To whom does it apply
To employers of private entities, including those in the social sector, and their employees, affected by the COVID-19 disease pandemic and which, as a result, are in a business crisis situation.
What is meant by a situation of business crisis?
A business crisis situation is deemed to exist when a company, in the calendar month immediately prior to the initial request for support or renewal refers to, registers a reduction in its invoicing equal to or greater than 40%, compared to the same month of the previous year or to the monthly average of the two months prior to the said period; companies that started their activity in less than 12 months, the reduction in invoicing is measured by comparing the average monthly invoicing between the beginning of its activity and the second to last full calendar month to which the initial request for support or its renewal refers to.
What are the necessary formalities to qualify for the support?
- Written communication to the affected employees informing of the percentage of the reduction to be applied to the normal working time period as well as information on the predictable duration of the measure. In case a workers union and / or a workers’ committee exist, the same should be heard within a minimum term of three working days to be established by the company.
- Submission of an electronic application, using an online form to be provided by the Social Security for such specific purpose, which shall be enforced as of the month it is submittal. This form must include a declaration from the company and a certificate from the company’s certified accountant confirming the business crisis situation, as well as a list with the names of the affected employees, their gross normal remuneration and an estimated average, by employee, of the reduction of the normal working period to be applied.
- The company that requests this support must have its contributory and tax situation settled before the Social Security services and the Tax Authority.
How long does the support last for?
This support lasts for one calendar month, and may be extended monthly until the date on which Decree-Law 31 December 2020 ceases to be effective.
Companies may apply for this support in non-consecutive months, provided they meet the eligible criteria in the petitioning months.
What are the limits for the reduction of the normal working period?
The maximum limits for the reduction of the normal working period are directly related to the reduction in the company’s invoicing, as shown below:
Companies that register a reduction in their invoicing equal to or greater than 40%:
- 50%, during the months of August and September 2020; and
- 40%, during the months of October, November and December 2020.
Companies that register a reduction in their invoicing equal to or greater than 60%:
- (i) 70%, during the months of August and September 2020; and
- (ii) 60%, during the months of October, November and December 2020.
How much is an employee entitled to receive?
During the reduction of the normal working period, the employee is entitled to a salary corresponding to the hours effectively worked.
Employees are also entitled to receive a monthly retributive compensation, up to three times the minimum guaranteed monthly remuneration (€ 1,905.00) amounting to 2/3 of the normal gross remuneration corresponding to the unworked hours in August and September 2020 and amounting to 4/5 of the normal gross remuneration corresponding to the unworked hours in the months of October, November and December 2020.
In any case, an employee can never receive a monthly pay below the minimum guaranteed monthly remuneration (€ 635.00).
What are the remuneration components included in the “gross normal remuneration” concept?
The remuneration components that are included in the concept of “gross normal remuneration” for the purposes this support are:
- (i) Basic remuneration;
- (ii) Monthly bonuses;
- (iii) Regular monthly allowances, including shift work allowance;
- (iv) Meal allowance (when considered aspart of the remuneration concept);
- (v) Night work.
Concerning monthly bonuses, regular monthly allowances and night work, these shall only be considered as included in the concept of “normal gross remuneration” when they are of “regular nature”, which is deemed to be the case when the employee has received such amounts for, at least, 10 months during the period between March 2019 and February 2020, or the proportional part in case the employee has been working for the company for less than 12 months.
What does this financial support consist of and what is its amount?
The financial support consists of a retributive compensation to be paid to the affected employees and is exclusively aimed for such purpose; the financial support corresponds to 70% of the amount of the retributive compensation; the remaining 30% are guaranteed and supported by the company.
Furthermore, an additional support is also foreseen for companies whose invoicing decrease is equal to or greater than 75%. In this case, the support shall correspond to 35% of the normal gross remuneration due to each employee for the hours effectively worked.
The total sum of these two supports, per employee, cannot exceed the amount corresponding to three minimum guaranteed monthly remunerations (€ 1,905.00).
Is the beneficiary company exempt from the Social Security contributions?
The company that benefits from this support is entitled to a total or partial exemption of social security contributions in regard to the employees affected by this support, calculated in accordance with the remuneration compensation amount, under the following terms:
For August and September 2020:
- (i) Total exemption of social security contributions in regard to the employees affected by this support, in the case of micro, small and medium-sized companies;
- (ii) Partial exemption of 50% of the social security contributions in regard to the employees affected by this support, in the case of large-sized companies;
- October, November and December 2020: exemption of 50% of social security contributions in regard to the employees affected by this support, in the case of micro, small and medium-sized companies.
What are the company’s duties during the support granting period?
In addition to the compulsory compliance with the obligations provided for in the employment contract, by the law and in the collective bargaining agreement, the company is also obliged to:
Maintain, and evidence, that its contributory situation is settled before the Social Security services and the Tax Authority.
- (i) Ensure the timely payment of the retributive compensation, as well as the surplus;
- (ii) Timely pay its own and its employees’ social security contributions.;
- (iii) Refrain from increasing the remuneration or other patrimonial benefits granted to members of the company’s social bodies, while the social security is supporting the retributive compensation granted to its employees;
Refrain from distributing dividends in any form, namely by way of advance withdrawals; such obligation shall be applicable during the normal working period reduction and for the following 60 days
Is there any dismissal prohibition?
Yes, during the reduction of the normal working period and for the following 60 days, the company may not terminate employment contracts by means of a collective dismissal, dismissal due to job extinction procedure or dismissal due to maladaptation, nor start its respective formal procedures.
What are the effects of the reduction of the normal working period on the holiday entitlement, holiday subsidy and Christmas subsidy?
In regards to the holiday entitlement, the reduction of the normal working period does not have an impact its entitlement nor its duration.
During the reduction of the normal working period, there is also no impact on the employee’s right to schedule and take his/her holidays, moreover the employee is entitled to the payment of his/her remuneration and retributive compensation, as well as, to his/her holiday subsidy which shall be borne by the company in an amount equal to what would be due under normal working conditions.
As for the Christmas subsidy, although the employee is entitled to it in full, its payment, shall be co-borne between the company and the Social Security. As per the Social Security, its payment shall correspond to a twelfth of half of the retributive compensation related to the number of months the company benefits from the support, whilst the remaining difference shall be borne by the company, if and when, the payment date of the said subsidy coincides with the period during which the company benefits from the support.
Can a company accumulate this support with the lay-off regimen or with the extraordinary incentive for the normalization of the business activity?
A company that is benefiting from support provided for under the simplified lay-off regimen (Decree-Law no. 10-G / 2020, of 26 March), or from a reduction or suspension measure, provided for in articles 298 and following of the Labour Code, cannot apply for this extraordinary support.
The same rule applies to the company that has benefitted or is benefitting from the extraordinary incentive for the normalization of the business activity provided for in Decree-Law no. 27-B / 2020, of 19 June.
However, when the said supports no longer apply, the company may apply for the reduction or the suspension measures provided for in articles 298 and following of the Labour Code, without having to wait for the term provided for in article 298-A of that the said code.
Employees may exercise another remunerated activity outside the company whilst the support for the reduction of the working period is in force?
Yes, in the course of the reduction of the normal working period, the employee may exercise another remunerated activity provided that such employee r, within five days from the beginning of the said activity informs the company as an eventual reduction of the retributive compensation may be applicable. In such case, the company should inform the Social Security services of such occurrence within the two following days.
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