New scope of the TRE’s job retention commitment

In view of the recent processing of a Temporary Suspension of Employment (ERTE) file on behalf of your company, we would like to inform you that today, Royal Decree Law 18/2020, of 12 May, on social measures in defence of employment, was published in the Official State Gazette, which contains important modifications regarding the effects and processing of these files.

As always, you can find on our website, a summary of the most important legislative developments relating to the crisis of the COVID.

Notwithstanding the above, we understand that one of the most controversial issues introduced by RDL 8/2020 (Commitment to maintain employment of those affected by the ERTE) deserves specific clarification, since in the wording of that rule, it was only specified in its sixth additional provision that

“Sixth additional provision. Safeguarding of employment: The extraordinary measures in the field of employment provided for in this Royal Decree-Law shall be subject to a commitment by the company to maintain employment for a period of six months from the date of resumption of the activity”

The previous text, together with the responses and criteria published by the Directorate General of Labour (DGT) to the consultations made by various groups, has given rise to various interpretations and doubts regarding its content, scope and repercussions, which have been partly answered by the publication of RDL 18/2020, and the modification of the sixth additional provision of RDL 8/2020, which has been extensively amended. The key issues of these modifications are:

• It is specifically specified that the commitment to maintain employment only affects ERTE’s processed by force majeure, not those with objective causes.
• The six months will start to count from the effective return to work of persons affected by the ERTE, even if this is partial or only affects part of the workforce.
• The commitment to maintain employment shall be deemed to have been breached if the dismissal or termination of the contracts of any worker affected by the ERTE due to force majeure occurs.
  • Exceptions: This commitment shall not be considered to have been breached when it is terminated by fair disciplinary dismissal, resignation, death, retirement, total or absolute permanent disability or major invalidity and the termination of a temporary contract due to the end of its term or the end of the contracted work or service.
  • At the last moment, two modifications have been introduced with regard to the relaxation of this commitment, which, although it has not been made concrete in the form of exceptions with clear requirements, are announced as possible escape valves from the obligation of the employment commitment:
    • Taking into account the specific characteristics of the sector and the applicable regulations, -particularly- the specificities of those companies with high variability or seasonality of employment (e.g. companies in tourism or catering activities).
    • It will not be applicable either, in those companies that present a risk of declaring insolvency proceedings.
• Consequences: In the event of non-compliance, the companies must return all the quotas of those that have been exonerated, with a surcharge and interest for late payment, after action by the Labour and Social Security Inspectorate, which must accredit the non-compliance and determine the amounts to be returned. No mention is made of the return of benefits as envisaged in the previous text.
• Doubts remain:
  • It seems clear that the legislator has not wanted to resolve one of the clearest doubts, and that is that both in the resolutions of the DGT and in the wording of RDL 18/2020, there is an express reference to the fact that the maintenance of employment must be carried out with respect to all the contracts of the workers affected by the ERTE. However, it is not specified whether the failure to maintain employment under one of these contracts could lead to the return of all those affected in the same company.
  • Nor have the effects that such non-compliance may have on the judicial classification of dismissals that may occur for objective reasons been determined, once the prohibition that affects all those procedures that are related to the COVID (art. 2 RDL 9/2020) is lifted, since no reference to such dismissals has been included in the list of exceptions.

We will continue to pay attention to the next modifications and phases with which the legislator and the Government “wake up” us every morning.