Tuesday, 30 June 2020

COVID-19 – Extension of simplified lay-off in Portugal and new support measures for business activity and employment protection

VolverFollowing the Economic and Social Stabilization Programme, approved by the Portuguese Government in the beginning of June, Decree-Law no. 27-B/2020 of 19 June sets forth new rules for the employment sector, particularly, the extension of the extraordinary support for maintaining employment contracts in a business crisis situation – set forth by Decree-Law no. 10-G/2020 of 26 March (“simplified lay-off”) – and the creation of other employment support measures: the stabilisation subsidy and the extraordinary incentive for the normalisation of business.

The Labour Law Department of Belzuz Abogados, S.L. – Portugal comments these new rules below in broad terms:

Simplified Lay-Off

(1) Companies that have not yet requested the simplified lay-off can do it up to 30 June 2020 and beneficiate of a 3-month duration that cannot exceed 30 September;

(2) On the other hand, companies that have already requested the simplified lay-off and reached its limit until 30 June 2020 can beneficiate from the new extension until 31 July 2020;

(3) Lastly, companies whose establishments and facilities remain closed pursuant to governmental or administrative decisions, can access, or keep their right to simplified lay-off and respective extension, while the obligation above is in force. In this case, the 3 months duration is not applicable.

After the end of the simplified lay-off, companies that have resorted to this support may (i) request the progressive resumption support (1); (ii) request the extraordinary incentive for the normalisation of business, or (iii) implement the traditional lay off in accordance with the rules set forth in the Portuguese Labour Code.

Extraordinary Incentive for the Normalisation of Business

This financial incentive is granted to employers if they have beneficiated of the simplified lay-off or extraordinary training plan set forth by Decree-Law no. 10-G/2020 of 26 March.

Employers can choose to receive one in one of two modalities:

(a) A support equal to one minimum national wage (635 €), paid as a lump sum, per employee included in one of the measures above mentioned; or

(b) A support equal to two minimum national wage (1,270€), paid up to 6 months, per employee in one of the measures above mentioned.

If is chosen the type referred in subparagraph b) above, employers are also entitled to a partial exemption (50%) of their contributions to the Social Security concerning the employees who were under the simplified lay-off or extraordinary training plan, in the last month of such supports.

Stabilisation Subsidy

The stabilisation subsidy is a support granted by Social Security to employees whose basic remuneration in February 2020 was equal or lower than twice the minimum national wage - Eur. 1,270 - and that were at least for a full month from April to June, included in the simplified lay-off regime, or in the traditional lay-off regime set forth article 298 and following of the Portuguese Labour Code.

The stabilisation subsidy corresponds to the difference between monthly basic remuneration declared for February 2020 and the one received in the calendar month in which the employees was under one of the two measures above that showed the larger difference.

This support is paid in July 2020 by the Social Security, in an automated and official way (employees will not have to apply for the amount but must have their IBAN – International Bank Account Number – updated before Segurança Social Direta).

The subsidy will vary between a minimum of €100.00 and a maximum of €351.00.

Duties / Limitations

1) Employers that beneficiate of the extraordinary incentive for the normalisation of business cannot terminate employment contracts under collective dismissal, dismissal for termination of the job position, dismissal for inadequacy, nor initiate the correspondent procedures;

2) Employers that beneficiate of the extraordinary incentive for the normalisation of business and which have chosen the support corresponding to 1,270€/per employee, must keep their level of employment as in the last month of the application of the simplified lay-off or extraordinary training plan. In cases where the last month of these measures is July 2020, the month before the application of such measures is the one that will be considered;

3) The duties above mentioned must be complied with during the period of the extraordinary incentive for the normalisation of business was granted and the following 60 days;

4) The employer that beneficiates of the extraordinary incentive for the normalisation of business cannot access the support to progressive resumption set forth by the Resolution of the Council of Ministers no. 41/2020 of 6 June ( );

5) During the period in which this incentive is granted, the employer must keep evidence that has no debts before Social Security and Tax Authorities;

Violation of the duties above determines the immediate termination of the support and restitution or payment of the sums that were already received or exempted from Instituto do Emprego e Formação Profissional and Instituto da Segurança Social.

The Labour Law Department of Belzuz Abogados, S.L. – Portugal is available for further clarifications on this matter. Our team will continue to comment the publications and entry into force of legal documents about the impact of the COVID-19 pandemic on employment relationships, as well as the details of adopted measures.


(1) Support to progressive resumption is still pending regulation. However, according to the Government’s Economic and Social Stabilisation Programme, it will replace the simplified lay-off as from 1 August (and will not include the possibility to suspend employment contracts as it will only allow for the reduction of regular working hours).

 Vera Madeira Duarte Vera Madeira Duarte 

Labor Law department | (Portugal)

 

Belzuz Abogados SLP

This publication contains general information not constitute a professional opinion or legal advice. © Belzuz SLP, all rights are reserved. Exploitation, reproduction, distribution, public communication and transformation all or part of this work, without written permission is prohibited Belzuz, SLP.

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