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Are government labour support planned for businesses?

Yes, they are, even though they are in constant regulation. We will present the updated version on March 27, as the initial simplified lay-off regime has been repealed.

A set of measures have been defined for companies in a state of business crisis,which is characterised by one of the following assumptions:

  1. by means of a declaration bythe company, attesting to the total or partial closure of the undertaking or establishment, resulting from the duty to close facilities and establishments in accordance with the terms provided for this purpose;
  2. Upon declaration of the company together with the certificate of the certified accountant of the company,attesting to:
    • Total cessation of activity of the company or establishment resulting from the interruption of global supply chains, suspension or cancellation of orders;
    • The abrupt and sharp drop of at least 40 % of the turnover in the 30 days preceding the application to the social security, with reference to the monthly average of the two months preceding that period, or compared to the same period of the previous year or, also for those who have activity less than 12 months ago, at the average of this period.
  • Balance sheet for the month of support and its homologous month;
  • Declaration of Value Added Tax (VAT) for the month of support as well as the two months immediately preceding, in the case of a monthly scheme; or Statement for the last quarter of 2019 and the first quarter of 2020, in the case of quarterly arrangements;
  • Additional supporting evidence to be fixed by order of the member of the Government of the area of work and social security.

In order to access the support, the employer must, demonstrably, have the contributory and tax situations regularized before the Social Security and the Tax and Customs Authority.

The beneficiary entities may be inspected a posteriori and must prove at that time the facts on which the application was based and their renewals, and the following documents may be requested:

  • Accounting balance sheet for the month of support and other periods in comparison;
  • “VAT return” for the month of support and the two months immediately preceding, in the case of a monthly arrangement; or Statement for the last quarter of 2019 and the first quarter of 2020, in the case of quarterly arrangements;
  • [NOVO] Documents demonstrating the cancellation of orders or reservations, resulting in the use of the affected company or unit being reduced by more than 40 % of its production or occupancy capacity in the month following that of the request for support (where applicable );
  • Additional supporting evidence to be fixed by order of the member of the Government of the area of work and social security.

VAT Returns shall show the bursting or interruption of supply chains or the suspension or cancellation of orders

Extraordinary support for the maintenance of employment contracts in a situation of business crisis (“Simplified lay-off regime”)

The Government has instituted a simplified lay-off regime if activity related to the COVID-19 outbreak is suspended in cases of proven “business crisis”.

The extraordinary support for the maintenance of a work contract in a company in a situation of business crisis takes the form of financial support, per worker, allocated to the company, intended exclusively for the payment of remuneration.

This scheme provides for illiquid remuneration to the worker of 2/3 of his normal illiquid remuneration, never lower than the RMMG (635€) and with a maximum limit of 3 RMMG (1,905€), lasting one month, 70% of which is guaranteed by the Institute of Social Security and 30% guaranteed by the employer.

This measure may be cumulative with the implementation of a training plan approved by the Institute for Employment and Vocational Training (IEFP), which provides for a 30% x Indexante Social Support (€131.64), half for the worker and half for the employer (€65.82),supported by the IEFP.

Initially,the extension of support was conditional on the enjoyment of the annual leave ceiling and when the employer has adopted the mechanisms of flexibility of working hours provided for by law. These limitations have been repealed.

Extraordinary support can be exceptionally extendable monthly up to a maximum of 6 months.

How to proceed:

  • Assess the legal framework;
  • communicate in writing to workers the decision to request extraordinary support for the maintenance of jobs, indicating the foreseeable duration, union delegates and workers’ committees heard when they exist;
  • Immediately send the application to social security, accompanied by a statement from the Administration and certificate of the Certified Accountant in the applicable cases, as well as a nominative listing of the workers covered and their social security number .

The applications submitted in due course under Ordinance No. 71-A/2020 of March 15, that is, before the entry into force of the current simplified lay-off model, on March 27, for the purposes of the application of the financial support provided for in that, maintain their effectiveness.

Initially,the beneficiary of that measure could instruct the worker to carry out, on a temporary basis, functions not included in the employment contract, provided that this did not entail a substantial change in the position of the worker, and that it was oriented towards the viability of the undertaking. This possibility has been revoked.

