With regard to the urgent and extraordinary measures being adopted by the Spanish executive powers, pursuant to, among others, Royal Decree-Law 8/2020 of 17th  March, in which a series of measures regarding employment are established, we shall provide a summary thereof in the following:

1. SUSPENSION OF CONTRACTS AND REDUCTION IN WORKING HOURS

First of all, with regard to the dismissal procedure (ERTE – Expediente de Regulación Temporal de Empleo), we must clarify that this measure means the temporary suspension of contracts, not a definitive contractual termination (ERE – Expediente de Regulación de Empleo); so that, once the ERTE has ended, the rendering of labour services must be re-established as before. In fact, the Royal Decree-Law requires that in order to benefit from these measures amending the general rules of the ERTE, the employment relationship must be maintained for six months following the resuming of the activity of the company. Likewise, it must be emphasised that the possible measures to be adopted may be a total suspension of the employment relationship of all or some of the workers, as well as measures for the reduction of working hours.

With regard to the type of ERTE, we may differentiate between those arising from a direct cause of force majeure and those arising from economic, technical, organisational and production causes.

A.- ERTEs arising from force majeure.

Are those derived from loss of activity as a consequence of COVID-19 (including the state of alert), which imply:

  • Suspension or cancellation of activities.
  • Temporary close of establishments with large flows of people.
  • Restrictions on public transport;
  • Lack of supplies which seriously impede the ability to continue with the ordinary development of the activity;
  • Preventative isolation measures decreed by the health authorities or in urgent or extraordinary situations due to the infection of the workforce.

Any of the above situations must be duly demonstrated in a report to be filed together with other documentation for applying for an ERTE.

Procedure:

  • It shall be initiated through an application filed by the company, accompanied by a report regarding the link of the loss of activity to the consequences of COVID-19, and, where appropriate, of the relevant supporting documentation. The company must notify its employees of the application and transfer the report and the supporting documentation to the worker representation.
  • The existence of force majeure should be verified by the labour authorities, regardless of the number of affected employees.
  • Should the labour authorities request a report (it is facultative) from the Labour and Social Security Inspectorate (ITSS – Inspección de Trabajo y Seguridad Social), the latter should issue such report in a non-extendable term of 5 days.
  • The resolution from the labour authorities shall be issued within five days as from the date of application and it shall be limited to verifying the existence, where appropriate, of the force majeure alleged by the company. It will then be up to the company to decide whether to apply suspension measures to contracts or a reduction in working hours, which shall take effect from the date of the event causing the force majeure.

Social Security contributions

While the suspension of contracts or reduction of working hours due to force majeure caused by the COVID-19 lasts, companies can apply for exemption from Social Security contributions in different proportions:

  • 100% if, on 29th February 2020 the company had less than 50 employees.
  • 75% if on said date it had 50 or more employees.

It is important to emphasise that this measure does not affect those employees who in said period shall continue to benefit from effective contributions.

B.– ERTEs arising from economic, technical, organisational and production causes.

In cases where the company decides upon the suspension of contracts or a temporary reduction in working hours for such causes, the company must notify the worker representatives of the intention to initiate an ERTE, as it would under normal circumstances.

When there is no legal worker representation, a series of special measures shall be established for the appointment of members of a representative commission which shall carry out the negotiations. In any case, the maximum non-extendable term for the constitution of a representative commission is 5 days.

Once this term has passed, the worker representatives and the labour authorities shall be notified of the start of the consultation period. Said labour authority shall be either at autonomous community level or state level, depending on the territorial scope of activity of the company.

The consultation period with the worker representatives or the representative commission shall not exceed 7 days maximum (instead of the 15 days under the regular legal system).

Once the consultation period has finalised, the employer shall notify the competent labour authorities of the outcome of the negotiations. This authority may request a report from the ITSS to be issued within a non-extendable term of 7 days (instead of the 15 days under the regular legal system).

After notifying the labour authority, the employer shall notify, each of the workers concerned individually, regarding the decision,f with their respective conditions.

