Considering the spread of COVID-19 disease, measures were taken in an attempt to reduce contamination by “closing the economy”. This recently published Decree-Law is meant to support companies in an effort to reduce the devastating effects of the pandemic. In this context, measures were approved to increase the support already given to companies, in order to protect the needs felt due to the mandatory confinement period. The extraordinary support for the reduction of the employer’s economic activity, the extraordinary support for maintenance of employment contracts in a situation of business crisis also known as simplified “lay off” and support for the “progressive recovery” were therefore extended by this Decree Law.
The support of “progressive recovery”, is an aid measure for employers affected by the pandemic which face themselves in a situation of business crisis, with a reduction of invoicing of at least 25%.
The employer can access this support with a temporary reduction in the normal working time of all or some of its employees.
This support is extended up until 30th September 2021, where new benefits have now been created, such as the new exemptions in Social Security contributions specially aimed at the tourism and cultural, events and show sectors.
In this framework, the employee was already entitled to receive a monthly salary compensation corresponding to the non worked hours, paid by the employer, in the equivalent amount of four fifths of the normal gross remuneration, with the limit corresponding to three times the guaranteed monthly remuneration (RMMG).
This Decree-Law introduces, a partial and full exemption of payment of Social Security contributions by the employer, during March, April and May 2021. The employer that had a reduction of invoicing below 75%, running an activity in the tourism and/or cultural sectors, supporting part of the salary compensation, corresponding to the non worked hours, is now entitled to the full exemption of payment of those contributions to its charge for the employees covered.
The employer, in the same situation, but with a reduction in invoicing equal or higher than 75% is now entitled to a partial exemption of 50% of payment of Social Security contributions on the same terms, plus the cumulative right of the support referred corresponding to 100 % of salary compensation, being borne by Social Security.
Such benefits only apply in cases where the level of employment is maintained while the support is in force, as well as in the following 90 days’ period, a level of employment which has to be the same as that observed in the previous month of the application filed.
In the case of simplified lay-off or extraordinary support for the maintenance of the employment contract in a situation of business crisis, there is again the possibility of access this support. The measure applies to Companies which activity has not been suspended or terminated, facing a decrease of activity (total or partial) of more than 40% in the month prior to the application to be made in March and April 2021 which has been significantly affected by the interruption of global supply chains or the suspension and cancellation of orders, in situations where more than half of the billing in the previous year has been carried out to activities or sectors that are currently suspended or closed.
The supporting measure now is also conferred to self-employed workers, individual entrepreneurs, managers and members of statutory bodies with management role, whose activity falls within the tourism, culture, events and show sectors, and who are in a situation of proven total stoppage of their activity or the activity of their sector is entitled to an extraordinary support due to the reduction of economic activity for the corresponding period.
As for the new incentive to normalise business activity, it can be applied by employers that have benefited from the extraordinary support for the maintenance of an employment contract or from the extraordinary support for the “progressive recovery” of activity. Employers under those circumstances will be entitled to the payment of 1 or 2 salaries per employee covered.
If it’s applied for up until 31st May 2021 the value is of two RMMG, and it will be paid by installments over a six month’s period. If it’s applied for on a subsequent date up to 31st August 2021, it will be paid for a value equivalent to 1 RMMG paid at once, corresponding to the period of three months. In applications made up to 31st May 2021, and during the 2 first months of this measure the right to 50% exemption of payment of Social Security contributions which would be borne by the employer accrues.
This new incentive, only applies, upon compliance of certain duties by the employer, who must maintain in a proven manner, the regular payments of Social Security and Taxes, as well as refrain from terminating, employment contracts through collective dismissal, individual redundancy and dismissal due to lack of performance of the employee.
Employees shall maintain, while the measure is in force, as well as for a period of 90 days following such measure, the level of employment observed in the month prior to submission of the application. For this purpose, the contracts that cease on their term or due to disciplinary action or by resignation of the employee do not count.
This support is not cumulative, simultaneously with the support provided for the “progressive recovery” in a situation of business crisis, nor with the simplified lay off regime, not also being cumulative with the decrease or suspension set out in article 298 and subsequent articles of Employment Code.
5th April 2021
Cláudia Vaz Póvoa
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