The Government has reached a principle agreement to lengthen the temporary employment regulation (ERTE) in light of the current health crisis and the suspension of certain activities due the state of alarm.
The agreement contemplates extending ERTE payments until 30th June for both total or partial suspension of business activity.
The agreement which is being proposed as a Royal Decree-law, establishes that companies and entities domiciled in tax havens will not be eligible for ERTEs. In addition, it is specified that the companies that take advantage of these procedures will not be able to distribute dividends during the fiscal year corresponding to the application of the ERTE, except if they return to Social Security the quotas from which they were exonerated. However, this limitation will not be applicable to companies that, as of 29th February of this year, had fewer than 50 workers.
The unemployment benefits associated with the ERTE (which are granted without the need to meet the grace period) will remain until 30th June, except for those of the fixed-discontinuous ones, which will be applicable until 31st December.
The regulation that was issued in mid-March to ERTE due to the coronavirus establishes a 75 percent exemption from contributions for companies that as of 29th February of this year had more than 50 workers registered with Social Security and the 100 percent for those with less than 50 workers.
The regulation in mid-March linked the advantages of ERTEs derived from Covid-19 to companies maintaining employment for six months from the date of the resumption of activity. However, under the new agreement that could change and this clause could be relaxed with the six-month computation starting from when the ERTE began and not when the employee returns to work.