César Navarro Elena Esparza María José Ramos Alejandro Gil Murillo August 5 2020 Employment-related measures to fight effects of COVID-19: regulatory update following lifting of state of emergency CMS Albiñana & Suárez de Lezo | Employment & Immigration - Spain César Navarro, Elena Esparza, María José Ramos , Alejandro Gil Murillo Employment & Immigration IntroductionTemporary employment-related measuresExtraordinary unemployment protection and ceasing of activity measuresExceptional measures to facilitate remote workingExceptional care-related circumstancesDismissalsDevelopments in terms of dividend distribution and fiscal transparencySpecial preventive measures at workplacesIntroductionThe government has adopted several extraordinary employment-related measures since the entry into force of Royal Decree-Law 8/2020 (RDL 8/2020), which included the first set of extraordinary measures relating to COVID-19.Moreover, since the state of emergency was declared, Spain's employment authorities have published countless guidelines and instructions relating to the practical application of such extraordinary employment-related measures.In order to illustrate the current status of these extraordinary measures following the lifting of the state of emergency on 21 June 2020, this article summaries the key employment-related measures adopted since the state of emergency was declared and the updated regulation of each measure following the numerous amendments introduced subsequent to RDL 8/2020.Temporary employment-related measuresProcedures for suspending employment contracts and reducing working time due to force majeureThe suspension of employment contracts and reduction of working hours (through a Temporary Employment Regulation File (ERTE)) are deemed to be underpinned by an event of force majeure when they are directly triggered by a fall in activity due to COVID-19, including the announcement of a state of emergency, entailing:the suspension or ceasing of activities;the temporary closure of establishments frequented by the public;restrictions on public transport;restrictions on the movement of people or goods;a shortage of supplies which severely hinders the ordinary course of business; andpreventative isolation measures ordered by the health authorities or, in urgent and extraordinary circumstances, due to contagion of the workforce.Regarding the activities which must remain operational pursuant to the state of emergency declaration, force majeure will be deemed to exist in relation to contract suspensions and working hours reductions applicable to the portion of the activity unaffected by the abovementioned activity maintenance conditions.All of the above situations must be duly evidenced in order to be considered force majeure events.As of 30 June 2020, no new ERTE procedures due to COVID-19-related force majeure can be initiated.However, existing force majeure-based ERTEs will remain applicable for as long as the force majeure event is considered to exist, which has been extended from 30 June 2020 until 30 September 2020.No overtime can be performed while these ERTEs apply and no new outsourcing contracts can be signed, whether directly or indirectly, during the application of these temporary measures. This prohibition may be lifted if the employees who provide services at a workplace cannot carry out newly required activities due to a lack of professional qualifications.In addition, companies will be considered to move from total to partial force majeure when the grounds underpinning the ERTE allow for the fractional recovery of activity, up to 30 September 2020.In the event of such fractional recovery, companies must reinstate the affected employees to the extent necessary for them to be able to perform their activity, albeit prioritising adjustments in terms of working hours reductions.The end of the ERTE must be notified to the employment authority within 15 days of conclusion. Any amendments to the data contained in the initial ERTE application relating to its termination – whether pertaining to the entirety or some of the affected employees – must be provided in advance to the State Employment Service.Procedures for suspending employment contracts and reducing working time due to economic, technical, organisational and production grounds In cases involving ERTEs on economic, technical, organisational and production grounds due to COVID-19, the following features will be applied in relation to the procedure outlined in the corresponding regulation.Creation of employees' representative commissionWhere a company has no legal representation for employees, the commission will be formed of:the leading trade unions of the sector in which the company operates and which are authorised to form part of the applicable collective bargaining agreement negotiation committee, with one member per union; orwhere the above is not created, a representative commission formed of three company employees chosen in accordance with Article 41.4 of the Workers' Statute.In either of the above cases, the representative commission must be formed within the non-extendable five-day period.Consultation periodThe consultation period with the employees' representatives or representative commission as described above must last no more than seven days.Labour Inspection and Social Security Service The request is optional for the employment authority, with the report to be issued within a non-extendable seven-day period.The previous procedure can be applied only where an ERTE is initiated on objective grounds following the conclusion of a force majeure-based ERTE. The former may have retroactive effect from the end date of the force majeure-based ERTE.Any ERTEs which are based on these objective grounds and remain in force