What is the simplified Lay-off, after all?

It is an exceptional and temporary measure aimed at maintaining jobs in companies in a business crisis, which may choose between reducing normal working periods and/or suspending employment contracts.

 

What are the access criteria?

The company must be in a business crisis. For these purposes, it is considered a business crisis situation the following scenarios: (i) the total or partial closure of the company or establishment, resulting from the duty to close facilities and establishments; (ii) the total stoppage of the company's or establishment's activity, resulting from the interruption of global supply chains, or the suspension or cancellation of orders; or, (iii) the abrupt and sharp drop of at least 40% in invoicing in the 30 days prior to the request for support, with reference to the monthly average of the 2 months prior to that period, or in relation to the same period, or even when the activity took place less than 12 months ago, in relation to the average period of activity.

 

What's the procedure?

Regarding the procedure, after prior hearing of the union representatives and/or workers' committees (if any), the company only has to communicate to the employee, in writing, the decision to request extraordinary support for the maintenance of the jobs, indicating their foreseeable duration and, afterwards, send the electronic application to Social Security, accompanied by the employer's declaration containing a summary description of the business crisis situation affecting him and a nominative list of the workers covered and their social security number. Depending on the business crisis situation, it may be necessary to attach a certificate from the certified company accountant attesting this.

Lay-off is applicable even without the employee's agreement.

 

What if the restrictions on my company's activity have been lifted after the state of emergency has ended?
In these cases, companies will continue to be able to benefit from the simplified lay off measure provided for in Decree-Law 10-G/2020 of March 26 in its current wording, provided that they resume activity within eight days.

 

What are the differences between the simplified Lay-off and the Lay-off provided in the Labour Code?

The simplified and the Lay-off provided for in the Labour Code are essentially based on the same basis. However, they differ in the procedure to be adopted, which is more simplified, and in the access criteria.

As opposed to the common rules regulated by the Labour Code, the simplified Lay-off also allows companies that make use of it to benefit, among others, from a number of supports, of which we highlight: (i) temporary exemption from Social Security contributions; and (ii) an extraordinary incentive to support the normalisation of the company's activity with the value of one NMW (EUR 635.00) or two NMW per employee covered, depending on the option to be made by the company and in terms that will still be regulated

 

Does the Company have to put all its workers in Lay-off?

The company doesn't have to put all workers on Lay-off. To cope with the situation, the company may decide to adopt measures to reduce the normal working period and/or suspend the employment contracts of all or only some of the workers, provided that such measures are the appropriate means to ensure the company's recovery and are essential to ensure its viability and maintenance of jobs.

In the simplified Lay-off - unlike the Lay-off regulated by the Labour Code - there are no explicit criteria for the selection of employees to be put into Lay-off. However, the selection of employees must take into account objective criteria of reasonableness, linked to the company and the activity it carries out, and cannot be based on criteria that may be considered discriminatory.

 

What types of Lay-off are there?

In both Lay-off schemes (simplified and the one regulated by the Labour Code) there are two measures:

(i) reduction of the normal working period; and
(ii) suspension of employment contracts. The models may be combined cumulatively or alternatively.

The suspension of employment contracts presupposes the absence of any provision of work by the employee. 

Whereas, the reduction of the normal working period presupposes the maintenance of part of the employee’s work performance, which will be carried out on a part-time basis. This reduction may cover one or more normal working periods (daily or weekly) and may concern different groups of workers, in rotation. It may also cover the reduction in the number of hours corresponding to the normal working period, daily or weekly.

 

What is the value of the support?

In situations of suspension of the employment contract, the employer is entitled to receive a social security support amounting to 70% of 2/3 of the gross normal salary of each employee covered, up to a limit of 1,333.50 euros per employee, to support exclusively the payment of wages.

 

How much does a Lay-off employee receive?

In situations of suspension of the employment contract, the employee receives a compensation corresponding to 2/3 of the salary, or, if higher, to the minimum amount of 635.00 euros with a maximum limit of 1,905.00 euros, 70% of which is paid by the Social Security and 30% by the employer.

