Employment maintenance clause in ERTES What do I do after ERTE?

Since the publication, on March 14, of Royal Decree 463/2020, declaring a state of alarm for the management of the health crisis caused by COVID-19, a multitude of royal decrees have been carried out over the months depending on how the pandemic was developing and the situation in which the companies found themselves, proceeding with the extensions of the ERTES of force majeure, offering the possibility of exemption from quotas based on certain percentages, the number of employees and the corresponding CNAE of the different activities, in order to “safeguard” a situation that for many is proving to be very complicated.

Notwithstanding the above, many of the companies in the sector are now starting to think about what options they have as of May, if the ERTES are not extended and must readmit all their workers or how summer will affect sales and bookings and if they will be able to meet all personnel costs.

Therefore, the most important thing is to know what the current regulations say in order to make the right decision in one direction or another.

It is necessary to highlight one of the most important and most debated points, such as the issue of maintaining employment. El Royal Decree-Law 8/2020, of March 17, of extraordinary urgent measures to address the economic and social impact of COVID-19, as everyone will remember, imposed, for the first time, the obligation to safeguard employment for a period of six months from the date of resumption of activity for companies that had carried out an ERTE due to force majeure due to COVID-19, provided that they benefited from the exemption from Social Security contributions. Through the Royal Decree-Law 24/2020, of June 26, this measure was established for companies in ERTE ETOP and continued through the Royal Decree-Law 30/2020, of September 29, for those companies that will benefit from exemptions from social security contributions as of October 1, 2020. Finally, the Royal Decree-Law 2/2021, of January 26, for the reinforcement and consolidation of social measures in defense of employment, maintained, like the previous ones, the commitments to maintain employment of companies that have enjoyed Social Security exemptions for ERTES applied until January 31, 2021, also regulating a new obligation to safeguard employment for another 6 months for companies that apply exemptions for ERTES starting from February 1 and until May 31, 2021, either for companies that extend their ERTES or start a new one.

And why can these measures affect the business fabric? We must not forget that in the various royal decrees that have been published, in the case of benefits from exemption from quotas by companies, new periods of maintaining employment have been incorporated, which are closely linked to the exemption of quotas, for the sake of the continuity of workers in the machinery of companies and thus avoiding, or so they have tried, mass dismissals. And this is the case because, both in RDL 30/2020 and in the latter, RDL 2/2021, what the standard indicates is that companies will be committed to maintaining the level of employment for another six months, since, if the company were affected by a previously acquired commitment to maintain employment, the beginning of this will occur when the previous one has ended. Therefore, we could be faced with a period of 18 months of maintaining employment to which the company would be obliged.

In this regard, it should be noted that the legislation establishes that companies that fail to comply with this commitment to maintain employment must proceed to reimburse the full amount of the exempted contributions, including the surcharge and the corresponding late payment interest, except for the exceptions stipulated in the sixth additional provision of Royal Decree-Law 8/2020, of March 17, an issue that we will talk about later.

Although it is true that with regard to the accumulation of deadlines with respect to the maintenance of employment, there is an open debate where many consider it unfeasible and impossible to carry out, no less true is that the Labour and Social Security Inspectorate published an Internal Note on the consequences of non-compliance with the “employment safeguard”, which established the criterion of total return. This criterion was supported by the Ministry's General Labor Department, as well as by the General Social Security Treasury, although it is true that it leaves an open door for discussion in court. And with regard to this “total return”, we believe that a reflection must be made: if the spirit of the rule and its main purpose is to safeguard, in the future, the employment of all those workers who may have been affected by a temporary employment regulation file and the employer were forced to return all the exemptions of all his employees, wouldn't this pose a very serious threat to the viability of companies in the sector, probably leading to the disappearance of thousands of jobs? The answer would probably be a resounding yes, but to date there is no jurisprudence in this regard, and therefore the businessman must act, analyzing and evaluating any type of action depending on the particular situation of each company.

However, it is necessary to remember the provisions of the Sixth Additional Provision of RDL 8/2020 of March 17, of extraordinary urgent measures to address the economic and social impact of COVID-19, which indicates that the commitment to maintaining employment will not be considered unfulfilled, in the following cases: disciplinary dismissal declared appropriate, voluntary discharge of the employee, retirement of the worker, total or absolute permanent disability or severe disability of the employees, termination of temporary contracts due to the expiration of time agreed in a contract or completion of work or service and completion of the call of persons with a fixed-discontinuous contract, when this does not involve a dismissal but an interruption of it.

Likewise, and based on Royal Decree-Law 18/2020, of May 12, on social measures in defense of employment, it is established that the commitment to maintain employment will not apply to those companies where there is a risk of bankruptcy based on article 5.2 of Law 22/2003, of July 9, Bankruptcy Law in relation to Article 2.4 of the aforementioned law. In this case, and in the face of regulatory inspecificity or vagueness, the priority objective must be to have all the documentary evidence that proves the situation of the company, in order to assert this exception, if, on the part of the employer, he sees the need to proceed with the termination of his workers' contracts.

Throughout all these months and the different training and advice we have been offering, at TOURISM & LAW, we have always transferred the need to analyze on a case-by-case basis. Not always the most appropriate solution is to “put on the float, throw ourselves in the river and let the current carry us”, because then what do we do? Our objective must be the continuity of our companies and for this we must analyze the pros and cons of each step we take. As of today, we do not know if the ERTES will finally be extended or not and for that reason we have the obligation to study and evaluate the options available to us in order to make the appropriate decision, since in the event that this extension is not agreed by the Government, unions and employers, companies must readmit their entire workforce with the consequences that this would entail.

Mª Paz Abad (Lawyer-Director T&L)