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Government and social stakeholders sign Social Agreement to extend temporary lay-off plans (ERTEs) until 30 June

Moncloa Palace, Madrid, Monday 11 May 2020

This new Social Agreement, to be ratified on Tuesday by the Council of Ministers, extends the temporary lay-off plans (Spanish acronym: ERTEs) caused by force majeure until 30 June 2020 for those companies that cannot resume their activity for causes of force majeure.

Companies that can partially recover their activity may reincorporate workers affected by the ERTE, prioritising adjustments due to reductions in the working day. Companies must notify the relevant labour authority of the full renouncement, as the case may be, of the ERTE in a period of 15 days and notify SEPE of the changes in the details of workers included in these plans.

Pool Moncloa/Borja Puig de la BellacasaThe Social Agreement also includes an amendment to the Sixth Additional Provision of Royal Decree-Law 8/2020, of 17 March, which guarantees the commitment to maintain jobs by companies for a period of six months from the date of resumption of their activity, understanding this as the return to effective work of those people affected by the temporary lay-off plan, even when this is partial or only affects part of the workforce.

The event to sign the agreement was attended, on behalf of the government, by the Second Vice-President of the Government and Minister for Social Rights and 2030 Agenda, Pablo Iglesias; the Third Vice-President of the Government and Minister for Economic Affairs and Digital Transformation, Nadia Calviño; the Minister for the Treasury and Government Spokesperson, María Jesús Montero; the Minister for Work and Social Economy, Yolanda Díaz, and the Minister for Inclusion, Social Security and Migration, José Luis Escrivá.

On behalf of the social stakeholders, the signing was attended by the General Secretaries of the trade unions UGT and CCOO, Pepe Álvarez and Unai Sordo, respectively; and on behalf of the employers' organisations by the President of the CEOE, Antonio Garamendi, and the President of CEPYME, Gerardo Cuerva.

New category of ERTE and exemption from NI contributions

The Social Agreement to Defend Jobs maintains the exemption on paying National Insurance contributions for companies that persist with a total temporary lay-off plan due to force majeure, an exemption that will stand at 75% for companies with 50 or more workers.

In addition, the Social Agreement introduces a new category of ERTE for companies that can re-commence their economic activity, known as "partial force majeure", which will last until 30 June. During this period, companies may combine workers that have returned to work and others that remain suspended, all of which will be exempt from the payment of National Insurance contributions.

To incentivise the return to work of the largest number of workers subject to a temporary lay-off plan, the exemptions will be greater for those employees that return to work than for those that remain suspended. Specifically, companies with less than 50 employees will have an NI exemption of 85% for those contributions that accrue in May, and of 70% for those that accrue in June for workers that return to work. For those that remain suspended, the exemption will be lower - 60% for those that accrue in May and 45% for those that accrue in June.

In the case of companies with 50 or more workers, the exemption for employees that resume work will be 60% and 45% for contributions that accrue in May and June, respectively. For those workers that remain suspended, there will be a 45% reduction in May and 30% in June.

The exemptions from NI contributions will be applied by the General Treasury of the Social Security system at the request of the company, following notification of the situation of total or partial force majeure, as well as the identification of the workers affected and the period of suspension or reduction in the working day.

Distribution of dividends and fiscal transparency

The Social Agreement also introduces two clauses that refer to the distribution of dividends and fiscal transparency. Companies and other entities that have their tax residence in a tax haven may not sign up for the extension to the temporary lay-off plan due to force majeure.

Furthermore, those companies and entities that post profits during the extension of the ERTE due to force majeure may not distribute dividends during the tax year corresponding to the application of the ERTE, unless they return the corresponding part of the exemption applied to National Insurance contributions.

Tripartite committee

The Social Agreement also provides for the creation of a tripartite labour Monitoring Committee to oversee the de-escalation process comprising members of the Ministries of Work and Social Economy, and of Inclusion, and the social stakeholders (CEOE, CEPYME, UGT and CCOO), which will monitor the measures in the phase of mitigated emergency.

This Committee will ordinarily meet on the second Wednesday of each month, after being called by the Ministry of Work and Social Economy, and on an extraordinary basis whenever it is requested by three of the four member organisations. The Committee will be consulted as to a potential extension of the ERTEs beyond 30 June.

Non official translation