The current health crisis following the outbreak of coronavirus (Covid-19) is not only having an impact on public health, but also on the global economy and the business world.
We are therefore facing a new reality with unforeseeable legal and economic consequences, in which companies must be aware that all the measures being taken to contain the virus may.
In front of the situation that Authorities are trying to contain the pandemic by temporarily closing schools, museums and other centers. Extraordinary measures that are fully affecting economic activities such as hospitality, tourism or passenger transport.
Aware that the situation could last for weeks, most of companies have begun to process temporary employment regulation (ERTE) files.
BUT WHAT IS AN ERTE TEMPORARY EMPLOYMENT MEASURES?
For sure, you have already heard about the ERTE, but you may have some questions regarding its regime. That is why we will proceed to explain what it is and what are the major consequences.
An ERTE is a legal mechanism, regulated in article 47 of the Employment Law (Estatutos de los Trabajadores), which allows companies to suspend work contracts or reduce working hours temporarily, when they are experiencing economic, technical or organizational difficulties that put their viability at risk.
WHAT OBLIGATIONS DOES THE COMPANY HAVE?
If the business is simply experiencing a drop in income, the employer should initiate a round of consultations with the representatives of the employees that will last between 7 and 15 days. In that period, both parties will have to negotiate the conditions of the temporary suspension as well as the affected posts.
However, in cases of force majeure, the company may avoid the conciliation stage and request temporary closure directly from the competent labour authority (the labour councils of the different Autonomous Communities). Once received, the authorities have 5 days to rule on the request.
Once the ERTE is approved, the employer is obliged to :
- keep the employees registered with the Social Security
- continue to pay 100% of their contribution to Social Security. Likewise, it must communicate monthly to the State Employment Service which employees are inactive and for how long.
Nevertheless, from that moment, the employer will not be required to pay any salary to the employee anymore.
IS THE CURRENT SITUATION A CASE OF FORCE MAJEURE & ERTE TEMPORARY EMPLOYMENT MEASURES?
In view of the current situation and the rapidity with which the virus has affected the entire national economy, as of today, Tuesday, March 17, 2020, the government has qualified the current situation as force majeure, allowing companies to skip the conciliation’s stage and to regularize their situation as soon as possible.
HOW LONG CAN ERTE TEMPORARY EMPLOYMENT MEASURES LAST?
The law does not establish a specific time limit. The ERTE will be set up for the duration agreed during the conciliation stage or, failing that, by the competent authorities.
WHAT RIGHTS DO EMPLOYEES HAVE?
As a result of the implementation of an ERTE procedure, employees may apply for unemployment benefit both if their contracts have been suspended or if their working hours have been reduced.
However, according to the actual version of the law and subject to the publication of the latest Order in Council issued by the Government on March 17, 2020, they will be eligible to unemployment benefits only if:
- they have more than 360 days of contributions or;
- do not have incomes higher than 75% of the minimum inter-professional salary.
In any case, it is important to bear in mind that employees affected by an ERTE are entitled to challenge it before the competent court if any type of irregularity has been identified.
At Lexidy, we aim to assist our clients with swift and simple responses, helping them to navigate the difficult current situation. We would be happy to help you. Contact us and we will assess your case.