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Simplified Lay-off

Extraordinary support for the maintenance of employment contracts

12th of March, 2020

In the Resolution of the Council of Ministers No. 10-A/2020, extraordinary support was established for the maintenance of employment contracts in companies in a situation of business crisisl, with or without training, entitled to compensation similar to a simplified lay-off regime, whose terms and conditions are provided for in Ordinance no. º 71-A/2020 of March 15th.

Recipients

Private companies in a situation of “business crisis” may use this mechanism, in situations where there is a total suspension of activity, related to the outbreak of COVID -19, and resulting from the intermittence or interruption of global supply chains or an abrupt break. and accentuated of 40% of sales, with reference to the same period of three months, or for those who started the activity less than 12 months ago.

Effects of the measure

Temporary suspension of the employment contract or temporary reduction of hours (even without agreement), for a period of one month, renewable monthly after evaluation, up to a maximum limit of six months.

Salary of covered workers

Workers who are part of the scheme earn, at least, a gross monthly remuneration of two thirds, up to a maximum limit of three minimum guaranteed monthly remunerations (1,905 euros). Social Security ensures payment corresponding to 70% of this remuneration; and the remaining 30% are borne by the employer.

Contributions to Social Security

“Exceptional and temporary regime” for exemption from the payment of Social Security contributions by employers and self-employed workers who are employers. Total exemption during the simplified lay off regime and in the month after work resumes, in the “business normalization” phase.

Extraordinary Financial Incentive

An “extraordinary financial incentive” was created for the “activity normalization phase”. In the first month after the resumption of work, companies will have support in the payment of wages up to a maximum limit of one minimum wage per worker.

Simplified Lay-off – Extraordinary support for the maintenance of employment contracts

Company in crisis situation

To whom they apply:

a) Total stoppage of the activity of the company or establishment resulting from the interruption of global supply chains, suspension or cancellation of orders;

b) Abrupt and accentuated drop of at least 40% of invoicing, in the 60 days prior to the request to social security with reference to the same period or, for those who started the activity less than 12 months ago, to the average of that period.

The one referred to in a) and b) is attested by a statement from the employer together with a certificate from the company’s certified accountant.

Companies can be inspected, at any time, by the competent public authorities, and they must prove the facts on which the request is based and the respective renewals.

Evidence is provided by documentary evidence, and the presentation of documents may be required when applicable, namely:

a) Accounting balance sheet referring to the month of support as well as the respective homologous month;

b) Value Added Tax (VAT) declaration referring to the month of support as well as the two immediately preceding months, or the declaration referring to the last quarter of 2019 and the first quarter of 2020, depending on whether the applicant is in the monthly VAT regime or quarterly respectively;

c) Additional supporting elements to be established by order of the member of the Government in the area of labor and social security.

Extraordinary support for the maintenance of an employment contract in a company in a business crisis situation is exclusively intended for the payment of workers’ remuneration.

– The workers covered will receive a gross monthly remuneration of two thirds of the salary, up to a maximum limit of 1905 euros , for the duration of the measure.

– The worker’s remuneration will be paid in the proportion of 30% by the employer and 70% by the social security.

Training Support

As part of the extraordinary support for the maintenance of employment contracts in a company in a business crisis situation with training entitled to remunerative compensation similar to a simplified lay off regime, the following is implemented:

  • Training grant, worth 30% x Social Support Index (approximately €131.64), half being awarded to the worker and half awarded to the employer (65.82€), with the cost borne by the Employment and Training Institute Professional, I.P. (IEFP, I.P.).
  • Extraordinary support for professional training, in the amount of 50% of the worker’s remuneration up to the limit of a minimum wage, plus the cost of training, for situations of workers without occupation in productive activities for considerable periods, when linked to companies whose activity has been severely affected.
  • Obligation to communicate: The company must communicate in writing, after hearing the union delegates and workers’ committees when they exist, the intention to reduce or suspend the provision of work, informing the workers of the foreseeable period, accompanied by a declaration from the employer and a declaration of the certified accountant.

 

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