On 18th March the Spanish Government published its plan which outlines the measures it is taking to help people to cope with the economic crisis affecting workers due to the COVID-19 outbreak.
You can read what the Royal Decree says by clicking here
In this article we will explain new measures and how they affect labour relations, both for workers and companies. If you are self-employed, own your own company or work for a company which is facing difficulties due to the crisis, please read on.
I am self-employed. How will it affect me?
The new law does not include many measures to help the self-employed. It only regulates a cessation of activity, which means that it affects you only if your company’s activities have ceased due to the crisis.
Article 17 of the new law refers to the cessation of economic activity due to the declaration of the state of emergency. It introduces a benefit that you can claim if:
1 – You have ceased your economic activity through obligation (force majeure – “Act of God”) because of the state of emergency. In other words you have a business and you are not permitted to open it at the moment.
2 – What you can bill your clients has reduced by over 75% in comparison with the preceding 3 months’ billing. In other words, the income of your business has fallen by more than 75% since the State of Emergency was declared.
To take advantage of this, you must be registered as self-employed, and your monthly “autónomo” Social Security payments must be up-to-date. If they are not, you will have 30 days to make up any shortfall in your payments; you may make this is in a series of part payments until your shortfall is cleared, if necessary.
With respect to how long you have been registered as self-employed, if you have not yet been self-employed for 12 months, you will have to make payments (70% of the minimum payment) to complete the requisite 12 month minimum before you can claim benefits.
However, if you have been self-employed for 12 months or longer, you will be able to make a claim for benefit.
The amount you receive will be 70% of your average declared income for the last 12 months. You can read the relevant regulations (article 339 of the Law on Social Security) here: (link)
This benefit will last for a month to begin with, but may be extended.
For now, you must continue paying your monthly Social Security “autónomo” payments.
Professional advice may be your best option at this time, in English and with someone who is experienced in these matters. Don’t hesitate to contact us for some down to earth advice on the best way forward for you and your business. We can help you to do the paperwork and take some of the worry away from you.
The main announcement of the new regulations refers to ERTEs. If your employer has told you that you will be suspended on an ERTE, please read on.
Exceptional measures in relation to the procedure for the suspension of contracts and reduction of working hours as a result of “Force Majeure”.
The government has made this announcement because it is expecting an avalanche of claims from people whose contracts have been suspended this month. They have made clear that this is not going to be a “free bar” by any means. In fact it has been reported that one large multinational which tried to use ERTE to suspend contracts has had its application refused.
So what is a Force Majeure?
This is sometimes referred to as an “Act of God”, a dramatic event which is completely unforeseen. In the new law (article 22), the government has recognised that companies are suspending contracts or reducing workers’ hours in response to the state of emergency.
However, it is clear from the wording of the article that Force Majeure may only be used as a reason for suspending or reducing contracts in the event that an economic activity has been suspended or cancelled: “involving suspension or cancellation of activities, temporary closure of places with high public movement, restrictions on public transport, and in general, on the mobility of people and/or goods, lack of supplies that seriously impede the continuation of the usual performance of the activity, or in urgent and extraordinary situations due to the contagion of the workforce or the adoption of preventative measures decreed by the Health Authorities.”
It appears that they are going to interpret this very strictly.
The process has to be initiated by the company.
The company needs to send an application, which must be accompanied by a report which explains and provides evidence of the loss of activities as a consequence of COVID 19, and where appropriate, the corresponding supporting documentation.
The company must inform the workers about the application, and give them copies of the relevant documentation.
The Labour Authorities will accept or reject the application, giving notice of their decision within 5 days of receipt. The company must then communicate the decision to its employees.
The number of workers affected in any single company is of no consequence to their decision, and there is no difference in the application process.
Exceptional measures in relation to the procedure for the suspension of contracts and reduction of working hours due to economic, technical, organisational and production related causes.
In article 23 of the new regulations, economic, technical, organisational and production related causes are also mentioned. It will include situations which do not refer to the cases mentioned above. In these cases it will be mandatory for the workers and their employer to negotiate. If the workers do not have a representative such as a union, they must now nominate 3 colleagues who will represent them and negotiate with the employer on behalf of all of the workers.
Whether the employer negotiates with a union (if ether is one) or workers’ representatives (if there is not), this must be put in place within 5 days, so that negotiations can begin promptly. The maximum period for negotiations is 7 days.
If after the negotiations an agreement cannot be reached, an application for ERTE will have to be made and the company and workers will have to wait for the official decision on it.
I am a business owner. ¿What happens to the Social Security contributions in the event of an ERTE being approved?
In the case that contracts are suspended or working hours are reduced on the basis of force majeure, companies with fewer than 50 workers will not have to pay any social security contributions.
Those companies with more than 50 employees will have to pay 25% of the usual contribution amount.
During this period, those employees will remain in the social security system – what we would refer to in English as having their stamp paid.
Other interesting measures
The Real Decree also introduces 2 new changes:
Article 5 encourages teleworking, remote working, “working from home” insofar as the usual risk prevention and health and safety obligations imposed on companies whose staff work remotely have been relaxed.
Article 6 allows for the adaptation and reduction of working hours, but in order to take advantage of this, you will have to prove that you have sick or dependant relatives who need your care. It may include changing shifts or reducing your hours… but be careful because it will also mean a proportional reduction in your salary.
It appears that you may be able to ask for a 100% reduction for these reasons, but of course you will not earn anything. However your employer will continue to pay your social security contributions. Such arrangements will have to be agreed between employer and employee. In the case of a disagreement, the regulations state that “Conflicts that could be generated by the application of this article will be resolved by the social jurisdiction through the procedure established in article 139 of Law 36/2011, of October 10, Regulating the Social Jurisdiction.”
We would strongly recommend that you do everything possible to try to reach an agreement without recourse to the courts which are slow at the best of times, and which are likely to break under the strain of a deluge of cases, leading to worse outcomes all round.
Changes to Unemployment Benefits
Article 25 refers to unemployment benefit. A worker who is affected by an ERTE will have access to unemployment benefit. In Spain, unemployment benefits are contributions based under normal circumstances, and you have to have been working for a period of time before you may claim them. However, due to the current crisis, the Government has decided that you are eligible even if the normal contribution requirement has not been met.
In addition, under normal circumstances your “pot” of benefits will be depleted each time you claim unemployment benefit, but the new regulations state that the contribution time will not be discounted either. This also means that if at the end of the ERTE period, an employee is not taken back on by the employer, the benefits taken during the time of the ERTE will not be discounted from any future unemployment benefits.
Article 26 refers to the time taken to make applications. Normally there is a time limit within which you must claim your unemployment benefit. However, if you are unable to put in your claim within the usual deadline, your benefits will not be reduced accordingly.
As the unemployment offices (SEPE) are currently all closed, all applications will be processed electronically.
It has been reported in the press that SEPE say that you must begin your unemployment benefit claim either online (if you already have a digital signature set up) or by telephone. You may require help if you do not speak good Spanish.
The process of making your claim will be the same whether you have been dismissed or had your contract suspended under an ERTE, although in the latter case, you will have to wait until your employer has sent the relevant information in to the authority in whichever Autonomous Community you live in.
The main point here is that nobody needs to worry about deadlines to make their claims for unemployment benefit.
That said, we have to remind ourselves that any of these measures may change as the State of Emergency continues and develops.
Our best advice is to seek professional help if you are confused or worried and need clarification in English from a labour law professional. There is no need to panic, and we would urge everyone to do all that they can to solve any such disputes or conflicts without resorting to legal action.