2. ADAPTATION AND REDUCTION OF WORKING HOURS

Workers who prove that they have duties of care towards a spouse or common-law partner, as well as towards family members with a second degree blood relationship, shall be entitled to adapt their working hours or to a reduction in working hours when there are exceptional circumstances related to necessary actions for avoiding the transmission of COVID-19.

It shall be deemed that such exceptional circumstances exist for applying for such measures when:

  • The presence of the employee is necessary for the attention to those persons indicated in the above paragraph, when due to their age, illness or disability they need personal and direct care.
  • Government decisions which imply the close of educational centres or centres for the care and attention to those in need or the absence of the person previously in charge of such care or assistance.

The entitlement to the adaptation or reduction of working hours is an individual right corresponding to each of the parents or carers, but it must be justified, reasonable and proportionate in relation to the company situation.

a) Adaptation of the working hours

The adaptation may consist of a change in shift, alteration to working hours, flexible working hours, split or continuous working hours, change in the place of work, change of functions, change in the way in which the work is carried out including remote working, or in any other way available in the company, or which may be implemented in a reasonable and proportionate manner, and limited to the exceptional period of duration of COVID-19.

b) Reduction in working hours.

The entitlement to a special reduction in working hours, and salary, for exceptional circumstances, has the following features:

    • The reduction in working hours must be communicated to the company with 24 hours advance notice before the application of the requested measure.
    • The reduction may extend to up to 100% of the working hours.
    • In the case of a reduction in working hours due to the direct care for a family member, up to a second degree blood relationship, who due to age, accident or illness may not be able to look after themselves, it will not be necessary for the family member requiring attention and care to not carry out a gainful activity.
    • If the employee previously benefitted from the entitlement to a reduction in working hours, they may temporarily renounce the entitlement or they shall be entitled to a modification of the terms thereof.

3. EMPLOYMENT BENEFITS

When the company adheres to one of the aforementioned procedures, the Spanish Public Employment Service shall:

  • Recognise the right to contributory unemployment benefit for workers whose employment relationship began before the entry into force of this Royal-Decree Law, even if they fall short of the necessary minimum contribution period.
  • Not count the time for which the unemployment benefit is received as a result of the aforementioned extraordinary circumstances, as a part of the usual maximum periods established for receiving such benefits.

4. PROMOTION OF REMOTE WORKING.

Priority is given to alternative measures to the temporary suspension or the reduction of activity, such as remote working. Companies should set up organisational systems that allow for these alternative systems wherever technically and reasonably possible.

Furthermore, among other development measures, a line of credit is established for the coming two years for the amount of Euro 200 million for SMEs to acquire through the purchase or lease of equipment and services for digitalisation,  so that companies may adapt to this form of remote working.

5. SELF-EMPLOYED WORKERS AND FREELANCERS

Exceptionally and with a limited effect of one month, as from the entry into force of the Royal-Decree Law which is object of analysis, or until the last day of the month in which the state of alert ends, those self-employed workers and freelancers, whose activities have been suspended, or when their turnover in the month previous to the application for the benefit is notably reduced, by at least 75% in relation to the average turnover of the previous semester, shall be entitled to receive an extraordinary benefit. For this, they must fulfil the following requirements:

  • Be affiliated and registered on the date of the declaration of the state of alert in the corresponding Social Security system.
  • In the event that the activity is not directly suspended, to demonstrate the reduction in turnover by at least 75% in relation to the previous semester.
  • To be up to date with the payment of Social Security contributions. If not, the managing body shall require payment within 30 calendar days.

The amount of the benefit regulated in this article shall be determined by applying 70 per cent to the applicable regulatory base. The duration of payment shall have the same consideration of normal effective contribution and shall not reduce the periods of benefit due to the suspension of activity to which one may be entitled in the future; this payment shall be incompatible with any other benefit under the Social Security system.

 

 

Jaime Madero

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

27th March 2020