Bill would extend COVID furlough schemes through June 30, 2020

Automatic summary, not yet reviewed

1. The bill would keep companies with a furlough scheme (ERTE) based on Article 22 of Royal Decree-Lawroyal decree-law A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses. 8/2020 in a situation of total or partial force majeure due to COVID-19, as long as the causes last and at most until June 30, 2020. Companies with a partial recovery must bring back the workers needed, favoring reduced hours over suspensions.
2. Furlough schemes started after the lockdown for economic, technical, organizational or production reasons, until June 30, 2020, would follow Article 23 of Royal Decree-Law 8/2020. If such a scheme starts after a force majeure scheme ends, its effects would be backdated to that end date.
3. The extraordinary unemployment benefits in Article 25 of Royal Decree-Law 8/2020 would apply until June 30, 2020, and those in section 6 of that article until December 31, 2020.
4. The bill would exempt companies from part of their Social Security contributions for May and June 2020, with different percentages depending on whether the company had fewer than 50 workers or 50 or more, and on whether the force majeure is total or partial. To apply, the company files a responsible declaration through the Sistema RED system.
5. Companies with a tax domicile in tax havens could not use these furlough schemes. Companies using them could not pay dividends for the fiscal year unless they first repay the contribution exemption; this limit does not apply to companies with fewer than 50 workers as of February 29, 2020.
6. The Government could extend the furlough schemes and exemptions if health restrictions persist, and a tripartite monitoring commission would be created with the Government, employers and unions. Companies must keep workers employed for six months after resuming activity or repay the exempted contributions with surcharges and interest.

Who it affects

• Companies and entities with a COVID-19 force majeure furlough scheme (ERTE): They could keep applying it, totally or partially, until June 30, 2020, with Social Security contribution exemptions.
• Workers affected by those furlough schemes: They keep the extraordinary unemployment benefits, and the period counts as contributed.
• Companies starting furlough schemes for economic, technical, organizational or production reasons: The special regime of Article 23 of Royal Decree-Law 8/2020 would apply to them until June 30, 2020.
• Companies with a tax domicile in tax havens: They are excluded from these furlough schemes.
• Companies using these furlough schemes: They could not pay dividends for the year unless they repay the contribution exemption, if they have 50 or more workers.

Words worth knowing

ERTE (Expediente de Regulación Temporal de Empleo)

A Spanish furlough scheme: a procedure by which a company temporarily suspends contracts or reduces its workers' hours.

Fuerza mayor (force majeure)

An external, unforeseeable cause, such as a health crisis, that prevents normal business activity.

Exoneración de cuotas

Exemption from paying part or all of the company's Social Security contributions.

Paraíso fiscal

Tax haven: a country or territory with very low or no taxes, so classified under Spanish law.

Real decreto-ley

Royal decree-law: a rule with the force of law that the Government can pass in urgent situations, later validated by the Congress of Deputies (Congreso de los Diputados).

royal decree-law

A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses.

decree-law

A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses.

It summarizes the text as it was introduced. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries