Temporary extension of TERs due to force majeure arising from COVID-19 and clarifications on the maintenance of employment

The new Royal Decree-Law 18/2020, of 12 May, on social measures in defence of employment was recently approved.

The Official State Bulletin has published this Wednesday, May 13, a new RDL which establishes new measures, with the aim of preserving jobs, extending the extraordinary measures applicable to the ERTE by force majeure or underpinning the safeguarding of employment for six months for workers affected by an ERTE.

The most important point of the regulation refers to TRE’s, distinguishing two different types derived from force majeure: total force majeure and partial force majeure.

In this way and in summary, from the entry into force of this Royal Decree Law, those companies that cannot resume their activity will continue in a situation of total force majeure derived from the COVID-19. It also establishes an extension of its duration until 30 June 2020 at the latest.

On the other hand, those companies that have a Temporary Regulation of Employment File authorized on the basis of article 22 of Royal Decree Law 8/2020, of March 17, will be in a situation of partial force majeure from the moment that the causes reflected in said precept allow for the partial recovery of their activity, until June 30, 2020.

To this end, companies must reincorporate workers affected by temporary employment regulation measures, to the extent necessary for the development of their activity, giving priority to adjustments in terms of reduced working hours.

Similarly, companies must inform the labour authority of the total resignation, if applicable, of the ERTE within fifteen days and the SEPE of any changes in the data on workers included in these files.

In relation to these ERTEs, the Social Security General Treasury will continue to exonerate, with respect to the contributions accrued in the months of May and June 2020, the companies included in the ERTEs of total force majeure from the payment of the employer’s contribution provided that, on 29 February 2020, they had fewer than fifty employees registered with the Social Security, or 75% of them if they had fifty or more employees.

Companies affected by ERTE’s of partial force majeure will be exempted from the payment of employer’s social security contributions as follows:

In the case of workers who restart their activity as from the date of effect of the resignation and the periods and percentages of working time worked since that restart, the exemption will reach 85% of the employer’s contribution accrued in May 2020 and 70% of the employer’s contribution accrued in June 2020, when the company had fewer than fifty workers registered with the Social Security authorities on 29 February 2020. If on that date the company had fifty or more employees, the exemption will reach 60% of the employer contribution accrued in May 2020 and 45% of the employer contribution accrued in June 2020.

With regard to workers in these companies who continue with their suspended activities from the date of the effects of the resignation and the periods and percentages of the working day affected by the suspension, the exemption will reach 60% of the company contribution accrued in May 2020 and 45% of the company contribution accrued in June 2020, when the company had less than fifty workers registered with the Social Security on 29 February 2020. If on that date the company had fifty or more employees, the exemption will reach 45% of the employer contribution accrued in May 2020 and 30% of the employer contribution accrued in June 2020.

The exemptions in the contribution will not have effects for the workers, maintaining the consideration of the period in which they are applied as effectively contributed to all the effects.

In relation to this point, the RDL establishes limits related to the distribution of dividends and fiscal transparency. Thus, companies and entities that have their tax domicile in countries or territories that are classified as tax havens under current legislation cannot avail themselves of the Temporary Employment Regulation Files discussed at the beginning of this article.

Likewise, companies or other legal entities that make use of these Temporary Layoff Schemes may not distribute dividends corresponding to the tax year in which these temporary layoff schemes are applied, unless they previously pay the amount corresponding to the exemption applied to social security contributions.

This limitation to distribute dividends will not be applicable to those entities that, on February 29, 2020, had less than fifty workers.

Another point included in the RDL are the procedures for suspending and reducing the working day for economic, technical, organisational and production reasons reported as from the time of deconfinement. It explains that the processing of these cases may be initiated while a Temporary Employment Regulation Case is in force due to force majeure.

In addition, when the temporary layoff proceedings for economic, technical, organizational or production reasons are initiated after the end of a temporary layoff proceeding based on the cause provided for in Article 22 of Royal Decree Law 8/2020 of 17 March, the date of effect of the temporary layoff proceeding will be retroactive to the date of end of the proceeding.

The extraordinary measures in the field of unemployment protection provided for in paragraphs 1 to 5 of Article 25 of Royal Decree Law 8/2020 (obtaining unemployment benefits without a grace period or not taking into account the periods for the purpose of future benefits, among others) are also extended and will be applicable until 30 June 2020.

The Royal Decree-Law provides for the creation of a tripartite labour monitoring committee for the process of deconfinement between the Ministries of Labour and Social Economy, Inclusion and Social Agents (CEOE, CEPYME, UGT and CCOO).

The objective of this committee will be to monitor the measures that are carried out in the labour field during the different phases of exceptionality and, in any case, in view of the restrictions on activity linked to health reasons that remain, it may extend beyond 30 June 2020 the force majeure ERTE and its quota exemptions to the SS, extend the quota exemptions to the ERTE due to force majeure to the ERTE for objective reasons and extend the unemployment protection measures provided for in Article 25.1 of Royal Decree Law 8/2020.

Finally, the RDL amends the sixth additional provision on the Safeguarding of Employment by stating that the extraordinary measures approved in the field of employment, basically the exemptions from social security contributions, will be subject to the company’s commitment to maintain employment for a period of six months from the date of resumption of activity.

This commitment shall not be deemed to have been breached where the employment contract is terminated as a result of disciplinary dismissal declared to be appropriate, resignation, death, retirement or total or absolute permanent disability of the worker, or the end of the call of persons with a permanent-discontinuous contract or the termination of a temporary contract due to the expiry of the agreed time or the performance of the work or service.

To extend the information on the commitment to maintain employment we leave the following link published recently.

From the Labour Management Department of AddVANTE we remain at your disposal for further information or to resolve any doubts that may arise in relation to this article.