Coronavirus: Spain in state of alarm

Since last Thursday, March 12th, when the indefinite suspension of lessons was announced, the events and measures caused by the coronavirus are constantly increasing, confronting companies and businesses to a complex and unknown reality.

Unfortunately, the governmental measures in the labor-social and tax-fiscal field are so far notoriously scarce. Therefore, the access of the legal tools for companies, freelancers and workers in these circumstances are limited.

We continue to work from home to meet any need you may have and we also remain in constant union not only with the different professional associations we belong to, but with our professional offices network iusTime, attentive to any novelty or solution that could be approved, that we will inform immediately.

We are aware of the appropriate lobbying work that employers and unions, also including the professional associations themselves, are exercising. For that reason, we trust that at cabinet meeting that will take place on Tuesday 17 March, as the Prime minister himself has anticipated, measures that facilitate that facilitate the adoption of solutions in the field of companies and businesses, as well as aid to businesses, freelancers and families will be approved.

In particular, the Spanish Government is being asked to simplify and to accelerate the procedures for the temporary regulation of employment, with retroactive effects and to recognise the current state of alarm as a force majeure. The suspension of the contributions and taxes payment. And the access to unemployment without deprivation periods. In case of the self-employed, articulate the appropriate benefit due to the termination of activity.

Waiting for these legislative measures, promised but whose specificity or detail are unknown, the current situation is the one we summarize below. Without prejudice to the study of your case in our office, since each client has his own reality. For that purpose, we request you to contact us, if you have not already done it.

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The problem, regarding business and companies is the following:

A.- Activity suspensions or closures by order of the authority:

1.- The Spanish Government has decreed, from March 14th, the suspension of the opening to the public of locals and retail establishments.

● ‘Retailer’ is understood as the one who sells by units to the final consumer.

● The rule does not exclusively refer the retail stores, for that, the suspension it’s applicable to all retailers, whether is a store or not.

● The opening to the public is suspended, but not the activity of the business. That is, the activity can continue if an establishment open to the public is not used, also by carrying out internal tasks.

● There are specific exceptions to this suspension, which are: retail stores of food, beverages, products and goods of first need, pharmaceutical establishments, medical, optics and orthopedic products, hygienic products, press and paperwork, fuel for automotive, tobacconists, technological and telecommunications equipment, food for pets, online commerce, telephone or correspondence, dry cleaners and laundry.

● The exceptions above do not enable to consume any product in these establishments, which must avoid crowds, as well as control the minimum safety distances.

2.- The Spanish Government has decreed, from March 14th, the suspension of the hostel and restaurant industry activity, only home delivery services may be provided.

3.- In general, the spirit of published rules is the called ‘flexible confinement of the population’. Employers, both public and private, are obliged to facilitate measures enabling the working activity of employees by non-face-to-face means whenever possible.

B.- Abrupt decrease of activity due to several reasons:

1.- Total or partial lack of sales orders (for example, in school transport, in supplies to the hospitals industry, etc.) that paralyzes production.

2.- Impossibility of production due to shortages or logistics (for example, exports or imports from countries with closed borders, absence of maritime container operators, stock breaks without possibility of replacement due to lack of supply of materials, components or spare parts, etc.).

3.- Significant losses in the staff or personnel. Not only because of contagion that causes the appropriate sick leave, also due to mandatory sanitary confinement, or quarantine, of those who have been in contact, ordered by the competent health authority, or agreed by the representation of the workers by there is an imminent risk of contagion. Or if in the workplace environment it is necessary to adopt preventive measures, recommended by the concerted prevention service when evaluating the risk of exposure, that cause the stoppage or reduction of the activity (for example, to keep the minimum safety distances or to avoid crowds ).

C.- Absenteeism rates that prevent regular activity:

1.- Working people who are unable to go to the workplace because they must take care of school age children.

2.- Working people unable to go to the workplace due to the reduction in transport services. Or that they have been quarantined because infection, outside of their work environment.

D.- Unexpected increase in activity:

1.- There are some sectors where the problematic is the inverse, they are experiencing an increase in their activity. In this case the solutions are more pleasant and go through the irregular distribution of the working day that increases resources, the establishment of incentives, incentives bonus, or their combination.

