How to Remove Employees from a Temporary Layoff Procedure (ERTE) for force majeure, Switching to an Temporary Layoff Procedure (ERTE) on objective grounds

How to notify the Public Employment Service (SEPE) of deactivations or amendments to Temporary Layoff Procedure (ERTE) arising from the gradual return to work

Download Public Employment Service (SEPE) guidance

Key legal changes to Temporary Layoff Procedure (ERTE): Royal Decree-Law 18/2020 

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UPDATES TO Temporary Layoff Procedure (ERTE) ON force majeure GROUNDS:

EXTENSION OF Temporary Layoff Procedure (ERTE) ON force majeure GROUNDS: how long do Temporary Layoff Procedure (ERTE) last? 

Temporary Layoff Procedure (ERTE) based on force majeure may remain in force for as long as the underlying circumstances persist, up to 30 June 2020, except for companies whose registered tax address is in a jurisdiction classified as a tax haven, or for those with more than 50 employees that proceed to distribute dividends for the 2020 financial year, unless they first reimburse the amount corresponding to the Social Security contribution exemptions received.

The Government may grant extensions beyond 30 June 2020 in light of restrictions on activity linked to public health grounds.

NEW PARTIAL Temporary Layoff Procedure (ERTE) ON force majeure GROUNDS:

Going forward, there will be two types of Temporary Layoff Procedure (ERTE) on force majeure grounds:

1. FULL Temporary Layoff Procedure (ERTE), which continue to apply to all employees.
2. PARTIAL Temporary Layoff Procedure (ERTE), which allow for the gradual reintegration of employees into work and will only be permitted until 30 June 2020. 

HOW TO TRANSITION TO A PARTIAL Temporary Layoff Procedure (ERTE):

• You must notify the Public Employment Service (SEPE) in advance of the percentage or the days on which the employee will be reactivated.
• You must notify the Public Employment Service (SEPE) in advance when you intend to withdraw entirely from the Temporary Layoff Procedure (ERTE).
• You must notify the labour authority of the full withdrawal from the Temporary Layoff Procedure (ERTE) within 15 days.

ADVANCE NOTICE IS REQUIRED:

Contact us for assistance with the process:

UPDATES ON objective grounds ERTEs:

Temporary Layoff Procedure (ERTE) PROCEDURES ON objective grounds RELATED TO COVID-19:

The Temporary Layoff Procedure (ERTE) on objective grounds is the one based on economic, technical, organisational and/or production-related grounds.

The Government introduced the special provisions we outline in this link, which streamlined the procedure. Hereinafter referred to as the Covid-19 Objective ERTE.

Further special provisions have now been added:

• They may only be initiated up to 30 June 2020. After that date, the standard procedure under the Workers' Statute will apply.
• They may be initiated even where a Temporary Layoff Procedure (ERTE) on force majeure is already in force.
• Where a Temporary Layoff Procedure (ERTE) on force majeure is in force, the Covid-19 Objective Temporary Layoff Procedure (ERTE) will take effect once the force majeure Temporary Layoff Procedure (ERTE) ends. Even if negotiations are concluded after the force majeure Temporary Layoff Procedure (ERTE) has ended, its effects will be backdated to the date on which the force majeure Temporary Layoff Procedure (ERTE) expired. 
• Objective ERTEs that had already been processed will remain in force under the terms set out in their final notification.

Unemployment benefit: 

The unemployment benefit protection measures are extended in their effects until 30 June 2020.

For permanent seasonal workers, the extension runs until 31 December 2020.

We summarise these measures in this link, covering everything related to the Public Employment Service (SEPE).

Social Security contributions for force majeure ERTEs: 

HOW CONTRIBUTIONS WORK FOR TOTAL SUSPENSION ERTEs:

That is, ERTEs in which workers remain 100% affected by the force majeure:

1. For companies with fewer than 50 employees:
   - 100% exemption during the months of May and June.
2. Para companies with more than 50 employees:
   -75% exemption during May and June.

This exemption applies to the employer's Social Security contributions (as well as the jointly collected contributions covering unemployment, the Wage Guarantee Fund, and Vocational Training), and applies exclusively to Temporary Layoff Procedure (ERTE) based on force majeure, provided the company had that number of employees as at 29 February 2020.

HOW PARTIAL Temporary Layoff Procedure (ERTE) CONTRIBUTIONS ARE CALCULATED:

That is, companies under a Temporary Layoff Procedure (ERTE) based on force majeure that decide to "reactivate" some employee will benefit from the following exemptions, which alter the contribution rates for the entire workforce:

1. Employees returning to REDUCED HOURS:
   
   • For companies with fewer than 50 employees:
     - 85% of the employer's contribution accrued in May 2020 = company pays 15%
     - 70% of the employer's contribution accrued in June 2020 = company pays 30%
   • For companies with more than 50 employees:
     - 60% of the employer's contribution accrued in May 2020 = company pays 40%
     - 45% of the employer's contribution accrued in June 2020 = company pays 65%
2. Employees remaining SUSPENDED:
   
   • For companies with fewer than 50 employees:
     - 60% of the employer's contribution accrued in May 2020 = company pays 40%
     - 45% of the employer's contribution accrued in June 2020 = company pays 55%
   • For companies with more than 50 employees:
     - 45% of the employer's contribution accrued in May 2020 = company pays 55%
     - 30% of the employer's contribution accrued in June 2020 = company pays 70%

PRIOR NOTIFICATION REQUIRED:

Contact us to handle the process:

UPDATES ON THE JOB RETENTION REQUIREMENT:

In this link we explained the job retention safeguards.

New developments have now emerged: as of today, 13/05/20, breaching the employment level requirement means dismissing or terminating the contracts of any of the employees covered by a Temporary Layoff Procedure (ERTE) on grounds of force majeure, except in the following cases:

• disciplinary dismissal declared fair
• resignation
• death
• retirement or severe disability, total permanent disability (IPT), or absolute permanent disability (IPA) of the employee
• where a permanent seasonal employee's call-up period ends, provided this does not constitute a dismissal but rather a temporary interruption of the contract
• in the case of fixed-term contracts, where the contract expires upon the agreed end date or upon completion of the work or service
• where the contracted activity cannot be carried out immediately
• companies at risk of insolvency proceedings within the meaning of Article 5.2 of Law 22/2003 of 9 July

Account will also be taken of the specific characteristics of different sectors and applicable employment legislation, with particular regard to the specificities of companies with high variability or seasonal employment patterns. It will ultimately fall to the courts to interpret these rules.

CONSEQUENCES OF BREACHING THE JOB RETENTION REQUIREMENT:

Companies that fail to meet this commitment will be required to repay the full amount of the Social Security contributions from which they were exempted, together with the applicable surcharges and late payment interest.

The Labour and Social Security Inspectorate must first open proceedings to establish the breach and determine the amounts to be repaid.

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EVERYTHING YOU NEED TO KNOW ABOUT THE Public Employment Service (SEPE):

How to notify changes to Temporary Layoff Procedure (ERTE) arising from the gradual return to work?

Download Public Employment Service (SEPE) instructions