ERTE until September
“Late, badly and at a crawl” seems to be the prevailing doctrine of the Government, in keeping with the Spanish tradition of leaving everything to the last minute and then improvising a solution, which in this case comes in the form of Royal Decree-Law 24/2020.
This Saturday, the 27th of June, we are greeted with the 30 pages of the “Royal Decree-Law 24/2020, of the 26th of June, on social measures to reactivate employment and protect self-employment and the competitiveness of the industrial sector” (RDL 24/2020), which will come into force immediately and with palpable effects from Wednesday.
Palpable effects, as the majority of employers have been worried for several weeks about what to do as of the 1st of July, when the ERTEs initiated during the state of emergency expired. Many had already taken measures, because in the absence of new rules such as today’s, deadlines are deadlines.
This RDL is not without its traps, small print, conditions, exceptions and, of course, the relevant attack on the freedom of enterprise (we will see later that today the freedom of outsourcing and/or subcontracting is restricted).
As always, we will limit ourselves to the most relevant sections and try to abbreviate and summarise the amalgam of modifications in the most orderly way possible. First, the headline:
The ERTEs initiated during the state of emergency are extended until the 30th of September 2020.
But not under the same conditions. Especially in terms of contributions.
Let us remember that there are two types of ERTE, both with their “COVID-19 versions” (RDL 8/2020)
- Those of Force Majeure (“those of Article 22”)
- Those based on economic, technical, organisational and production causes (“those of article 23”).
The ERTE COVID ended, those of force majeure, on the 30th of June. Companies that considered it appropriate could change from force majeure to other causes on the 1st ofJuly. Now the application of the ERTE due to force majeure can be maintained until the 30th of September,
The establishment of new outsourcing or new contracts during the application of the ERTE is prohibited, as well as overtime work. With the sole exception that the affected persons “cannot, due to training, qualification or other objective and justified reasons, carry out the functions”.
The deadline for “converting” a force majeure ERTE (art. 22) to an objective one (art. 23) is extended from the 30th of June to the 30th of September.
The unemployment benefit received for the application of the ERTE maintains the current special conditions. In particular, ignoring the lack of the minimum contribution period and not “consuming” unemployment.
Modification of contribution rebates
The bonuses only apply for as long as the ERTE remains in force, in whole or in part. They will cease to apply from the date of the ERTE resignation.
Two important distinctions are established in terms of bonuses, with respect to the worker:
- For the periods worked.
- For the periods affected by the suspension of the contract/activity.
A worker with reduced working hours due to ERTE would fit into both groups.
The new regulation grants greater bonuses to those who restart activities on the 1st of July.
- For periods worked, a bonus of 60%.
- For suspended periods, a bonus of 35%.
These percentages will be 40% and 25% respectively if the company had more than 50 workers on 29 February 2020.
Be careful! The obligation to maintain employment is still in force, so the higher the bonus, the higher the amount to be returned if the conditions are not met. The obligation applies to all ERTE COVID and the deadline (for those who are not already running) will start today.
Beware! The wording of the regulation is confusing. Apparently, workers affected by an organisational ERTE (art. 23) who have restarted their activity before the 1st of July are excluded from any bonus.
Support for the self-employed
As of the 1st July 2020, a rebate on self-employed contributions (RETA) is established, with two essential requirements:
- That on the 30th of June the extraordinary benefit of RDL 8/2020 was being received.
- Not receiving the benefit for termination of activity (see below).
The legislator seeks to encourage the self-employed to resume their activities by subsidising their contributions to the TGSS.
The rebate will be 100, 50 and 25% of the contribution base for the months of July, August and September respectively.
On the other hand, the extraordinary benefit (art. 17 RDL 8/2020) disappears. Let us remember that it was valid until the last day of the month in which the state of alarm ended (this June), so the self-employed will have to resort to the “normal” protection for cessation of activity provided for in the General Social Security Law (art. 327).
New requirements have been added to this “normal” protection, applicable to those who have been receiving the extraordinary benefit and who now opt for cessation protection.
- Proof, with respect to the third quarter of 2020, of a reduction in turnover of at least 75% with respect to the same period in 2019.
- Not obtain net income in the third quarter of 2020 of more than 5,818.75 euros or 1,939.58 euros per month.
- The “normal” requirements of art. 330.1 letter c) (legal cessation of activity, commitment, availability, …) will not apply, but the other letters (a, b, d, e) will apply.
As long as this benefit is received, the full RETA contribution must be paid, with no rebate.
As the payment requirements relate to the third quarter, which is the same as the quarter for which the benefit applies, in the event of non-compliance, the self-employed person may: return the benefit received or wait for it to be claimed (with a surcharge).
be careful! If you opt for the benefit and then have to give it up because you have paid in or earned more than the limits, you may not be able to make use of the previous allowances.
Limitations on dividend distributions
Commercial companies or other legal entities that avail themselves of the ERTE COVID and use the public resources earmarked for them (i.e. bonuses) may not distribute dividends corresponding to the tax year in which these temporary redundancy plans are applied, unless they have previously paid the amount corresponding to the exemption applied to social security contributions and have waived it.
The financial year in which the company does not distribute dividends in application of the provisions of the previous paragraph shall not be taken into account for the purposes of the exercise of the shareholders’ right of separation provided for in section 1 of article 348 bis of the revised text of the Capital Companies Act.
This limitation on the distribution of dividends shall not apply to those entities which, as on the 29th of February 2020, had fewer than fifty employees, or persons treated as such, registered with the Social Security.
Special termination benefit (seasonal workers)
An extraordinary benefit is established (art. 10) for “seasonal” workers. These are those who contribute only between March and October (in RETA or Sea Workers) and who do not reach 120 days of employment between 2018 and 2019.
For the sake of brevity and given the limited scope of the measure, we will not comment here on the benefit. But do not hesitate to contact us if you are in this group.
Today’s BOE and Royal Decree-Law 24/2020 is complex, but it allows us to postpone some vital decisions until September when, perhaps, it will be possible to have a better idea of the future that awaits us.
This economic crisis, in which we are already immersed, is unparalleled to any previous one. Entrepreneurs must be vigilant and try to anticipate the needs and/or problems of the company and take measures as soon as possible.
Taking action in time can save not only your company, but also your personal assets. Like any obstacle, this crisis can be an opportunity to strengthen your company and/or business, read our previous note “don’t let the trees blind you to the forest“. Beyond the business world, history shows us that economic crises are the breeding ground for fanaticism, extremism, violence and intolerance among other ailments of our society. If your environment descends into violence, take action. As we said in our note “violence“: Evil, in order to triumph, only needs good to do nothing.