with less than 50 workers and 60% for those with a higher workforce.  According to the State Gazette, all sorts of combinations of activity/inactivity, total or partial activity are possible, as well as informing SEPE before and at the end of the relevant month the ERTE should be paid out for. Please check with your gestor which is the most appropriate for your business.

In general, companies that take advantage of any of these exemptions must continue to maintain employment for a period of six months, so they cannot make redundancies. Companies based in tax havens will continue to be unable to benefit from this regulation.
No overtime work or new outsourcing of the activity may be established, nor is it allowed to issue new contracts, whether direct or indirect, during the application of the ERTE. Unless none of the employees included in the ERTE is qualified to carry out the work, based on objective and justified reasons.

For their part, workers affected by an ERTE derived from COVID-19 do not have to prove a minimum period of contribution to access this benefit, nor are they computed for the time they have remained in this situation for the purposes of the unemployment contribution.

Businesses that find it impossible to employ all their employees full-time for economic, technical, organizational or production reasons as a result of the COVID-crisis.

They can apply for a regular ERTE regulation, but with special COVID conditions in place until the 30th of September. If there is an ERTE in place as described above, the employer can apply for a regular ERTE while this is still valid. In the case that their employees were previously included in a COVID ERTE for ‘force majeure’ that had ended, the new ERTE can take retroactive effect as of the date that COVID ERTE finalised.

If there was already a regular ERTE in place, it will remain valid under the established conditions and until the date the employer has set for it.

Employees on these ERTEs with COVID conditions will be entitled to unemployment benefits, irrespective of their work history. They need to have been employed before or on the 17th of March 2020.  The special unemployment protection measures for employees on ‘fijo-discontinuo’ contracts remain in force till the 31st of December 2020. For more info, read THIS ARTICLE.

Disclaimer: this is a summary of the Royal Decree published in the State Gazette on the 27th of June and not pretending to be exhaustive or complete.

Please note: The information provided is based upon our understanding of current legislation. It is not legal advice but is provided freely to enable you to be properly informed. We recommend that if you are considering taking action, you should seek professional advice.

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