The various rules approved since the declaration of the state of emergency for the purpose of regulating ERTEs have generated a series of legal questions on which employers require clarification. One example is the uncertainty surrounding the commitment to maintain jobs, in a scenario which has proved to be more complicated and longer lasting than had been envisaged. We analyze the legislation approved in this respect and the main points to be borne in mind in this context.

One of the first rules to be enacted by the Government in response to the halting of economic activity due to the COVID-19 pandemic and the declaration of the state of emergency, was Royal Decree-Law 8/2020 of March 17, 2020, on urgent and extraordinary measures to confront the economic and social impact of COVID-19. This established new categories of temporary lay-off procedure (ERTEs) on the grounds of force majeure (article 22) and on production-related grounds (article 23), and envisaged a specific regime — more beneficial than the ordinary regime — applicable to the benefits corresponding to workers affected and to the Social Security contributions payable by companies whose activity has been halted due to situations of force majeure (article 24).

These extraordinary measures are conditional upon the company committing to maintain their employment levels for a period of six months as from the date of resumption of business.

The wording of such commitment is nevertheless somewhat vague, leaving a number of questions to be answered. Does the expression “extraordinary measures” refer only to those measures affecting employers (exemption from the payment of contributions) or does it also refer to those affecting workers (unemployment benefits)?  Is it sufficient simply to maintain the total number of workers, irrespective of the type of contract, or should they be the same employees who were affected by the ERTE? What is the starting point of the six-month term referred to. Is this commitment applicable in cases of justified dismissal or resignation by the employee? What about businesses whose activity is clearly seasonal in nature? What will the consequences be if a business is unable to meet its commitment? And then there is what is perhaps the most important question of all: what happens if the situation — which the Government had expected to be short-term — becomes more permanent, forcing the company to dismiss employees?

Due to the uncertainty generated, the wording of this commitment has been amended twice. The first such amendment was implemented through Royal Decree-law 11/2020 of March 31, 2020 adopting additional urgent social and economic measures to confront COVID-19, the second being implemented through  Royal Decree-law 18/2020 of May 12, 2020 on social measures to safeguard employment.

In addition, Royal Decree-law 24/2020 of June 26, 2020 on social measures to reactivate employment and protect individual contractors and competitiveness in the industrial sector and Royal Decree-law 30/2020 of September 29, 2020 on social measures to safeguard employment have made it easier, in two ways, to obtain an exemption from the payment of employer social security contributions: on the one hand, by envisaging the application of such exemption not only to ERTEs on the grounds of force majeure, but also to ERTEs on economic, technical, organizational and/or production-related grounds (known as ERTE ETOP); and on the other hand, by increasing the term of this arrangement, which is currently set to last until January 31, 2021.

On the other hand, the Directorate-General of Employment of the Ministry of Employment and Social Economy has issued a number of rulings in response to queries filed by various legal operators (which have no direct legislative value but are useful as an indication of the interpretative criteria applied) which analyze the obligations deriving from this commitment.

Judging from the ways in which the rules in question have variously been worded, and the interpretation offered by the Directorate-General of Employment, the main features of the commitment to maintain jobs are as follows:

  1. The obligation incumbent on businesses to maintain employment contracts relates solely and exclusively to workers affected by the ERTE.
  2. The obligation is nominative in nature, meaning that the employment contracts which are required to be maintained are precisely those which were affected by the ERTE (in other words, the obligation cannot be met by dismissing workers affected by an ERTE and contracting others in their place).
  3. The obligation is not deemed breached in the case of a justified dismissal on disciplinary grounds, nor in any other situation of termination at the worker’s behest (for example, resignation, permanent disability, or retirement of the worker). It should be stressed that these exceptions to the rule do not include dismissals on objective grounds of any type, even where justified, nor the retirement of the actual employer.
  4. In cases of termination of temporary contracts, neither is the obligation to maintain jobs deemed breached “where the contract terminates due to expiry of the stipulated term or the completion of the project or service forming its subject-matter or where the activity envisaged in the contract cannot be carried out immediately”. It is very important to reconcile this provision with the rule envisaging the obligatory prolongation of the term of temporary contracts affected by an ERTE.
  5. The six-month term begins at the point of “resumption of the activity, which is understood to refer to the actual return to work of the persons affected by the proceeding, even where such return is partial or affects only a part of the workforce”. This would appear to indicate that the starting point of the six-month term is the point at which the first of the employees affected by the ERTE returns to work.
  6. Up to three special situations are nevertheless envisaged in relation to the term, and these should be taken into account by employers:
    1. In the case of an ERTE on production-related grounds taking place under the provisions of the aforementioned Royal Decree-law 24/2020, where the requirements applicable for an exemption from the payment of Social Security contributions are met, the six-month term of the commitment is to be counted as from the point of entry into force of that rule (i.e. June 26).
    2. In the case of new ERTEs taking place under Royal Decree-law 30/2020, where the new exemption from Social Security contributions envisaged in that rule is applied, the six-month term is to be counted as from the date of return to work by employees.
    3. However, when an employer carries out one of these latter ERTEs but it derives from an earlier one, the six-month term of the new commitment to maintain jobs is counted from the point at which the previous commitment — by which the employer was already obligated — comes to an end.
  7. The commitment to maintain jobs is not applicable to employers which are “at risk” of undergoing insolvency proceedings. The use of the expression “at risk” is also somewhat vague, making it difficult to tell for sure, at this point in time, the cases in which such exception shall be deemed applicable.
  8. Finally, the consequences of breaching the commitment to maintain jobs are the refunding “of the full amount of the contributions for which an exemption from payment was obtained, along with the corresponding surcharge and late-payment interest”. This wording, once again, gives rise to certain interpretative problems, since it is not indicated whether the refund in question is that corresponding to the workers in respect of whom the commitment has been breached (bearing in mind that the obligation is nominative), or to all the employees affected. If this latter interpretation is correct, an employer with a large workforce could be required to refund the exempted contributions corresponding to all its workers because the dismissal of just one employee has been declared unjustified.

Several of the legal queries which arose initially have been resolved although others have since arisen — especially in relation to the term of application — due to the gradual accumulation of rules. Still to be addressed, however, is the problem of how to maintain this commitment in a situation which is proving, without doubt, to be far more complex and  longer-lasting than had been envisaged. Given the slump in economic activity, the high rates of unemployment, the worrying figures recorded by the tourism sector and, above all, the emergence of new outbreaks or flare-ups which are forcing businesses to halt their activities once again without knowing how long for, the extent to which companies will reasonably be able to maintain their volume of employment for as long as is required is unclear.

Mauricio Maggiora

Garrigues Employment & Labor Law Department