Pérez-Llorca analyses the key aspects of the temporary workforce restructuring plans (ERTEs) and the new complementary measures approved by the Government in Royal Decree-law 10/2020

Pérez-Llorca held a webinar with the aim of analysing the key aspects of the temporary workforce restructuring plans (ERTEs) and the new complementary labour measures set out in Royal Decree-law 10/2020 to alleviate the effects of COVID-19.

The session was opened by Luis Enrique Fernández Pallarés, who summarised the main differences between an ERTE due to force majeure and one for objective reasons. Fernández Pallarés highlighted that, in an ERTE due to force majeure, suspensions of contracts and reductions in the working day must be directly linked to a loss of activity as a consequence of the restrictions arising from the extraordinary legislative measures approved to stop the spread of COVID-19, including the declaration of the state of alarm. Furthermore, this will be applicable for the duration of the state of alarm and its possible extensions. On the other hand, ERTEs for objective reasons are triggered by negative economic situations, changes in the demand for products or services, in organisational systems or in production systems and can be extended over time if the employer deems it necessary. Fernández Pallarés noted that it is possible for both processes to take place at the same time within a company that carries out different activities.

Laura Pérez was next to speak, and analysed the main differences that arise when it comes to regulating and carrying out these procedures. During her speech, the partner at Pérez-Llorca noted that ERTEs due to force majeure do not involve negotiation, but are authorised or rejected directly by the labour authority, and that the period for deciding on a request cannot exceed five days. Pérez noted that this period could be extended to up to 10 days owing to the large volume of applications being received by the labour authority.

The partner also explained the complexity of the procedure for implementing an ERTE for objective reasons. The main reason for this complexity is that the procedure involves a negotiation period in order to arrive at an agreement between the company and the workers’ representative, which may lead to deadlines being extended. Lastly, she noted that the Ministry of Labour, Migration and Social Security will review the ERTEs due to force majeure that have been authorised by positive silence and, in the event that it is deemed that there is no instance of force majeure, the companies may need to repay their workers’ unemployment benefits and may even face administrative and criminal penalties.

What are the costs associated with implementing an ERTE?

During the webinar, Isabel Moya analysed the three main areas that determine associated costs for a business that implements an ERTE. In particular, she explained that companies are exempt from paying their workers’ salaries (or the proportion corresponding to the reduction in their working day), but it is highly recommended that they arrive at an agreement and set an amount that regularises the difference between the salary and the amount of unemployment benefit received. With regard to contributions, she indicated that businesses will be exempt from paying 100% of the quota if they have fewer than 50 employees and 75% if they have more than 50 workers, provided that the ERTE is due to force majeure.

In relation to unemployment benefits, the Pérez-Llorca partner highlighted two extraordinary measures. The first is that the unemployment benefit received by a worker as a consequence of an ERTE in these circumstances will not be deducted from any future unemployment benefits. The second measure means that the employee’s previous contribution period will not be taken into account.

New complementary measures: paid leave and the prohibition of dismissals.

Luis Enrique Fernández Pallarés analysed the latest measure approved by the Government and published in the Spanish Official State Bulletin on Sunday, 29 March. Royal Decree-law 10/2020 regulates recoverable paid leave for employees who do not provide essential services, with the aim of reducing the movement of the population in light of the spread of the coronavirus. In this context, the partner indicated that workers will continue to receive salaries, variable payments and social benefits as normal and that they will have to agree with the employer to recover the hours corresponding to the paid leave period before 31 December 2020, the latest date authorised by the Government.

Fernández Pallarés and Isabel Moya then explained that this leave is mandatory, from 30 March, for all workers who do not carry out essential activities for the company, who cannot work remotely or who are not affected by an ERTE. With regard to this last point, Moya noted that businesses that have requested an ERTE and are waiting for it to be approved must grant recoverable paid leave until the labour authority issues its decision in this regard.

Fernández specified that, if a company has implemented an ERTE for objective reasons that exceeds the period of the state of alarm, it must ensure that both the ERTE and the recovery of hours are compatible.

Lastly, and to conclude the meeting, Laura Pérez commented on the new measure approved by the Government in which dismissals or contract restrictions are prohibited in order to mitigate the impact of COVID-19 on employment. The partner indicated that this measure cannot be applied retroactively, nor can it be applied to dismissals that are not based on causes related to the coronavirus. Furthermore, she highlighted that, although the regulation does not state clearly whether a dismissal carried out during the state of alarm for reasons related to COVID-19 would be deemed unfair (improcedente) or invalid (nulo), everything indicates that it ought to be unfair.

Pérez also highlighted that this new measure establishes that businesses that are implementing an ERTE may not terminate temporary contracts and that the time during which the company ceases its activity for health reasons related to COVID-19 will not be counted as part of the calculation of the duration of the temporary contract; rather, it will be interrupted for this period.