Decree-Law no. 10-G / 2020 of 26 March establishes an exceptional and temporary measure for the protection of jobs, in the context of the pandemic COVID-19, the so-called Simplified Lay-Off (suspension of the employment contract) .
Who it applies to
Employers in situations of business crisis that have their situation regularized to Social Security and the Tax Authority, that is:
Employing entities to which private law applies – commercial companies, regardless of corporate form (eg Unipessoal, Limited and Limited Company), cooperatives, foundations, associations, federations and confederations – including those with the status of Private Institution Social Solidarity (IPSS) and Self-employed workers who have employers.
The entity is considered to be in a business crisis when it results from:
- Total or partial closure of the company or establishment, due to the duty to close facilities and establishments, provided for in the various legislation published in the meantime, in relation to the establishment or company effectively closed and covering workers directly affected;
- Total or partial stoppage of the activity of the company or establishment that results from the interruption of global supply chains, or from the suspension or cancellation of orders;
- Abrupt and sharp drop of at least 40% of the turnover in the preceding 30-day period to request to the competent authorities of social security, with reference:
- The monthly average of the two months preceding that period, or
- Compared to the same period of the previous year, or
- For those who started the activity less than 12 months ago, the average of that period.
Example: if the order is delivered on March 30, the average billing between February 29 and March 29, 2020, compared to the billing average for the months of:
-January 2020 to February 2020; or
-February 29 to March 29, 2019.
Or, if the order is placed on March 30, 2020 and the company has been in business since September 1, 2019, the average billing between February 29 and March 29, 2020 should be compared with the average billing from September 1, 2019 through February 28, 2020.
Note: Lay-Off can be triggered by total suspension of the employment contract or by reducing the number of hours worked.
What is support
Financial support per worker, attributed to the company and destined exclusively to the payment of wages. The worker is entitled to support corresponding to 2/3 of his normal gross salary, with a minimum equal to the value of the national minimum wage (€ 635) corresponding to his normal working period, and cannot exceed 3 national minimum wages (€ 1,905). Social Security supports 70% of the support amount up to a limit of 1,333.5 € per worker and the Employer the remaining 30%.
How long is the support
This support has an initial duration of up to one month, and can be extended monthly, up to a maximum of 3 months.
Extraordinary financial incentive to support the normalization of the company’s activity
Employers who benefit from the measures provided for in the Lay-Off of Decree-Law no. 10-G / 2020, of March 26, are entitled to an extraordinary financial incentive to support the resumption of the company’s activity, to be granted by the IEFP, IP, paid in one go and worth € 635 per worker.
Temporary exemption from payment of Social Security contributions
Employers who benefit from the measures envisaged are entitled to a total exemption from the payment of Social Security contributions by the employer, in relation to the workers covered and managers, during their period of validity. The right to exemption also applies to self-employed workers who are employers who are beneficiaries of the measures and their spouses.
What procedures does the employer have to carry out for the purpose of temporarily reducing the normal working period or suspending an employment contract?
The employer must inform the workers in writing of the decision to request extraordinary support for maintaining jobs, indicating the expected duration.
What is not allowed for the employer benefiting from the financial support provided for in Decree-Law no. 10-G / 2020, of 26 March, while receiving financial support?
- Dismissal, except for reasons attributable to the worker;
- Punctual non-compliance with the remuneration obligations owed to workers;
- Failure by the employer to comply with its legal, tax or contributory obligations;
- Profit distribution during the term of the obligations arising from the granting of the incentive, in any form, namely by way of withdrawal on account;
- Non-compliance, attributable to the employer, of the obligations assumed, within the established deadlines;
- Provision of false statements;
- Provision of work to the employer itself per worker covered by the extraordinary support measure for the maintenance of the employment contract in the modality of suspension of the contract, or beyond the established schedule, in the modality of temporary reduction of the normal period of work.
It should be noted that, during the period in which the company or establishment is the beneficiary of these supports, either within the next 60 days, the employer cannot terminate employment contracts under the terms of collective dismissal, termination of employment contract or due to unsuitability, in relation to all workers, whether or not they are covered by those supports.
Can more documentary evidence be required?
Yes. The Social Security and IEFP, I. P. services may request accounting documents that show the alleged business crisis, namely:
- Accounting balance sheet referring to the month of support, of the same month, or previous months, when applicable;
- Value Added Tax (VAT/ IVA) 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, as the applicant is in the monthly or quarterly VAT/ IVA regime respectively;
- Other additional supporting elements to be fixed by order of the member of the government in the area of labor and social security.
Can the beneficiary entities be inspected?
Yes, the entities benefiting from the support can be inspected at all times by the competent public entities, and must, at the time of the inspection, prove the facts on which the application is based and the respective renewals.
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