Covid-19 New ERTE rules published on 13/05/2020

The long anticipated law (Royal decree-law 18/2020 of 12 May) has finally been published to extend the application of the rules that govern the suspension or substantial modification of employment contracts due to the Covid-19 crisis.

As originally written, the law was meant to come to an end automatically once the State of Alarm had ceased. The latest extension of the State of Alarm will expire on 23rd May and there is no guarantee that it will be extended because the minority Government is rapidly losing the support of the competing political parties.

Spain commenced the relaxation of mobility restrictions on 11 May and the objective of the new law is to encourage employers to restart at least part time employment and to stimulate the gradual reactivation of the economy. The law states that the new measures are consistent with the need to keep the exposure of individuals to low levels and help avoid a further outbreak of the virus.

The new rules certainly give considerable flexibility to employers that will make the restarting of business much easier to manage than under the old rules.

The fundamental change in the new rules, published late on 13 May, is that the Covid-19 ERTE end date is now the 30 June and employers may decide when to restart their businesses between now and 30 June.

Also, it was a previous requirement to re-employ for six months all staff immediately when the state of Alarm came to an end. This has been modified to the extent that the condition will not be considered breached:

  • if an employee ceases work due to voluntary decision, death, retirement, complete or substantial invalidity, justified disciplinary causes.
  • for the failure to re-employ permanent seasonal workers (fijos-discontinuos), as long as this is not a permanent termination of the labour relationship.
  • for the failure to extend short or fixed term contracts that have come to an end.
  • if the employer is able to demonstrate a risk of insolvency.

If the employer does not observe the six month rule, subject to the above bullet points, it will have to reimburse all social security exemptions, plus a 20% surcharge and interest.

In detail the new rules are as follows:

ERTEs that were applied according to Force Majeure rules with complete suspension of staff

  • Those employers who used this type of ERTE because it was impossible to carry out a business, should recommence staff employment as soon as feasible for their business needs.
  • Part time recommencement of employment is encouraged.
  • For those employees whose work restarts, and this does not have to be full time, the 100% employers social security exemption (75% in the case of 50 or more staff) will be reduced to 85% for May and 70% for June (60% and 45% in the case of 50 or more staff). These exemptions are not linked to the hours of work of the employee.
  • For employees who do not restart work until 30 June, the 100% employers social security exemption will be reduced to 60% for May and 40% for June (45% and 30% in the case of 50 or more staff).
Table showing S.S. discountsMayMayJuneJune
Number of employeesEmployees remaining on ERTEEmployees that restartEmployees remaining on ERTEEmployees that restart
1-4960%85%45%70%
50+45%60%30%45%

Employers may switch to an ERTE for economic, technical, organisational and productive causes

Where it is not practical for an employer (that applied a Force Majeure ERTE) to recommence working as normal after 30 June, the previously available ERTE for economic, technical, organisational and productive causes, remains available.

The notification of the choice of this type of ERTE must be made before 30 June.

Employees unemployment benefits

The right to receive unemployment payments is extended until 30 June except for fijo discontinuo employees who will have this right until 31 December 2020.

Extension beyond 30 June

The new regulations state that further measures may be introduced, if the circumstances require, extending the concessions until after 30 June

Spence Clarke & Co specialises in the provision of Spanish tax, legal, audit and accountancy services, mainly to foreigners with interests in Spain. Our cross-border knowledge helps clients adapt to the Spanish system with the minimum of doubt and disruption. If you have any questions about this article or any other matter contact us, with no obligation, to see how we can help you.