Royal Decree-Law 18/2020 of 12 May on social measures in defence of employment

Royal Decree-Law 18/2020 on 12 May incorporates a series of modifications to the employment regulation records. Hereafter, we present the main innovations.

Regarding the ERTE (Expediente de Regulación Temporal de Empleo) for force majeure of Article 22 of Royal Decree-Law 8/2020, the main points are the following:

• Differentiation between ERTE by total and partial force majeure. Companies that already have an ERTE of Article 22 but cannot resume their activity shall be deemed to be in a situation of total force majeure. Companies that already have an ERTE of Article 22 but can restart their business, even partially, shall be deemed to be in a situation of partial force majeure.
• Extension of the duration of the ERTEs due to force majeure of Article 22 until June 30, 2020.
• In cases of partial force majeure ERTE, companies must reincorporate their employees through employment regulation measures, prioritizing the reduction of working hours.
• Obligation to notify the Labour Authority of the withdrawal from the ERTE, after communicating this circumstance to the SEPE, within 15 days from the effective date of the resignation.
• Obligation to notify the SEPE of any modifications to the ERTE (e.g. change from the suspension of contracts to the diminution of working hours).
• An ERTE can be processed for objective reasons of Article 23 of Royal Decree-Law 8/2020 concurrent as a valid ERTE for force majeure of Article 22 of the same legal text. In this case, the ERTE for objective reasons of Article 23 can be retroactive to the moment when the ERTE ceased to exist due to force majeure.
• The unemployment protection measures of paragraphs (1) to (5) in Article 25 of Royal Decree-Law 8/2020 will apply until 30 June 2020.

These measures include access to unemployment benefits for workers who do not prove the minimum contribution period; the time receiving the unemployment benefit will not consume the maximum periods of reception set by law. Measures applicable to unemployment benefits for permanent-discontinuous contracts will remain in force until 31 December 2020.

• Concerning the measures for Social Insurance contributions:
  • Exemption from quotas must be requested from the General Treasury of the social security administration through a responsible declaration.
  • ERTE for total force majeure: companies with less than 50 workers registered with the SS on 29 February 2020 will be 100% exonerated from the quotas from May and June, and those with 50 or more will be 75% exempted.
  • ERTE due to partial force majeure:
• For working people who return to their activity:
  • Companies with less than 50 workers: There will be an 85% exoneration in May and 70% in June
  • Companies with 50 or more workers: There will be a 60% exoneration in May and 45% in June
• For working people who do not return to their activity:
  • Companies with less than 50 workers: There will be a 60% exoneration in May and 45% in June
  • Companies with 50 or more workers: There will be a 45% exoneration in May and 30% in June
• Except for entities with fewer than 50 employees as of 29 February 2020, commercial companies adhering to the ERTE for force majeure and use the public resources allocated to them may not distribute the dividends corresponding to the tax year in which these ERTE apply unless they return the part corresponding to the quota exemption.
• Modification of the commitment to maintain employment: limited to companies with ERTE due to total or partial force majeure. This commitment begins to operate when the activity restarts, with the effective return to work of persons affected by the record, even if it is partial or affects a part of the staff.

This commitment shall not be deemed satisfied if, with the exceptions set out hereafter, any of the persons affected by the record are dismissed or have their contracts ended.

Exceptions: the termination of the contract due to disciplinary dismissal declared to be appropriate, resignation, death, retirement or total or major permanent disability of the working person, or in the case of the end of the appeal of persons with a permanent-discontinuous contract, when this does not entail a dismissal but an interruption of the contract. Similarly, temporary contracts are an exception when ended after the expiration of the agreed time or performing the work or service; or when the activity under contract cannot be achieved immediately.

Royal Decree-Law 18/2020 also excludes companies at risk of insolvency.

Any company failing to comply with this commitment shall be required to reimburse the entire amount of the exempted contributions, with interest because of late payment.

Alejandra Sanz

For further information regarding ERTEs in Spain,