What is the simplified Lay-off, after all?

It is an exceptional and temporary measure aimed at maintaining jobs in companies totally or partially closed by legal imposition 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 total or partial closure of the company or establishment, resulting from the duty to close facilities and establishments.


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 my company is benefiting from Gradual Recovery Support?

Companies may withdraw from the remaining Gradual Recovery Support period and subsequently request the Simplified Lay-off for the number of days their activities/establishments are suspended or closed.

The Simplified Lay-off and the Gradual Recovery Support are not cumulative.


What if the restrictions on my company's activity have been lifted?

In these cases, companies can benefit from the Gradual Recovery Support. 


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.


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 1,396.50 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 665.00 euros with a maximum limit of 1,995.00 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 665.00 euros and the maximum of 1,995.00 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.

If an employee receives a monthly amount lower than his/her gross normal salary, the amount of compensation - paid by social security - is increased to the extent strictly necessary to ensure that remuneration, up to a maximum of a gross normal salary corresponding to EUR 1,995.


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, as long as the duty to close the Company’s facilities is maintained.

Companies may request the simplified Lay-off, for the number of days of suspension or closure.

The extension of the extraordinary support is requested monthly, through the Direct Social Security.


Until when may companies apply to the Lay-off?

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.


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.




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.