Without a doubt, for all mentioned above, for companies and businesses is, as we said, a complex and unknown problem.* * *

The solutions that can be adopted at the moment, in the absence of the package of measures that can be adopted at the cabinet meeting of the Council of Ministers on Tuesday March 17th, and that our recommendation is to wait for them, would be:

I.- Solutions that do not involve the suspension of the employment contract.

To implement teleworking or work from home. To adapt the working days, through their irregular distribution, their time flexibility, or their agreed reduction. paid licenses and holidays. To concrete as ‘non-suitable’ the trial periods and the non-renewal of temporary contracts.

II.- Solutions involving the suspension of the employment contract.

For the suspension of the employment contract, a temporary employment regulation (ERTE) file must be processed and may be of two types, as explained below. Workers affected by an ERTE receive unemployment benefit (if they have been contributing enough) and the company continues to be forced to contribute to the Social Security Contribution. The same procedure and effect could be to temporarily reduces working hours.

A. ERTE due to force majeure.

An ERTE can be processed for reasons of force majeure if there is a clear assumption of direct involvement, without leading to other interpretations. We understand that it would be the case of the suspension of the activity or closure due to being within the assumptions decreed in the regulations to that effect. Or when due to health reasons it is necessary to suspend business activity, when ordered by the authority, have to adopt isolation measures, or when the absenteeism rate caused by such causes is very high.

This abbreviated procedure is initiated by the company’s request to the labor authority, which must accompany the evidence, and its simultaneous communication to the legal representatives of the workers, who have the status of interested part. The resolution of the labor authority must be issued within five days of the request and must be limited to verifying the existence of the force majeure alleged by the company, for which it must require a report to that effect from the Labor and Social Security Inspectorate. Once the determination of force majeure has been made, the company must decide on the suspension, which will take effect from the date of the event causing the force majeure.

B. ERTE for economic, technical, organizational or production reasons

An ERTE can be processed for economic, technical, organizational or production reasons when the company is faced with indirect causes that make it impossible to provide the services.

This type of ERTE requires greater formal or procedural requirements than the previous one. To begin with, there is a mandatory period of consultation with the legal representation of the workers, which is usually a real negotiation. The labor authority transfers the company’s notification to the unemployment benefits agency and obtains a mandatory report from the Labor and Social Security Inspectorate on the details of the notification and the progress of the consultation period. The report must be processed within a non-renewable period of fifteen days from the notification to the labour authority of the end of the consultation period. When the consultation period ends by agreement, it will be presumed that there are justifiable grounds. It is the responsibility of the company to decide about the suspension, which will take effect from the date of its communication to the labor authority, unless it holds a subsequent one.

III.- Solutions related to the payment of tax debts.

Payment in instalments of tax debts with no added interests over six months as long as the company has no debt with the Tax Office or Social Security, related to amounts whose payment deadline goes from the 13th of March to the 30th of May and up to 30,000 Euros. No interest will be paid over the initial three months.

III.- Medical assistance and sick benefit.

Those affected by the virus or in quarantine will have to receive health assistance from the GP or the Spanish health system, and the employee or self-employed will receive a sick-note with the legal effects of an accident at work: the payment of the sick benefit will be made by the employer but Social Security will compensate the payment of such benefit from the first day. The payment will correspond to 75% of the average salary of the employee. In some cases, when the collective agreement says so, employers will have to compensate the employee for the rest of the amount up to the usual salary.

Either the employer or the employee will have to provide their legal advisors with the sick note the GP or any other doctor from the public health system has given them.

IV.- New contracts with reduced National Insurance Payments

New permanent employees under certain conditions will have discounted National Insurance payments until June 2020.

V. Other legal considerations.

– The payment of the lease of rented business premises may be subject to revision in case that the business cannot work under normal conditions.

– Some insurance contracts may become partially null and void under the current emergency-scenario situation, for instance, some insurance companies may be reluctant to cover accidents in case that the current regulations have not been respected.

Please, do not hesitate to contact us if you require any further information and we will come back to you as soon we have any further news.

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