Temporary Layoff Procedure (ERTE) Support Extensions to 31 May: force majeure and ETOP

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EXTENSION OF Temporary Layoff Procedure (ERTE) UNTIL 31 MAY:

- Temporary Layoff Procedure (ERTE) on force majeure grounds are automatically extended until 31 May 2021

- Temporary Layoff Procedure (ERTE) based on legal prohibition remain in force from 1 February 2021 until 31 May 2021 

ERTEs FOR RESTRICTED ACTIVITY:

These apply to sectors and businesses whose activity has been partially affected by decisions taken by public authorities. Examples include restaurants, retail establishments, theatres, cinemas, concert venues, or any businesses required to operate at reduced capacity or with a limited number of workers.

EXEMPTIONS:

- For companies with fewer than 50 employees:

• 100%, in February;
• 90%, in March;
• 85%, in April;
• 80%, in May.

- For companies with more than 50 employees:

• 90%, in February;
• 80%, in March;
  75%, in April;
• 70%, in May.

ERTEs FOR TOTAL PROHIBITION OF ACTIVITY:

These apply to businesses that are required to suspend their activity entirely as a result of administrative measures taken to combat the pandemic. For example, where a regional government (comunidad autónoma) orders the complete closure of a sector (such as hospitality or retail), or where a business is affected by a curfew (nightclubs and other late-night venues).

EXEMPTIONS:

- 90%, for companies with fewer than 50 employees;

- 90%, for companies with more than 50 employees.

ERTEs for sectors particularly affected or under enhanced protection

• These are sectors whose activity has been severely impacted by the pandemic, resulting in activity levels below 70% of normal and a proportion of workers covered by a Temporary Layoff Procedure (ERTE) exceeding 15%.
• This also covers businesses whose turnover depends primarily on these heavily affected activities.

A total of 47 sectors have been designated under this category (we provide this link to the Spanish Official Gazette (BOE) specifying these sectors)

EXEMPTIONS:

- 85% for companies with fewer than 50 employees.

- 75% for companies with more than 50 employees.

This equally applies to businesses in these sectors that convert their Temporary Layoff Procedure (ERTE) from force majeure (Covid-19) grounds to an ETOP-based Temporary Layoff Procedure (ERTE).

PROHIBITION ON DIVIDEND DISTRIBUTION:

Companies maintaining a Temporary Layoff Procedure (ERTE) may not distribute profits in the same year in which the procedure remains in force.

Companies domiciled in a tax haven are also ineligible to apply for a Temporary Layoff Procedure (ERTE).

employment commitment of the company

Companies in a Temporary Layoff Procedure (ERTE) that benefit from Social Security contribution exemptions may not dismiss any employee covered by the Temporary Layoff Procedure (ERTE) within 6 months of the procedure ending, except in the case of a justified disciplinary dismissal.

Otherwise, they must reimburse all Social Security exemptions applied, across the entire workforce.

UNEMPLOYMENT BENEFIT:

• Employees do not consume any of their entitlement to unemployment benefit protection.
  
  
  

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EXTENSIONS TO Temporary Layoff Procedure (ERTE) ETOP COVID-19 until 31 May:

The situation regarding Temporary Layoff Procedure (ERTE) ETOP procedures is as follows:

Can a Temporary Layoff Procedure (ERTE) ETOP be extended?

It has always been possible to extend a Temporary Layoff Procedure (ERTE) ETOP by submitting a request to the Labour Authority, justifying the grounds or providing an agreement reached with employee representatives.

Extension of COVID-19 Temporary Layoff Procedure (ERTE) ETOP procedures before the Labour Authority:

Article 3 of Royal Decree-Law 30/2020, of 29 September, on social measures in defence of employment, allows the extension of an active Temporary Layoff Procedure (ERTE) ETOP (on economic, technical, organisational or production grounds), provided that an agreement to that effect is reached during the consultation period. Accordingly, the extension must be negotiated under the same conditions as the original Temporary Layoff Procedure (ERTE) ETOP (7 days), and must be notified to the Labour Authority.

PROCEDURE FOR EXTENDING A COVID-19 Temporary Layoff Procedure (ERTE) ETOP:

1. Notification to employee representatives of the opening of the consultation period
2. Notification of the opening to the Labour Authority or, in Catalonia, to the Generalitat de Catalunya
3. 7-day consultation period
4. Notification of the outcome to the Generalitat de Catalunya, whether or not an agreement has been reached

The Labour Authority will formally notify the company or entity by official letter that the extension has been communicated to the body responsible for managing unemployment benefit benefits (Public Employment Service (SEPE)), provided that all legally established requirements have been met.

See our post where we explore this point in greater detail

collective dismissal OR Collective Dismissal Procedure (ERE) ON ECONOMIC, TECHNICAL, ORGANISATIONAL OR PRODUCTION GROUNDS:

If the situation calls for more than simply extending a Temporary Layoff Procedure (ERTE), and new measures involving terminations become necessary, a new Collective Dismissal Procedure (ERE) procedure must be initiated.

If specific employee representatives were appointed for the COVID-19 Temporary Layoff Procedure (ERTE) on economic, technical, organisational or production grounds, our view is that new representatives must be appointed. We believe case law will support this position, as courts consistently tend to afford employees the greatest possible protection and safeguards, given that they are the weaker party in the employment relationship (the in dubio pro operario principle).

• STEP 1 – Notification to employees
• STEP 2 – Formation of a new employee representative committee, which must be constituted within 7 days if employee representatives already exist, or within 15 days if there are none.
• STEP 3
  • The required documentation for the Collective Dismissal Procedure (ERE) or Temporary Layoff Procedure (ERTE) must be delivered to the representative committee, and the negotiation period must be formally opened.
  • Simultaneous submission of the application to the relevant labour authority.
• STEP 4 – Negotiation period of 30 days (first meeting within 3 days; minimum of 3 meetings required)
• STEP 5 – Agreement reached, or employer's unilateral decision in the absence of agreement.
• STEP 6 – Communication of the agreement or decision to the Labour Authority. No more than 15 days may elapse between negotiation meetings without notifying the Labour Authority of the decision.

CAN I DISMISS EMPLOYEES DURING OR AFTER A Temporary Layoff Procedure (ERTE) ON ECONOMIC, TECHNICAL, ORGANISATIONAL OR PRODUCTION GROUNDS?

Unless the case involves a justified disciplinary dismissal, if a company has previously carried out a Temporary Layoff Procedure (ERTE) on grounds of force majeure or on COVID-19-related economic, technical, organisational or production grounds, employment judges are very likely to conclude that the grounds cited for any subsequent dismissal are the same as those relied upon in the earlier Temporary Layoff Procedure (ERTE), in other words, that they remain linked to COVID-19.

See our post where we explore this point in greater detail