Reduction or suspension in a business crisis

  • In a situation of business crisis, the employer may temporarily reduce normal working hours or suspend employment contracts;
  • In case of reduction of the normal working time, the rights, duties and guarantees of the parties are maintained, in accordance with the provisions of the Labour Code;
  • In the event of suspension of the employment contract, the rights, duties and guarantees of the parties that do not presuppose the effective performance of work, in accordance with the provisions of the Labour Code, are maintained;
  • This scheme provides for illiquid remuneration to the worker of 2/3 of his normal illiquid remuneration, never lower than the RMMG (635€) and with a maximum limit of 3 RMMG (1,905€), lasting one month, 70% of which was guaranteed by the Institute of Social Security and 30% guaranteed by the employer;
  • Retributive compensation shall be paid by reference to the normal illiquid remuneration for the work provided in the company, and the Social Security services shall subsequently make adjustments that are necessary, with any refund of the sums improperly received;
  • If the employee works in a paid activity outside the undertaking, he/she must communicate the fact to the employer within five days of the commencement of the undertaking for the purpose of any reduction in retributive compensation, under penalty of loss of the right of compensation retributive and, as well as, duty to refund the amounts received under this title, constituting the omission as a disciplinary offence.

Extraordinary Training Plan

For companies that have not used the previous simplifiedlay-off benefit, they can access extraordinary support for part-time vocational trainingby complying with a training plan which must comply with certain a requirements.

This measure aims to maintain their jobs and strengthen the skills of their workers in order to act preventively on unemployment, supporting the training of workers without occupation in productive activities by considerable periods when linked to undertakings whose activity has been severely affected by COVID-19.

The extraordinary support to be allocated to each worker concerned is supported by the IEFP, and is granted on the basis of the training hours attended, up to a limit of 50 % of the illiquid remuneration, with the maximum limit of the RMMG (635€).

To this end, the employer shall communicate to the workers in writing the decision to initiate a training plan and the foreseeable duration of the measure, immediately sending information to the IEFP, I.P., accompanied by a statement by the Administration and certificate of the Accounting Officer Certificate.

(a) Training Plan requirements:

• Be implemented in conjunction with the entity, being up to the IEFP, its organization, and can be developed at a distance when possible and the conditions allow it;

• Contribute to the improvement of the professional skills of workers, whenever possible by increasing their level of qualification, and contribute to increasing the competitiveness of the company;

• Correspond to the qualification modalities provided for under the National Qualifications System;

Its duration shall not exceed 50 % of the normal working time during the period in which it takes place;

• The minimum number of trainees to be integrated into each training action is defined by agreement between the IEFP and the employer.

Extraordinary financial incentive to support the normalization of the company’s activity

Employers benefiting from the previous measures are entitled to an extraordinary financial incentive to support the resumption of the company’s activity.

It will be granted by the IEFP, paid at once and with the value of one RMMG (€635) per worker.

To access the incentive, the employer submits an application to the IEFP, accompanied by a statement from the Administration and certificate of the Certified Accountant.

Temporary exemption from the payment of company charges for Social Security

Employers who fall within the situations of “simplified lay-off”, extraordinary training plan or who are beneficiaries of extraordinary financial incentive (below), are entitled to the total exemption from payment of social security contributions to the employer, in respect of the workers covered and members of the statutory bodies, during the term of the same.

Employers shall deliver the declarations of self-pay relating to the workers concerned and pay the respective contributions.

The exemption from the payment of contributions for the workers concerned is recognised of its own motion,in particular on the basis of the information provided by the IEFP.

Non-compliance and refund of support

Failure to comply with the conditions and obligations laid down in the measures set out in the measures set out entails the cessation of the requirements and the refund of undue payments.

During the period of application of the above-mentioned support measures, as well as within the next 60 days, the employer concerned may not terminate employment contracts under the modalities of collective redundancy or dismissal for termination of the laid down in Articles 359 and 367 of the Labour Code.

The following criteria should also be met:

  • (a) non-punctual compliance with the retributive obligations owed to workers;
  • b) Failure by the employer to comply with its legal, tax or contributory obligations;
  • (c) distribution of profits during the duration of the obligations arising from the granting of the incentive, in any form, in particular as an account withdrawal;
  • d) Non-compliance, attributable to the employer, of the obligations assumed within the time limits set;
  • (e) the provision of false declarations;
  • f) [NOVO] Provision of work to the employer himself by a worker covered by the measure of extraordinary support for the maintenance of an employment contract in the form of suspension of the contract, or beyond the hours established, in the form of temporary reduction of the normal working time.

The measures provided for in this Ordinance are cumulative with other support.

The support provided for in this Ordinance is subject to Community funding and the respective provisions of Community and national law shall apply to it.

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