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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 We will present the updated version on March 27, as the initial “simplified lay-off” regime has been repealed.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 sharp drop of at least 40% of the turnoverin the 30 days prior to the application to social security, with reference to the average monthly of the two months preceding that period, or compared to the same period of the previous year or, for those who started the activity less than 12 months ago, at the average of that period.

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. However, until the day to April 30, 2020, employers may exceptionally access debt support in March 2020.

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 a quarterly scheme;
  • 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 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.

Notes:
(a) The calculation of retributive compensation takes into account the remuneration benefits normally declared for social security and usually received by the employee in relation to basic remuneration, monthly premiums and regular monthly allowances.

b) The inclusion of new workers during the period of granting extraordinary support for the maintenance of employment contracts, which in addition to those identified in the initial application, is made through the delivery of a new attached file, and the payment of the support granted for the remaining period.

Self-employed persons who are employers may access the support listed below with appropriate adaptations.

Relevant information proving the assumptions should be preserved over a three-year period.

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 there is a suspension of activity related to the COVID-19 outbreak, in cases of proven ” businesscrisis“, and may opt for the reduction of normal working time or suspension of employment contracts.

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. The company may have only part of its establishments under this support, as well as have in the same establishment workers with reduction and others with suspension of the contract.

This measure may be cumulative with the implementation of a planapproved 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.

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;

In the event of a reduction in the normal working time,the right to the respective salary, calculated as a proportion of working hours,shall be guaranteed. However if the salary earned by the worker is less than 2/3 of his normal remuneration illiquid or less than the RMMG corresponding to his normal working time,whichever is higher, the worker entitled to retributive compensation equal to the difference between the salary earned and one of these amounts, as applicable.

In any case, the amounts paid or made available are considered as income from work and are subject to withholding tax, in accordance with the irs tables in force, as well as to the contribution of the worker in social security.

Training grants, traineeships and equivalent in normal activity, will not be subject to loss or reduction of retributive compensation since it does not constitute employment contract relationships.

During the period of justified absence, the trainee is entitled to the grant the cost of which is borne by the IEFP, provided that he is not covered by other protection measures under the state of emergency, suspending the effects on the contracts, unless the traineeship contracts are less than 15 working days to go, and the payment of justified absences until their expiry is due.

Extraordinary support may be exceptionally extendable monthly up to a maximum of 3 months,contrary to the 6-month period in the “previous version”. There is a possible possibility of extension depending on the evolution of the pandemic.

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 simplifiedlay-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.

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 requirements (a).

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 for considerable periods, when linked to companies 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 from the Administration and certificate of the Certified Accountant.

Applications for the training plan financed and approved by the Institute of Employment and Vocational Training were opened on April 3, 2020.

(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 which are beneficiaries of extraordinary financial incentive (below), are entitled to a total exemption from the payment of social security contributions to the employer for the workers concerned and members of the statutory bodies for the duration 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.

Note: The exemption applies only to the employer’s charge, as a general rule, 23.7, keeping the contribution of the worker, as a general rule, 11.

The date of opening of applications for the extraordinary financial incentive will be announced shortly by the Institute of Employment and Vocational Training.

At one point there was a controversy surrounding the temporary exemption, as Social Security was limiting its implementation.

The terms published in the Business Briefing made a correct interpretation of the published diplomas, and Social Security updated the information on its website on 25/04.

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 dismissal or dismissal for termination of the job, provided for 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) 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.
  • g) The following limitation provided for in the Labour Code does not apply: “During the period of reduction or suspension, the employer may not proceed to the admission or renewal of an employment contract to fill a job which may be secured by a worker in a situation of reduction or suspension.”

The measures set out are cumulative with other support and can be financed by the Community and the respective provisions of Community and national law shall apply to it.

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