New ERTEs for Obstruction or Limitation, and Extensions to 31/01/2021

    New Temporary Layoff Procedure (ERTE) due to impediment to activity:

Companies and entities in any sector or industry whose operations at one or more of their workplaces are prevented from continuing, resulting in the suspension of work, as a consequence of new health containment measures or restrictions adopted from 1 October 2020 onwards by Spanish or foreign authorities, may benefit from Social Security contribution exemptions at the rates set out below, subject to prior authorisation of the "IT Temporary Layoff Procedure (ERTE)":

Social Security contribution exemptions for Temporary Layoff Procedure (ERTE) due to IMPEDIMENT:

1. Companies with fewer than 50 employees (as at 29 February 2020): 100% of the employer's Social Security contribution accrued during the closure period, up to and including 31 January 2021.

2. Companies with 50 or more employees as at 29 February 2020: 90% of the employer's Social Security contribution during the closure period, up to and including 31 January 2021.

    New Temporary Layoff Procedure (ERTE) due to activity restrictions:

Any company, in any sector, whose normal activity is restricted as a result of decisions or measures adopted by the Spanish authorities from 30 September 2020 onwards, may benefit at the affected sites, subject to prior authorisation of the Temporary Layoff Procedure (ERTE) on grounds of force majeure, from the following exemption percentages:

Social Security contribution exemptions for Temporary Layoff Procedure (ERTE) due to RESTRICTIONS:

1. Companies with fewer than 50 employees (as at 29 February 2020): For employees affected by suspension, in respect of the periods and proportions of working hours affected, the exemption from the employer's Social Security contribution for the months of October, November and December 2020 and January 2021 shall be 100%, 90%, 85% and 80%, respectively. 
   
2. Companies with 50 or more employees as at 29 February 2020: the exemption from the employer's Social Security contribution accrued in the months of October, November and December 2020 and January 2021 shall be 90%, 80%, 75% and 70%, respectively.

Required notification upon termination of impediment and restriction ERTEs:

Formally renouncing the Temporary Layoff Procedure (ERTE) results in the termination of these exemptions from the effective date of such renunciation. Companies must notify both the General Social Security Treasury and the labour authority that issued the express or tacit resolution to that effect.

Any contribution exemptions applied shall have no adverse effect on employees, and the period during which they are applied shall continue to be treated as a period effectively contributed to Social Security for all purposes.

Prohibition on dismissal under force majeure ERTEs and the new Temporary Layoff Procedure (ERTE) for impediment or limitation:

• For the original ERTEs, the rules remain unchanged: once an employee returns from a Temporary Layoff Procedure (ERTE), the employer may not dismiss that employee for 6 months, on pain of losing all Social Security exemptions obtained if the dismissal is declared unfair.
  see our previous post on the employment safeguard obligation
• However, if companies receive exemptions under impediment or limitation ERTEs, or under extensions where Social Security contributions have been exempted pursuant to this new Royal Decree, they must observe a new six-month period during which dismissal is prohibited, likewise running from the moment the employee returns from the Temporary Layoff Procedure (ERTE) (as has been the case to date).
• If a Temporary Layoff Procedure (ERTE) on grounds of force majeure is extended (which, as we have seen, is now possible up to 31/01/2020…), a new 6-month employment commitment will arise, beginning once the initial 6-month period of the first Temporary Layoff Procedure (ERTE) on grounds of force majeure has ended.

PROHIBITION ON DISMISSAL IN ALL CASES:

• The prohibition on dismissal is extended until 31/01/2021 on grounds of force majeure or on the ETOP grounds (economic, technical, organisational or production grounds) underpinning measures to suspend contracts and reduce working hours (Article 2 of Royal Decree-Law 9/2020 is hereby extended). According to the High Court of Justice of Catalonia, a dismissal in breach of this prohibition does not render it null and void, but rather unfair.

PROHIBITIONS ON "OVERWORKING":

For all Temporary Layoff Procedure (ERTE) (whether on grounds of force majeure or ETOP economic, technical, organisational or production grounds), unless there are reasons relating to lack of training, qualification, or other objective and justified grounds, and employee representatives have been duly informed:

• overtime is not permitted while these NEW Temporary Layoff Procedure (ERTE) are in force.
• Outsourcing of activities is not permitted.
• New hires, whether direct or indirect, are not permitted.

The Labour Inspectorate may impose sanctions for any of the above breaches.

UNEMPLOYMENT BENEFIT:

The following benefits are extended until 31/12/2021:

1. THE employee DOES NOT NEED TO MEET A PRIOR CONTRIBUTION PERIOD
2. THE employee DOES NOT "USE UP" THEIR unemployment benefit ENTITLEMENT (although this does apply to "NEW ETOP Temporary Layoff Procedure (ERTE)" initiated after 30/09/2020).

• A new collective benefit application must be submitted before 20 October 2020.
• The Public Employment Service (SEPE) must be notified in advance if any or all workers are removed from the scheme...
• ...and at the end of each month, the periods of activity and inactivity during the preceding month must be reported to the Public Employment Service (SEPE).
• If the Temporary Layoff Procedure (ERTE) is fully and definitively withdrawn, this must also be communicated in advance.

See our previous post on unemployment benefit

• Permanent seasonal workers (fijos discontinuos) will be entitled to receive an extraordinary benefit payment. If you need further information, please get in touch with us.
• If you need to know in which cases unemployment benefits are compatible with part-time work, please consult us as well.

Download the Public Employment Service (SEPE) Guide:

SOCIAL SECURITY CONTRIBUTION EXEMPTIONS:

EXEMPTED employer contribution:

The employer's Social Security contribution is exempted between 1 October 2020 and 31 January 2021 for:

• Automatic extension of an "ACTIVE Temporary Layoff Procedure (ERTE)", in sectors with a high rate of Temporary Layoff Procedure (ERTE) coverage and a low rate of activity recovery.
• Companies with a "NEW ETOP Temporary Layoff Procedure (ERTE)" transitioning from an active Temporary Layoff Procedure (ERTE) based on force majeure with the specified CNAE activity codes.
• Companies with a Temporary Layoff Procedure (ERTE) under the specified CNAE activity codes.
• Companies that, having been classified as dependent on or forming part of the supply chain, transition from a Temporary Layoff Procedure (ERTE) based on force majeure to one based on ETOP grounds.

Between 1 October 2020 and 21 January 2021, exemptions apply to the periods and proportions of working hours during which employees...

• ...covered by a Temporary Layoff Procedure (ERTE) who resumed activity from 1 October 2020 or from 13 May.
• ...whose activities were suspended between 1 October 2020 and 31 January 2021, and for the periods and proportions of working hours affected by the suspension.

... under the following exemption percentages and conditions:

• Companies with fewer than 50 employees as at 29/02/2020: 85% of the employer contribution accrued in October, November and December 2020 and January 2021.

• Companies with 50 or more employees as at 29/02/2020: 75% of the employer contribution accrued in October, November and December 2020 and January 2021.

THE FULL BACKGROUND TO ERTES IN...