In the scenario of a reduction in working hours, the employee receives his or her remuneration in proportion to the time actually worked, and is entitled to compensation in the strict extent necessary to - together with remuneration for partial work - make up 2/3 of the remuneration he or she received before the reduction, taking into account the minimum limit of 635.00 euros and the maximum of 1,905.00 euros. In these cases, the compensation, if due and in the applicable part, will fall 70% to the Social Security and 30% to the company.

During the Lay-off period, the compensation due will be paid monthly to the employees by their employer. The support granted by Social Security will later be transferred to the employer directly by the latter.

 

Can the Company pay remuneration above the maximum limit for compensation?

Yes, there is no cap for the employer, who may pay, whether in full or in part, the difference between the compulsory compensation and the limit of the gross normal pay due to the employee corresponding to his/her normal working period.

The employer is entitled to a temporary exemption from the payment of social security contributions regarding the total remuneration paid to the employees concerned, as well as to the members of the statutory bodies, meaning that the exemption also covers the amount paid in excess of the limit of 2/3 of the gross normal salary.

 

What is the duration?

This scheme has a duration of one month and can be extended monthly, up to a maximum of 3 months.
The extension of the extraordinary support is requested monthly, through the Direct Social Security.

Companies that applied to the simplified Lay-off and reached the renewal limit by 30th June, may benefit from the extension of this support until 31st July 2020.

After the simplified lay-off, employers may apply to the traditional lay-off, regulated in the Labour Code, without the need to comply with the waiting period between the application of the two measures.

 

Until when may companies apply to the Lay-off?

Companies that have not applied to the Lay-off may file the initial application until 30th June 2020, in which case the application of the measure may be extended on a monthly basis up to a maximum of 3 months.

Nevertheless, companies that are required to close their facilities and establishments by virtue of a legislative or administrative order from a governmental source may continue to apply to the simplified Lay-off, as well as its extension, as long as this obligation is required. In this case, the 3 month limit does not apply.

 

Can the Company terminate employment contracts during the Lay-off period?

Pending the application of the simplified Lay-off scheme, as well as in the 60 days following it, companies are prevented from terminating employment contracts through collective dismissal and dismissal for termination of the job.

However, the Lay-off regime does not prevent other forms of termination than those already indicated.

 

Can the company hire during the Lay-off?

Although such understanding does not expressly result from the simplified Lay-off regime, it should be understood - by reference to the common regime - that companies are prevented from hiring employees to occupy jobs which, alternatively, could be occupied by employees who are covered by the Lay-off.

However, companies are not prevented from renewing employment contracts to fill jobs that can be secured by employees in Lay-off.

 

Does the Lay-off interfere with the counting of vacation days, and the value of vacation and Christmas allowances?

No. The time of reduction or suspension does not affect the salary and duration of the vacation period, nor does it affect the scheduling in general terms, and the employee has the right to the payment of the vacation allowance to be paid by the employer on terms equal to those due under normal working conditions.  The employee will also have the right to the Christmas subsidy in full, being the same paid by the social security in an amount corresponding to half of the salary compensation and by the employer in the remainder.

 

When the Lay-off is over, will the employee recover his job and his duties?

Yes. When the Lay-off period is over, the employee returns to his/her job and his/her duties and resumes his/her normal working hours.

 

Can an employee during the Lay-off work for another company?

Yes, the employee may work for another company during periods of suspension or reduction. However, should this happen, the employee in question must communicate this fact to the employer within 5 days from the start of employment in the new company, since it will be necessary to make an adjustment in his compensation. If he/she does not do so, the employee may lose the right to it and must return the amounts already received for this purpose.

On the other hand, the lack of communication may still be considered as a disciplinary infraction, which can give rise to the opening of disciplinary proceedings (we remind you that the rights, duties and guarantees of the parties are maintained during the reduction period, as well as those that do not presuppose the effective performance of work, during the suspension period).

As soon as the employee communicates this fact to his employer, the latter will have 2 days to inform the Social Security that he is working for a different entity.

