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Labour and social security measures addressing the crisis provoked by Covid-19

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20 March 2020

Royal Decree 463/2020 of 14 March, by which the state of alarm in Spain is declared, includes a number of measures, among them the limitation of freedom of movement, which limits the freedom of movement of people, though it allows them to go to their workplace as workers or businesspersons.

This is an extraordinary situation that has led to business activities being halted, the temporary closing of some companies and more teleworking. These situations have an impact on labour relations and they have led to the adoption of measures to mitigate the possible negative effects on companies and workers.

Some of these measures are already provided for by the existing labour legislation. Others, however, have been specifically established to provide an appropriate response to the situations arising as a result of the current Covid-19 crisis.

The last set of them was included in Royal Decree-Law 8/2020 of 17 March, on extraordinary urgent measures to address the economic and social impact of Covid-19, published yesterday in the Spanish Official Gazette BOE (Royal Decree-Law). According to its preamble, the adopted measures are geared not only to combat the illness, but to strengthen protection for workers, families and vulnerable groups, while supporting the continuity of productive activity and the maintenance of jobs. Beyond the specific measures in favour of the workers and their families affected, Royal Decree-Law considers that measures should be adopted that "provide the necessary flexibility for the temporary adjustment of companies with the aim of favouring the maintenance of jobs and strengthening the protection of workers directly affected."

The Royal Decree-Law entered into yesterday, on its publication in the BOE. The measures provided for by thereto will remain in force for one month following its entry into force, though they may be extended. However, the measures for which a specific term is stipulated will be subject to said term. In this sense, the measures set out to increase the flexibility of the temporary workforce adjustment plans, measures affecting social security contributions and measures related to unemployment protection will remain in force while the extraordinary situation arising from Covid-19 remains in place.

In any event, these extraordinary measures relating to employment included in the Royal Decree-Law will be subject to the company’s commitment to maintain jobs for a period of six months from the date it resumes its activity.

Working remotely/from home (Article 5)

If the company continues its activity, it must provide the option of remotely working for its workers. This is not a legal obligation, but a recommendation.

Where remote working is established, the company must provide workers with the necessary means to carry out the activity. Upon agreement between the parties, workers may make available to the company their personal equipment to enable teleworking.

If the service provision continues remotely wages may not be reduced nor may workers’ rights be modified.

Article 5 of the Royal Decree-Law establishes the preference for remote working as a mechanism that allows the maintenance of activity by alternative means. As a result, the company should establish the appropriate means if technically and reasonably possible, and if the necessary effort to adapt is proportional to the situation.

To make remote working easier in sectors, companies or jobs in which this form of working has not been planned for, the mandatory risk assessment under Article 16 of Law 31/1995 of 8 November, on occupational risk prevention (LPRL), may exceptionally be carried out by the workers themselves, who may voluntarily assess the risks.

Obligation to attend the workplace

Unless there is a situation of serious and imminent risk, workers are obliged to attend their place of work. This scenario is provided for by Article 21 of the LPRL, and if applies, "workers shall have the right to interrupt their activity and leave the workplace, if necessary, if they consider that this activity involves a serious and imminent risk for their life or health."

Rights to adapt the working day and reduce working hours (Article 6)

Another of the common measures in situations in which there are difficulties in reconciling work and family life for workers is enhancing such reconciliation work and family life.

The Royal Decree-Law strengthens the rights to a work/life balance regulated in the Workers’ Statute, establishing additional measures to guarantee the reconciliation of work and family life and rights linked to it.

Scope of the rights

New provisions have been introduced by adapting the timetable at work and reducing the working hours for employees with duties to care for a spouse or partner and family members up to the second degree of kinship, in exceptional circumstances related to the activities needed to avoid the spread of Covid-19.

There following are considered to be exceptional circumstances:

  • If the worker’s presence is considered necessary to care for people who, for reasons of age, illness or disability, need direct personal care as a direct consequence of Covid-19.
  • If decisions adopted by the government related to Covid-19 imply the closure of educational or any other centres that offer care or attention to people who need it.
  • If the person who so far has been responsible for the care stops providing it. The lack of a care giver must be for justified reasons related to Covid-19, its prevention or to avoid its spread.

These are individual rights. Each of the parents or care givers may request the right with respect to the persons whom it is a duty to care for.

These rights observe the needs for reconciling work and family life, so any conflicts that may be generated shall be resolved by the industrial courts under the procedure provided for by Article 139 of the Ley Reguladora de la Jurisdicción Social (Labour Courts Jurisdiction Act).

Right to adapt working hours

The specification of the right, in terms of its scope and content, corresponds to the worker. The only limitations are the justification, reasonableness and proportionality of the request. The organisational needs of the company should be taken into account for the purpose of a possible refusal of the right. However, there is a presumption of the justification, reasonableness and proportionality of the request, unless there is proof to the contrary, while the company and workers are urged to reach an agreement in case of disagreement.

