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Workforce Flexibility and Government Incentives in times of Covid-19 - Spain

Short-term State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

Yes

If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

Please take into account that as per established in the Royal-decree law 8/2020 of 17 March, related to urgent extraordinary measures to address the economic and social impact of Covid-19, the Company can adopt measures consisting in:

  • a temporary reduction of working hours, or
  • the temporary suspension of employment contracts (in Spanish, the so-called "ERTE"). These situations could be complemented with unemployment benefit.
  • The Royal-decree law 18/2020 of 12 May on social measures in defense of employment, differentiates between:

    • Companies undergoing the ERTE based on force majeure who cannot resume their business activity (“total force majeure”). For this companies the regulation establishes that the ERTE may be extended as long as the cause continues, at least until 30 June 2020
    • Companies undergoing the ERTE which can gradually resume their activity (“partially force majeure”). The regulation establishes that this companies may continue to operate under ERTE until 30 June 2020, they must reinstate the employees that were affected by the ERTE and prioritize the use of reduced working hours.
    • It is important to point out that the employment measures adopted as a consequence of the aforementioned Royal-decree law will be subject to the condition that the Company maintains the workforce employed during the next six months since the reinstatement of the ordinary activity.

      if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

      Please note that the Company shall follow different procedures depending on which kind of ERTE intends to apply. In order to apply the ERTE based on force majeure, the Company shall send to the Labour Authority a communication enclosing: (i) the intention of carrying out the preocedure; and, (ii) the grounds and cumentation that evidence the neccesity of the measure. Once the Labour Authority has adopted a resolution, the Company must decide and inform the Employees' Representatives. No negotiation is required with the Employee's Representatives.

      On the other hand, when the Company intends to implement an ERTE based on economic, technical, organizational or production grounds it should be negotiated with the employees' representatives along a consultation period which can be extended for a maximum of 7 days (before the Royal Decree, it was 15 days).

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

Please refer to answers provided for questions 1 and 3.

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

Please take into account that the following state aid and support measures have been approved by the Government:

  • For employees: the government have approved that in case of suspension of contracts or reduction of working hours due to the Covid-19, in order to access to unemployment benefits, the requirements that are normally required will not be enforceable (i.e.: a minimum period of prior contribution to the situation of unemployment).
  • For employers:

    In case of total force majeure ERTEs, the Royal-decree law maintains the exemption from social security contributions that was in force during March and April and extends it to May and June:

    Companies with less than 50 employees at 29 February 2020 are entitled to a 100% exemption.

    Companies with 50 or more employees at 29 February 2020 are entitled to a 75% exemption.

    In case of partial force majeure ERTE. Royal-decree law 18/2020 establishes exemptions from social security contributions both for employees who continue to be affected by the ERTE, and for those who return to work:

    Employees who return to work:

    Companies with less than 50 employees at 29 February 2020, are entitled to a 85% exemption for May 2020, and 70% for employers’ contribution accrued for June 2020.

    Companies with 50 or more employees at 29 February 2020 are entitled to a 60% exemption for May 2020, and 45% for June 2020

    Employees whose contract continue to be suspended:

    Companies with less than 50 employees at 29 February 2020, are entitled to a 60% exemption for May 2020, and 45% for employers’ contribution accrued for June 2020.

    Companies with 50 or more employees at 29 February 2020 are entitled to a 45% exemption for May 2020, and 30% for June 2020

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

As stated before, in case of suspension or reduction of working hours due to force majeure, companies can be exempted from paying the Social Security contributions. In this regard, the regulation approved by the Government establishes that the Company that wants to apply this benefit, will have to request it to the Social Security administration, identifying the employees and the intended period of suspension/reduction of contributions.

For the purpose of monitoring the abovementioned exemption, it is sufficient to verify that the National Public Employment Service (SEPE) recognizes the unemployment benefit of the employees for the period at stake. For greater agility, it was established that the unemployment benefit of employees affected by an ERTE derived from the Covid-19 will be processed directly by the Company, which will have the obligation to carry it out jointly with the SEPE.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 04 June 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.