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Since the declaration of the state of emergency on March 14, 2020, the Government has approved a series of extraordinary social and employment-related measures to address the economic and social consequences of the COVID-19 health crisis.  Companies must keep in mind all the employment measures approved to adapt as quickly as possible to the new rules of the game, amid the turmoil and uncertainty caused by the pandemic.

What are the alternatives for companies to face the direct and indirect effects of the health crisis?   

  1. Preference for remote working.  To preserve the continuity of economic activity and employment, remote working is given priority whenever technically and reasonably feasible for companies, and the job allows it. 
  2. Temporary suspension of work contracts or reduction of working hours.  Possibly the most remarkable measure is the flexibilization and promotion of temporary redundancy plans (ERTES), adapting their characteristics, causes and procedures under article 47 of the Workers’ Statute both on the grounds of force majeure and on economic, technical, organizational or production grounds.
    • Generally, companies can implement temporary redundancy plans based on force majeure when the reduction in activity is directly linked to COVID-19 or to the measures adopted during the state of emergency (e.g., Royal Decree 463/2020, of March 14, preventing shops, retail establishments and restaurants from opening to the public).  The procedure is streamlined: after the company submits an application and a report justifying force majeure, the labor authorities will decide within five days (after which the request is considered granted). 
    • While the ERTE for force majeure is in force, companies can apply for exemption from paying social security contributions: 100% or 75% depending on their size and conditional on maintaining employment levels in the six months after resuming normal activity.
    • The procedure for ERTEs on objective grounds is significantly shortened.  Negotiation with the workers’ legal representatives within seven days is mandatory, and the report from the Labor and Social Security Inspectorate (Inspección de Trabajo y Seguridad Social, ITSS) is optional.  In the absence of workers’ legal representatives, a committee must be formed within five days, comprising the most representative unions in the sector or, failing that, three employees of the company or establishment.
    • While any type of ERTE due to COVID-19 is in force, workers are no longer required to provide full or partial services and are entitled to contributory unemployment benefits, even if they have not made the minimum social security contributions, and without the period they are receiving these benefits counting against the maximum period allowed.  The company must submit the collective application before the Spanish Public Employment Service (Servicio Público de Empleo Estatal, SEPE) with the employees’ consent.
    • The calculation of the duration of temporary contracts of workers affected by an ERTE is interrupted ex lege during the suspension period.  
  3. Prohibition of dismissals due to COVID-19 Grounds based on the health crisis are considered temporary and cannot justify the termination of employment contracts. 
  4. Public sector contractors. A specific procedure is established for companies to request compensation from a public entity regarding the total or partial suspension of a public contract. 
  5. Right to adjusting and reducing working hours for workers justifying care duties for the people listed in the relevant provision in exceptional circumstances related to actions necessary to prevent community transmission of COVID-19
  6. Recovery of paid leave. Between March 30 and April 9, all non-essential activity was suspended to limit movement.  Companies were required to grant recoverable paid leave to all employees whose contracts were not otherwise suspended.  Recovering working hours can now be negotiated with the workers’ legal representatives and can be effective from the day after the end of the state of emergency until December 31, 2020.   
  7. Moratorium on paying social security contributions and deferral of debts. The Government has authorized the TGSS to grant six-month moratoriums on paying social security contributions accrued between April and June 2020, interest-free, to companies that meet the criteria established in the rule pending implementing regulation.  Also, if they do not have any other deferral in place, companies can defer social security debt payments due between April and June 2020 with 0.5% interest. 

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Abogada del Área de Conocimiento e Innovación de Cuatrecasas. Profesora colaboradora en ESADE

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