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23/10/2019

Temporary redundancy proceeding in Spain

Temporäre Suspendierung der Arbeitsverhältnisse

Temporary redundancy proceeding in SpainAfter the State of Alarm was established last Saturday, March 14, the Spanish Government has adopted, through the approval of Royal Decree-Law 8/2020, of March 17, on extraordinary urgent measures to face the economic and social impact of the COVID-19, a plan of exceptional measures in the economic field to mitigate the impact of the COVID-19 on citizens, companies, self-employed and employees.

A line of guarantees of 100 billion euros has been approved to provide companies with the liquidity they need and up to 200 billion euros will be used, which corresponds to 20% of Spanish GDP (117 billion will be public and the rest private).

Chapter 2 of the aforementioned decree includes the measures adopted that make the existing labor mechanisms more flexible in order to avoid redundancies in the future. Article 22 has incorporated the option of carrying out a temporary Redundancy Proceeding (better known as ERTE) due to force majeure related to COVID 19:

  1. There is no negotiating commission. The procedure will be initiated at the request of the company with the corresponding supporting documentation.
  2. For the duration of the ERTE authorized period, the Company shall be exempt from paying social security contributions provided the company, on 29 February 2020, has less than 50 registered workers. If the company has 50 employees or more, the exemption from the obligation to pay contributions will be 75% of the company’s contribution.

On the other hand, it is important to note that this exemption for companies will not have any effect on the workers, as the period will be understood as effectively contributed to the social security for all purposes.

  1. The Spanish Government will be responsible for paying the unemployment benefits of all workers affected by the ERTEs during the health crisis, even if they have not contributed to the social security for the minimum period of time established by law. For this measure to be applicable to the company, the temporary adjustments to the workforce, carried out by ERTEs, will have to be considered force majeure.
  2. The duration of the unemployment benefit will be extended until the end of the period of suspension or reduction of working hours caused during the period of validity of the extraordinary measures. The time in which the unemployment benefit is received by the worker will not be considered for the purpose of consuming the maximum periods of receipt of said unemployment benefit.
  3. The labor authority has a maximum period of 5 days to resolve the ERTE.
  4. Retroactive nature on the application once approved.

Article 23 provides for the relaxation of the measures in relation to the procedures for suspension and reduction of working hours for economic, technical, organizational and production reasons, basically the reduction of the deadlines for both the incorporation of the negotiating committee (5 days) and the reduction of the consultation period (7 days).

However, in the event that an ERTE is presented in accordance with Article 23 and is approved by the Labor Authority, the Company will not be exonerated from the social security contributions of the employees covered by the ERTE.

This implies that it will be particularly important to prove the causal relationship between the Covid-19 and the loss of the company’s activity.

Dr. Frühbeck Abogados is at your disposal and we offer you all the support and legal advice you need in case, in view of the situation we are living, you need to file a Temporary Layoff Procedure.

Should you need any further assistance on the matter, please do not hesitate in contact our law offices in Madrid, Barcelona, Marbella, Gran Canaria or Mallorca.

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