 

 Is there any incentive for Companies after the Lay-off ceases?

Yes, Companies that have benefited from the simplified lay-off or the extraordinary training plan are entitled to an extraordinary incentive to return to normal business activity.

 

Is there any support for employees who have been covered by the Lay-off?

Yes, employees whose basic salary in February 2020 was equal to or less than EUR 1,270 (2x RMMG) and who, between the months of April and June, have been covered for at least one full calendar month by the simplified lay-off, are entitled to a stabilisation supplement.

 

What is the Gradual Recovery Support (“Apoio à retoma progressiva”)?

Yes. Companies with a turnover reduction of 25% or more in the month immediately preceding the month in which the initial application for support (or extension) is presented, compared to the same month of the previous year or compared to the monthly average of the two months preceding that period, or for those whose activity started less than 12 months ago, to the average of that period, may access the extraordinary support for the gradual restart of activity with a temporary reduction in the normal working period  (“NWP”) of all or part of their employees.

The temporary reduction of the NWP, per employee, has the following limits:

a) In the case of an employer with a turnover decrease of 25% or more, the reduction of the NWP per employee may be a maximum of 33% in October, November and December 2020;

b) In the case of an employer with a 40 % or more turnover decrease, the reduction of the NWP per employee may be a maximum of 40 % in October, November and December 2020;

c) In the case of an employer with a turnover decrease of 60% or more, the reduction of the NWP per employee may be a maximum of 60% in October, November and December 2020;

d) In the case of an employer with a turnover decrease of 75% or more, the reduction of the NWP per employee may be up to 100% in October, November and December 2020.

Employees covered by this measure are entitled to: (i) salary for the hours effectively worked paid by the employer and (ii) compensation for the hours not worked, in the amount of 4/5 of gross normal pay between the months of October to December 2020.

The maximum compensation amount is EUR 1,905.00 (3 x national minimum wage), and its calculation basis includes: (i) base salary, (ii) meal allowance when qualified as salary and (iii) bonuses, regular allowances (including shift bonus) and night work, when received for at least 10 months in the period of March 2019 to February 2020.

Employees covered by this measure will always be entitled to a minimum monthly amount of EUR 635.00 and may perform paid activity outside the company (the compensation being reduced accordingly).

Social Security pays 70% of the compensation, being the remaining 30% paid by the company.

In situations where the reduction in NWP is higher than 60%, i.e., a turnover decrease of more than 75%, the amount of compensation is adjusted to the extent strictly necessary to ensure that the employee receives, overall, a monthly amount equivalent to 88% of gross normal pay, up to a limit of EUR 1905. In these cases, the compensation is fully supported by Social Security.

If the Company’s turnover reduction is higher than 75%, an additional support of 35% of the gross normal salary for hours worked by employees with reduced normal working hours will also be paid by Social Security.

Micro, small and medium companies benefiting from this measure will also be entitled to a 50% partial exemption from the payment of social security contributions regarding the compensation paid to employees with a reduced working period, between the months of October to December 2020.

During the period of the measure and for a period of 60 days following its completion, companies are may not terminate employment contracts (or start the correspondent legal procedures) by:

(a) Collective dismissal;

(b) Individual redundancy; and/or

(c) Dismissal for unsuitability.

 

Can companies which have resorted to the Extraordinary Incentive, resort to the Gradual Recovery Support?

Yes. Companies that have applied for the Extraordinary Incentive to return to normal business activity until the 31st of October 2020, may, exceptionally, until the 31st of December 2020, give up this support and access the Gradual Recovery Support without having to return the amounts already received.

 

Can companies which have resorted to the lay-off regulated by the Labour Code resort to the Gradual Recovery Support?

Yes. Companies which have resorted to the application of the reduction or suspension measures regulated in the Labour Code (lay-off) and intend to access the Gradual Recovery Support, can do so, without being applied the impediment equivalent to half of the period previously used in the application of those measures. 

 

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This information is being updated on a regular basis.

All information contained herein and all opinions expressed are of a general nature and are not intended to substitute recourse to expert legal advice for the resolution of real cases.