The right to adaptation is not limited to the arrangement of working hours. The conditions of work that the adaptation may extend to are very broad. The adaptation may refer to the distribution of working hours, changes in shifts, changes in the working hours, "flexitime", continued or discontinued working days, change in the workplace, change in duties, change in the form of work provision, including the provision via teleworking, or any other change in conditions that may be available to the company or that may be implemented reasonably and proportionally.

Right to reduce working hours

The right to a special reduction of working hours is established in situations provided for under Article 37.6 of the Workers’ Statute in the exceptional circumstances stipulated in Article 6.1 of the Royal Decree-Law. The reduction will imply a proportional reduction in wages.

The right is regulated by the provisions of Articles 37.6 and 37.7 of the Workers’ Statute, with the following provisions:

  • It must be notified to the company 24 hours in advance.
  • It may amount to 100 per cent of the working hours. In this case, the worker’s right must be justified, reasonable and proportional to the company’s situation.
  • When the permission is requested for the direct care of a family member of up to the second degree of kinship or kinship by marriage, the family member may be engaged in paid work.
Measures in the case of enjoying a prior right to the reconciliation of work and family life

Where the person requesting this special reduction in the working day has benefited before of: (i) an adaptation of the working day, due to reconciliation measures of work and family life; (ii) a reduction in working hours to care for children or family members; or of (iii) any of the rights related to the balance between work and family life; then the worker may temporarily suspend the right so far enjoyed or may request that the terms of its use may be modified to adapt it to the exceptional circumstances specified in Article 6 of the Royal Decree-Law.

Suspension of labour activity

The company may not unilaterally decide to suspend labour activity and stop paying its employees’ wages. Any suspension of the employment contract must be made through a temporary work adjustment plan (ERTE).

What is an ERTE? The ERTE is an administrative procedure that allows employers to temporarily suspend or reduce the employment contracts of its workers.

When can an ERTE be carried out? An ERTE may be requested in the case of force majeure or when there are economic, technical or production reasons for it. In companies where one of the suspension measures agreed by the health authorities during this situation applies, an ERTE may be initiated for reasons of force majeure.

Force majeure is understood to be the result of events or incidents that are involuntary, unforeseeable, external to the sphere of the company, and that temporarily make it impossible to carry on with business activity.

Does an ERTE have to be presented for each workplace in the same company? An ERTE may be presented for various workplaces if the cause is the same.

Where can the ERTE procedure be requested? The procedure must be initiated online, upon the company's request, before the labour authorities (at regional level, at the Directorate-General for Employment of the Autonomous Region of Madrid) no matter its cause or the number of workers affected by the measure. At the same time, the legal representatives of the workers must be notified.

How must the documentation be presented for initiating an ERTE? The documentation must be presented online at the following address: processing the ERTE.

Who decides to initiate an ERTE? The company decides on whether to apply measures to suspend employment contracts or reduce working hours. The company must notify this decision to the workers’ representatives and the labour authority.

What is an ERTE for reducing working hours? Generally, ERTEs are for suspension of employment contracts, but it is also possible to request an ERTE to reduce working hours. The ERTE for reducing working hours may be applied for if there is a temporary reduction of between 10% and 70% of the working hours calculated according to the daily, weekly, monthly or annual hours.

In the case of reducing the working hours, the specific periods in which the reduction will be implemented for each of the workers affected will be determined, as well as the corresponding working timetable , for the whole period in which the reduction is in force.

The Royal Decree-Law regulates two types of ERTE, for which there are different provisions:

Suspension of employment contracts and reduction of working hours as a result of force majeure (Article 22)

For these purposes, force majeure is considered to be loss of activity as a result of Covid-19, including the declaration of the state of alarm, which involve the suspension or cancellation of activities, the temporary closure of public premises, restrictions on public transport and, in general, on the movement of people and/or goods, lack of supplies that seriously impede continued ordinary business activities, or urgent and extraordinary situations due to the infection of the workforce or adoption of preventive isolation measures provided for by the health authorities, which must be duly accredited.

The procedure provided for in the Workers’ Statute is made more flexible by including the following specific provisions:

  • The procedure begins at the request of the company, which must submit to the competent Labour Authority a report evidencing the relation between the proposed measure and the governmental adopted measures. The company may also notify its request to the workers and submit the report and the documentation certifying the situation to the workers’ representatives.
  • The competent labour authority must determine that it is a case of force majeure.
  • The labour authority must issue its decision within 5 days after the request. The Labour and Social Security Inspectorate (ITSS) may issue a prior report to determe whether there is force majeure

Suspension of employment contracts and reduction of working hours for economic, technical, organisational or production reasons (Article 23)

Whenever the company’s need to suspend its employment contracts or reduce the working hours are not related to the government measures adopted as a result of Covid-19, the company may request to apply these measures for economic, technical, organisational or production reasons.

