In the context of the COVID-19 pandemic, the Government approved Ordinance no. 71-A/2020, of 15th March, with a view to determine extraordinary measures of immediate support for employees and companies, in which it establishes a simplified lay-off regime.
Due to a deeper reflection of the Government and in order to better clarify this legislation, Decree-Law no. 10-G/2020, of 26th March, was created, with the aim to clarify and compile what is set out in the aforementioned Ordinance also determining its revocation. The above mentioned Decree-Law will remain in force up until 30th June 2020 at the least.
This new legislation refers to the “lay-off” already known and determined by the Employment Code, which means that companies in a proven crisis situation can resort to the suspension of employment contracts or the reduction of the normal working period, but now in a more simplified procedural way.
The business crisis situation must be proven by the employer and an application filed by electronic sent to Social security services.
For this purpose, three types of situations are considered to be a business crisis:
⁃ Companies which have been forced to close their facilities and establishments, as set out in DL 2-A/2020, of 20th March, or by legislative and administrative determination (DL 10- A/2020, of 13th March) due to the declaration of emergency state;
⁃ Companies whose employer has declared, together with a certified accountant’s certificate, the total or partial cease of the activity, either due to lack of supply or lack of orders or reservations depending on the activity;
⁃ Companies in which there has been an abrupt fall at least 40% in their invoicing, in the period of 30 days prior to the application to Social Security, in comparison with the two months prior to that period.
All entities in this situation are naturally subject to supervision and may, in this circumstance, have to provide the competent authorities with documentary evidence of this business crisis situation.
The supports to which the employer is entitled under this Decree Law are:
⁃ Extra financial support for the maintenance of an employment contract - support of 2/3 of the salary with a minimum limit of a national minimum wage paid in 70% by Social Security;
⁃ Extraordinary training support – not cumulative with the financial support for the maintenance of an employment contract:
⁃ Extraordinary financial incentive with a view to normalizing the activity in the company – a minimum monthly remuneration per employee covered;
⁃ Temporary exemption of contributions’ payment by the employer to Social Security services.
⁃ The companies that have not requested financial support to maintain their employment contracts may still have access to support for part-time vocational training, also for one month, a plan that will be articulated with IEFP, I.P., with up to 50% of the employees’ monthly salary up to a maximum of one national minimum wage.
Companies receiving the above-mentioned support may also benefit from an extraordinary support provided to ensure the normalization of the activity, which is paid in one lump sum, in the amount of one national minimum wage per employee.
These measures can be combined with total exemption from payment of social security contributions while the measure is in force.
Both during the period of application and during the following 60 days, dismissals are not allowed and companies may not terminate the employment contracts of their employees neither by collective dismissal nor by individual redundancy.
Naturally, it is expected that companies will adopt a transparent and compliant stance in terms of compliance with this support package, under penalty of ceasing it and the consequent reimbursement of its payment, to the respective entities. The following are considered to be situations of non-compliance: dismissals, except for fair dismissals; non- compliance with legal, fiscal, administrative and other obligations assumed by the employer; distribution of profits by the company during the period of obligations arising from these incentives; false declarations; and also in the case of work in the event of suspension of the employment contract or the provision of work that exceeds the established time when the working period is reduced.
Cláudia Vaz Póvoa
27th March 2020