Member Article

Assistance to maintain employment contracts in companies facing a proven business crisis.

Ministerial Order 71-A/2020 of 15 March defines and regulates the terms and conditions to award immediate assistance for employers and employees affected by the outbreak of the COVID-19 virus. The assistance is intended to maintain jobs and to mitigate the extreme difficulties that many businesses are now facing. Thishelp isextraordinary, temporary and transitional in nature. The Ministerial Order was published in the official gazette, Diário da República, 1stSupplement, Series I of 15/03/2020. It was then rectified by Declaration of Rectification 11-C/2020 of 16 March and amended byDecree 76B/2020 of 18 March.

 

Ministerial Order 71-A/2020 of 15 March (“Order 71-A/2020”) 1 approves four immediate extraordinary measures to help employers and employees affected by the outbreak of COVID-19. These measure are:

a) Extraordinary assistance to maintain employment contracts in companies facing a business crisis, with or without training;

b) Creation of an extraordinary training plan;

c) A temporary exemption from payment of the social security contributions payable by the employer; and

d) An extraordinary financial incentive to support the normalisation of the company’s activity.

Order 71-A/2020 defines and regulates the terms and conditions of the assistance referred to above. It includes a measure inspired by the concept of the layoff, both in structure and in the form and amount of payment. However, it differs from the layoff because it does not lead to the suspension of employment contracts and it has a greatly simplified procedure.

It is a temporary measure to provide extraordinary assistance to make it possible to maintain the employment contracts in private companies in a proven situation of business crisis (including companies in the social sector) that results from one of the following situations:

A complete stoppage in the operations of the business or establishment resulting from a disruption or break in global supply chains, or the suspension or cancellation of orders; or

A sudden and sharp fall of at least 40% in billing in the 60 days prior to application to the Social Security compared with the corresponding period in the previous year or, for those that went into business less than 12 months ago, the average of this period.

1. Extraordinary assistance to maintain employment contracts in a situation ofproven business crisis

• This measure takes the form of help in paying the salaries of employees of companies that fall into any of the situations mentioned above. To receive this help, companies must inform the employees concerned in writing and indicate the expected duration of the interruption in operations. If they exist, companies must also first hear the trade union representatives and the works councils.

• Order 71-A/2020 has created a mechanism to declare and prove the existence of a crisis. This consists in submitting a certificate from the employer and a certificate from its accountant. Companies that benefit from this measure can be subject to an inspection by the public authorities at any time. If this happens, they must produce documentary evidence to prove the facts on which the application and any renewals of it are based.

• The financial support to be granted to businesses is an amount equal to 2/3 of the employee’s gross salary, up to a maximum of 3 x the RMMG (Minimum Monthly Guaranteed Salary), which is €1,905). Of this, 70% is financed by Social Security and 30% by the employer. The support has a duration of 1 month and, exceptionally, it can be extended on a monthly basis up to a maximum of 6 months.

• This support can be combined with a training plan approved by the IEFP, I.P. (Institute of Employment and Professional Training). This includes a training grant of 30 % of the SSI (Social Support Index), which is €131.64, with half for the employee and half for the employer (€65.82 each). The grant and the training costs will be paid by the IEFP, I.P.

2. Extraordinary training plan

• Companies can apply for this support as an alternative to the measure mentioned above. It provides assistance for part-time professional training to be given to each employee covered. It is supported and given by the IEFP, I.P. and the duration is 1 month. It has as a reference the hours of training attended and the upper limit is 50% of the gross salary and it may not exceed the RMMG (Minimum Monthly Guaranteed Salary).

• If they choose to receive this support, employers must inform their employees in writing of the decision to begin a training plan and of its expected duration. They must also send the information immediately to the IEFP, I. P., together with the certificate from the employer and the certificate from its accountant.

 

 

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