will continue to apply under the terms agreed or communicated at the time to the relevant authorities.Commitment to maintain employment under force majeure-based ERTEs and objective grounds-based ERTEsThe commitment to maintain employment in this case will apply for six months from the resumption of activity (ie, on the full or partial reinstatement of the entire or a portion of the workforce affected by force majeure-based ERTEs or for six months from 26 June 2020 for objective grounds-based ERTEs).This undertaking will not apply to validly declared dismissals on disciplinary grounds, resignation, death, retirement or full permanent disability, absolute disability or severe disability or the release of fixed-term employees. It will also not apply on the termination of temporary employment contracts when the agreed term ends or project or service is concluded.The commitment will not apply to companies at risk of filing for bankruptcy under the legally prescribed terms.The commitment to maintain employment will be assessed in light of the defining characteristics of each sector and the applicable employment regulations, taking into account the specific features of companies with high employment turnover or seasonality.A breach of the commitment will entail an obligation to pay back the entirety of the exempt contributions plus a surcharge and late payment interest.Extraordinary contribution-based measures relating to ERTEs due to force majeure or for objective grounds due to COVID-19More beneficial exemptions will apply to reinstated employees compared with those who remain affected by a force majeure-based ERTE which becomes a partial force majeure-based ERTE from 1 July 2020, or an objective grounds-based ERTE, based on activity:companies with fewer than 50 employees will be exempt from 60% of the contributions owed for July 2020, August 2020 and September 2020; andcompanies with 50 employees or more will be exempt from 40% of the contributions owed for July 2020, August 2020 and September 2020.For those who remain under an ERTE arrangement, whether based on force majeure or objective grounds, these exemptions will be applied as follows:companies with fewer than 50 employees will be exempt from 35% of the contributions owed for July 2020, August 2020 and September 2020; andcompanies with 50 employees or more will be exempt from 25% of the contributions for July 2020, August 2020 and September 2020.In order for the above exemptions to apply, the company must first issue a request to the social security authority by means of a statement of compliance on the RED system. Such statement must be submitted before requesting the corresponding contributions calculation and will indicate the type of force majeure (total or partial), the affected employees and the suspension or working hours reduction period.These company exemptions will not affect employees, who for all intents and purposes will be considered as still paying contributions.Extraordinary unemployment protection and ceasing of activity measuresUnemployment benefitIn the cases involving the suspension of contracts and reduction of working hours detailed above, the State Employment Service will:recognise the affected employees' entitlement to unemployment benefit, even if they fail to meet the minimum contributions to be eligible for such benefit; andnot count the time during which unemployment benefit is received while the current extraordinary circumstances remain, in view of the maximum period permitted to receive such benefit.The duration of the benefit will be extended until the end of the suspension of contracts or working hours reduction period in question.However, the measures outlined above will remain in force until 30 September 2020. The unemployment authorities will automatically apply the extension to those ERTEs that were already in force.The initiation, instruction and termination of the procedure recognising the right to unemployment benefit will coincide with the terms of the applicable legislation for cases of temporary contract suspensions and working time reductions based on economic, technical, organisational and production grounds.While the extraordinary public health measures remain in place, the submission of requests to initially register for or resume unemployment benefit or subsidies filed outside of the legally established timeframes will not lead to a reduction of the term of the corresponding right to the benefit.Unemployment subsidies or those for persons aged over 52 whose requests for extension or other mandatory documents are submitted after the deadline will also not be affected.Extraordinary benefit for the ceasing of self-employed activitiesOn an exceptional basis and limited to 30 September 2020, self-employed workers whose turnover for the third quarter of 2020 drops by 75% compared with their average turnover for the same period in 2019 and whose net income does not exceed €5,818.75 will be entitled to an extraordinary benefit for the cessation of activity.Self-employed workers who were receiving such extraordinary benefit before 30 June 2020 are entitled to the following exemption on their social security contributions:a 100% exemption for contributions owed for July 2020;a 50% exemption for contributions owed for August 2020; anda 25% exemption for contributions owed for September 2020.Exceptional measures to facilitate remote working Alternative measures such as remote working are considered a priority over temporary business closure or a drop in activity. Thus, companies must organise themselves accordingly to enable such alternatives where technically and reasonably possible.This measure will remain in force for three months after the state of emergency is lifted (ie, until 21 September 