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Quotation exemption 

The exonerations to the FM ERTES are maintained although now the exonerations to the ETOP ERTES are regulated with the double sliding scale that distinguishes percentages according to the size of the company and according to the labor situation of resumption or not of activity of the workers affected and in decreasing percentages from July 1, 2020 to September 30, 2020. 

Dividend distribution and tax transparency (art. 5) 

The provisions already included in RDL 18/2020 are maintained, expanding their application to ERTEs for ETOP causes, on: 

  • Companies with tax domicile in tax havens: impossibility of availing themselves of the ERTEs due to force majeure or ETOP causes derived from COVID-19.
  • Impossibility of proceeding with the distribution of dividends corresponding to the fiscal year in which ERTEs are applied due to force majeure or ETOP causes derived from COVID-19, except if companies previously pay the amount corresponding to the exoneration applied to social security contributions and waive to it (not applicable to companies with less than 50 workers).

Safeguarding of employment 

The commitment to maintain employment is extended to companies that apply an ERTE for ETOP causes and benefit from the exemption of fees. 

In the case of companies that benefit for the first time from the extraordinary measures provided for in terms of contributions as of June 27, 2020, the 6-month term of the employment commitment will begin to run from the entry into force of this Royal Decree -law. 

Some deficiencies in this commitment remain unresolved: among others, the exceptions to the application of the employment guarantee in the case of withdrawals in probationary periods after the dismissal of workers or whether or not the principle of proportionality will be applied in the event of non-compliance. due to the initiation of ERES or objective dismissals since it has not been clarified if the legal consequence of the breach of commitment that operates in the listing relationship and is intervened by the Labor Inspection will force the reimbursement of all the exemptions from contributions of all the workers of the company requesting the ERTE or only of the workers affected by the termination or dismissals. 

Extension of the suspension of temporary contracts and the prohibition of firing 

Until September 30, it remains: 

- the prohibition of dismissal due to force majeure and ETOP causes related to COVID-19 
 - the interruption of the calculation of the duration of temporary contracts during the suspension due to force majeure or ETOP causes 

Advantages and disadvantages of ERTEs in Spain in the de-escalation phase. 

In summary, ERTEs in the de-escalation stage, whether due to FM or ETOP causes, will continue to be protagonists in the de-escalation stage and the new normal. It can be anticipated that there will be a future increase in ERTEs due to ETOP causes now with incentives and that the legislator will tend to eliminate as of October 1, 2020 or, as of January 1, 2021, the FM ERTEs derived from the COVID 19. 

It is clear that the main advantage of ERTEs is the prevention of layoffs despite the high cost of public resources. 

However, there are some aspects of ERTEs that can be negative: 
  (i) the dynamics of the ERTEs themselves, in the de-escalation phase, can lead to the tactical disaffection of temporary workers who, although they have interrupted periods of duration, after resumption will tend to see how, after the agreed period expires, they produce extinctions which is a disadvantage in relation to permanent workers due to their lower exit costs and is, especially, pathological in the Spanish labor market due to its duality and high rate of temporary employment; (ii) labor measures for workers affected by ERTEs in the de-escalation phase prevent or delay the sectoral adjustment that may be necessary for the reassignment of workers from less productive sectors or companies to more productive ones; (iii) ERTEs by FM assume a scheme designed by the State for the balanced distribution of costs between companies and workers, but it prevents collective bargaining at the level of each company from seeking a scheme that is more adapted to needs and perhaps more efficient; and (iv) the employment safeguard is drafted in imprecise terms, which leads to great legal uncertainty and also delays the adjustment of workforce in companies that, as a result of COVID 19, may be clearly oversized, so incorporation should be considered as an exception. the formulation of objective dismissals, although with adequate causality and duly accredited economic reasons.

New challenges in de-escalation: intersectoral mobility, continuous training and incentives for hiring.

However, there is no doubt that the FM and ETOP ERTEs are fulfilling a very positive desirable social objective and maintain reasonable economic efficiency, although it will be necessary to assess whether it is necessary, as long as there is no vaccine or an effective treatment against COVID 19, activate Complementary tools that allow the reassignment or mobility of workers from non-productive sectors and companies (currently tourism and hospitality, which are undoubtedly the most affected by COVID 19) to others that are more productive and, in addition, facilitate the training of workers that remain incorporated in the ERTEs. In addition, for those workers who saw their contracts terminated by COVID 19 and who did not enter the ERTEs (900.000 in Spain), it will be necessary to activate new incentives for hiring that may be more effective as soon as the recovery in consumption stabilizes and of demand in the new normal.                                  

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About the Author

Carlos de la Torre Garcia

Carlos de la Torre Garcia

Attorney Of Counsel of the Labor Department of Baker & Mckenzie. Specialist in labor and Social Security advice for national and international clients.

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