Last Thursday March 12th 2020, urgent measures were adopted to respond to the economic impact of COVID-19 which were approved through the publication in the BOE on Friday March 13, 2020 of Royal Decree-Law 7/2020, which content and economic and fiscal repercussion you can check again on our website at the following link: https://www.vilar-asociados.com/en/uncategorized/exceptional-measures-approved-in-the-economic-field/
STATE OF EMERGENCY AND TOTAL LOCKDOWN OF SPAIN
Last Saturday March 14th 2020, General Provisions were adopted to expand the measures previously approved last March 12th, which have been approved with the publication of Royal Decree 463/2020 of March 14th 2020, that declares the state of emergency for the management of the situation of the health crisis caused by COVID-19.
The declaration and management of the state of emergency is an instrument under our rule of law, contained in our Constitution, and dealt through the Organic Law 4/1981 of June 1 of the states of emergency.
By way of summary, it has been disposed that:
1. The state of emergency extends to the entire national territory.
2. Its initial duration will be 15 calendar days, that is, until March 30th, 2020.
3. The freedom of movement of people is limited, and they may only circulate on public roads to carry out the following activities while the state of emergency lasts:
o to acquire food, pharmaceuticals and first need products.
o Travel to receive healthcare.
o Commuting to the workplace.
o Return trips to the habitual place of residence.
o Assistance and care for people in vulnerable situations.
o Travel to financial and insurance entities.
o Displacement due to force majeure or need.
o Travel by vehicle for refueling.
o Any other activity of a similar nature that must be carried out individually, unless accompanied by a disabled person or for another justified cause.
IMPACT OF THE CRISIS
CLOSURE OF ESTABLISHMENTS AND RECREATIONAL ACTIVITIES, HOTEL AND RESTORATION ACTIVITIES AND OTHERS.
In its article 10, Royal Decree-Law 7/2020 published on Saturday, March 14th, suspends the opening of retail stores and establishments to the public, except for:
1). Retail commercial establishments for food, beverages and first need products.
2). Retail commercial establishments dedicated to:
a. Sale of pharmaceutical products.
b. Medical services.
c. Services / sale of optical products.
d. Sale of orthopedic and hygienic products.
e. Hairdressing services. This point has been modified by Royal Decree 465/2020 of March 17th, being only allowed the rendering of hairdressing services at home.
f. Sale of stationery and press products.
g. Sale of pet food.
h. Internet sales, telephone products or correspondence.
i. Fuel supply
j. Tobacco shops.
k. Sale of technological and telecommunications equipment.
l. Dry cleaning and laundry services.
3). The permanence in establishments that have the authorized opening, will be limited to what is strictly necessary so that consumers can purchase the food and products of first necessity.
4). The opening to the public of establishments dedicated to leisure and entertainment is suspended.
5). Hotel and restaurant activities are suspended, only home delivery services can be provided.
6). Verbenas, parades and popular festivals are suspended.
7). Nothing has been said yet about the services provided by domestic workers, therefore, these services have not been suspended for the moment.
TEMPORARY LAY-OFF PROCEEDING- ERTE – YES OR NO?
Many of our clients have expressed their concern about the direct consequences of the crisis on their businesses; many forced to close their businesses by mandate and all of them at the prospect of having to continue paying their employees’ payrolls and social security with uncertain income expectations in the midst of a paralyzed economy.
The concern especially affects the restaurant and hospitality businesses that either already had a permanent workforce or had expanded the same face to the Easter and summer campaign. The government is expected to announce some other type of measures to help SMEs and the self-employed, but in the meantime, those businesses that have been forced to close will have to continue paying their employees’ payroll and social security unless they file a temporary lay-off proceeding, known as ERTE in Spanish.
The ERTE is a proceeding regulated in article 47 of the Workers’ Statute and can consist of either a temporary suspension of employment contracts or a reduction in working hours. The procedure to carry out the ERTE is ruled by Royal Decree 1483/2012 of October 29 and its communication and compliance with its requirements are controlled by the Labour Inspection and Social Security.
As its name points out, the ERTE is temporary, that is, it leads to the suspension of the employees’ contracts for a certain time, after which the company will have to call back to work the workers who have been affected by the ERTE. During the period established in the ERTE, the company will have to continue paying 100% of the social security contributions, however, the employer will not have to pay the payroll or severance. Workers affected by an ERTE may apply for unemployment benefit, which they will receive provided they have contributed for more than 360 days or when their income does not exceed 75% of the inter-professional minimum wage.
As the media are reporting today, one of the demands that unions are making to the government is that companies be exempt from paying these social security contributions during the period of lockdown and that they complete the salary of these employees until 100% of their income. There is still nothing approved in this regard.
In the current state of emergency, the start of this procedure would be regulated by article 31 of Royal Decree 1483/2012 of October 29, which, based on the existence of force majeure, could be initiated whatever the number of workers affected, without the need to undertake consultation periods.
The duration of an ERTE is determined by estimating the duration of the period that motivates the suspension of contracts or reduction of working hours. If this situation ends earlier than expected, the employer can always request employees to come back to work before the term established by the ERTE, therefore, in the current situation, it seems reasonable to request a period larger than the one of 15 days established by the state of emergency.
ADDITIONAL PROVISIONS WITH SUSPENSION OF PROCEDURAL, ADMINISTRATIVE, PRESCRIPTION AND EXPIRY DEADLINES.
The additional provisions of Royal Decree-Law 7/2020 published on Saturday, March 14th, provide for the suspension and interruption of the periods provided for in :
o Procedural laws for all jurisdictional orders .
o The processing of proceedings with public sector entities.
The calculation of the terms and deadlines will be resumed at the moment that said Royal Decree loses its validity or, where appropriate, its extensions.
Within the provisions, the suspension of the statute of limitations and the expiration of any action and right during the period of validity of the state of emergency and, where appropriate, the extensions thereof that may be approved, were also approved.