2020), notwithstanding a potential extension to such period by means of a royal decree-law following an assessment of the situation by the government.For the purpose of facilitating remote working on an exceptional basis, companies' obligation to carry out a risk assessment will be considered fulfilled by means of a self-assessment performed voluntarily by employees.Exceptional care-related circumstances Employees who can prove a duty of care towards their spouse, civil partner or blood relatives up to the second degree will be entitled to adapt or reduce their working hours under exceptional circumstances relating to the necessary actions to prevent the widespread transmission of COVID-19 for at least three months after the state of emergency is lifted (ie, until 21 September 2020).Exceptional circumstances will be deemed to exist when:an employee is required to be present to look after those identified above who require personal and direct care due to age, illness or disability; andgovernmental measures order the closure of educational institutions or day-care centres or those who usually care for or assist people in need are unable to do so.The right to adapt or reduce hours must be justified, reasonable and proportional in view of the company's situation.Working time adaptationThe adaptation of working times may comprise a change in shifts or schedules, flexible working, split or single shifts, work centre relocation, a change of duties, a change in the way work is performed – including remote working – or any other means available in the company or which may be implemented on a reasonable and proportional basis.Working hours reductionA request for a reduction of working hours may be made in application of the following exceptions to the regulations under Article 37 of the Workers' Statute in this regard:Working hour reductions must be notified to the company at least 24 hours prior to the requested measure becoming applicable.Such reductions may stretch to 100% of the working hours provided that it is justified, reasonable and proportional in view of the company's situation.In cases of reductions for the direct care of a relative, there is no requirement that the relative in need of care and attention must not be carrying out any remunerated activity.If an employee has already exercised their right to reduced working hours for legal guardians, they may temporarily waive such right or will be entitled to amend its terms.DismissalsDeadline for ban on dismissals and break in maximum term of temporary contractsRoyal Decree-Law 24/2020 states that the ban on individual or collective dismissals based on force majeure or economic, technical, organisational and production grounds linked to COVID-19 will remain in place until 30 September 2020.Moreover, the break in the calculation of the maximum term of temporary contracts suspended as part of an ERTE due to force majeure or objective grounds will also remain in force up to such date.Mass redundancy proceduresNo amendments to mass redundancy procedures have been announced given that the purpose of the regulations passed in response to the COVID-19 pandemic is for companies to implement temporary employment-related measures.Nevertheless, such mass redundancies may be carried out under the legally prescribed terms, bearing in mind the time limit described above in relation to dismissals triggered by COVID-19.Developments in terms of dividend distribution and fiscal transparencyCompanies whose registered office is located in a tax haven are unable to implement a force majeure-based ERTE or an objective grounds-based ERTE after a force majeure-based ERTE.Where a force majeure-based ERTE is executed and where public funds set aside for such arrangement are used, the companies in question will not be permitted to pay a dividend for the fiscal year to which the ERTE applies unless they fully reimburse the amount of social security contribution exemptions.The above will not apply:to the effects of exercising shareholders' right of exit; orto companies with fewer than 50 employees on 29 February 2020.Special preventive measures at workplaces The Health Ministry has issued the following guidelines regarding organisational measures at workplaces:Employers should implement the necessary measures to minimise contact between employees and between employees and clients or members of the public who may attend the workplace. The arrangement of working spaces, the organisation of the circulation of people and the distribution of space (eg, furniture, shelves and corridors) at the workplace should be modified as much as possible in order to maintain the safe distance of at least 1.5 metres.In the case of premises open to the public, employers should:ensure that their maximum capacity complies with the extraordinary measures set out by the health authorities, specifically the requirement of maintaining safe distances;enable access control mechanisms at the entrances of the workplace, where possible. Such access control must comply with the maximum capacity applicable during this extraordinary situation;ensure that clients and visitors are clearly informed regarding the employer's organisational measures and their obligation to cooperate;implement physical separation barriers (eg, intercoms, windows, methacrylate partitions and transparent curtains); andmaintain safe distances at counters and service windows, among other places.For further information on this topic please contact César Navarro, Elena Esparza, María José Ramos or Alejandro Gil at CMS Albiñana & Suarez de Lezo by telephone (+34 91 451 9300) or email ([email protected], [email protected], [email protected] or [email protected]). The CMS Albiñana & Suarez de Lezo website can be accessed at www.cms.law.