Article 23 of the Royal Decree-Law introduces various provisions with respect to the procedure under the Workers’ Statute:

  • If the company does not have legally authorised workers’ representatives, the negotiating committee of the ERTE shall be formed by the main trade unions and representatives of the sector to which the company belongs who are authorised to form part of the negotiating committee of the collective agreement applicable. If trade union membership is not possible, the committee will be made up of three workers from the company itself, chosen pursuant to Article 41.4 of the Workers’ Statute.
  • In any event, the committee must be set up within five days.
  • The consultation period may not extend beyond seven days.
  • The Labour Inspectorate will issue its report within seven days. Its judgement will not be binding on the labour authority.

Can unemployment benefit be received? Among the measures on unemployment protection (Article 25), the right to contributory unemployment benefit is recognised for people who are affected by an ERTE, even if they do not meet the minimum period of prior contributions required to make them eligible for the benefit. The period for which unemployment benefit triggered by an ERTE as a result of Covid-19 may be received will not be discounted from the periods for receiving the benefit established in the Ley General de la Securidad Social (General Social Security Act).

The provision will be extended until the end of the period of suspension of the employment contract or the temporary reduction of working hours causing it.

Is there any limitation on applying the ERTEs? (First Transitional Provision) Provisions related to ERTEs regulated by Article 22 and 23 do not apply to the ERTEs initiated or notified before the entry into force of this Royal Decree-Law and based on causes provided included in it. The provisions relating to exemption from social security contributions and unemployment protection provided for by Articles 24, 25, 26 and 27 are applicable to those affected by the ERTEs notified, authorised or initiated before the entry into force of the Royal Decree-Law.

Social security measures

(Article 5 of Royal Decree-Law 6/2000 of 10 March and Articles 24 and 25 of the Royal Decree-Law

Isolation or sickness periods considered as a work-related accident

Article 5 of Royal Decree-Law 6/2000 of 10 March, adopting urgent measures on the economy and for the protection of public health, includes an important measure that affects both the scope of protection for workers and the economic obligations of companies.

During the periods of isolation or sickness of workers as a result of the Covid-19 virus, workers will have the right to receive a financial benefit for temporary incapacity for the amount corresponding to a work-related accident. It should be noted that this is an exceptional situation caused by the current health crisis.

This recognition has a number of consequences:

  • Workers will receive a benefit replacing their salary starting on the day following the doctor’s certificate. The amount of this benefit is 75% of the worker’s regulatory base amount.
  • If the work-related accident has been insured with the national Social Security system or with a mutual company that collaborates with it, or in, the companies do not have to assume the payment of the initial days of the benefit. The responsibility for payment lies with the mutual company or the national Social Security system.

If the company has opted to assume the cover for temporary incapacity due to a work-related accident, it is responsible for paying the benefit.

Social Security contributions related to the procedures for suspending employment contracts and reducing the working day due to force majeure caused by Covid-19 (Article 24)

Companies that as of 29 February 2020 had fewer than 50 workers registered in the national Social Security system shall be exempted from paying the employers’ social security contributions (and that related joint collection items) while the period of suspension of employment contracts or the reduction in the working day remains in place.

For companies with 50 workers or more, who are registered in the Social Security system as of 29 February 2020, the exemption from the obligation to make social security contributions shall amount to 75% of the employers’ contributions.

The exemption will not have any effect for the workers and this period shall be deemed to have received all the contributions for all purposes.

The company must request the exemption from contribution payments. To do so, it must present a request that will include the identification of the workers and the periods of suspension or reduction in the working day.

Other measures

Extraordinary benefit when contribution to social security by people affected by the declaration of the state of alarm is interrupted (Article 17)

This is an exceptional benefit of limited duration. Those eligible are the self-employed people whose activities may be suspended as a result of Covid-19 whose professional activity's turnover is reduced by at least 75% with respect to the average turnover of the previous half-year in the month before requesting for the benefit . Eligibility to the benefit depends on compliance with certain requirements included in Article 17.

The amount of the benefit equals to 70%, unless the minimum period of social security contributions giving eligibility to the benefit is not accredited. In that case the amount will be 70% of the minimum contribution base in the Special Self-Employed Social Security Scheme or the Special Sea Workers Social Security Scheme.

While this benefit applies, social security contributions will be deemed paid and the social security contribution period for which the beneficiary may be eligible in the future, even when interrupted, will not be considered as reduced.

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