COVID-19: unresolved labor matters after month of state of emergency

It is one month since the state of emergency was introduced, and its slowing or crippling effects on production activity have been compounded by the COVID-19 pandemic’s effects on the economy. In response to this negative and uncertain situation, a new emergency regulatory framework has been gradually constructed this month through a royal decree-law to support the continuity of production activity, facilitating temporary redundancy plans (“ERTEs”) and alleviating costs for companies in exchange for maintaining jobs, while also strengthening the protection for affected employees.

Whether it is due to the complexity of the situation and because action is being taken on several fronts that are difficult to reconcile or because the responses have been rushed or due to the economic uncertainty, the truth is that, in labor terms, some of the government’s measures leave a trail of legal uncertainty in their wake, which is not ideal for making decisions on the future at this time.

For example, we still do not have a clear response in at least five broad areas related to companies, namely:

1. Commitment to maintain jobs when implementing ERTEs

Under sixth additional provision of Royal Decree-Law 8/2020 (“RDL 8/2020”), “the special labor measures introduced by this royal decree-law will be subject to the company’s commitment to maintain jobs in the six months after its activity resumption date.”

It continues to be a subject of debate as to when this obligation will arise. The Directorate-General for Employment appears to have clarified that this obligation is only enforced when companies have implemented an ERTE due to force majeure and benefited from the exemption on social security contributions under article 24 RDL 8/2020.

However, it has not yet been confirmed whether merely implementing a simplified ERTE due to force majeure under article 22 RDL 8/2020 (without requesting the contributions exemption) or an ERTE due to objective causes under article 23, or having accessed the special unemployment benefits established in article 25 would be sufficient to activate that job maintenance obligation.

It is also not known what the consequences will be of breaching this obligation by terminating work contracts in the six months after resuming activity, except at the worker’s will.

There has been no official announcement on this point, and so legal professionals still have no reference with which to answer questions such as whether companies must pay all the social security contributions from which they were exempt or only those corresponding to the workers made redundant, plus the corresponding surcharge, or whether companies must repay the unemployment benefits received by the affected workers.

Finally, other questions are pending regarding different aspects of this obligation, such as whether terminating the contracts of the workers affected by the ERTE constitutes a breach or whether the term of the obligation starts to run from the end of the state of emergency or the effective resumption of the activity.

2.Duration of special unemployment benefits and other measures adopted

Under article 28 RDL 8/2020, the measures in articles 22 (simplified ERTE due to force majeure), 23 (simplified ERTE due to objective causes), 24 (exemption from contributions in ERTEs due to force majeure), and 25 (special unemployment benefits) of the same royal decree-law will apply “while the extraordinary situation arising from COVID-19 continues.”

Tenth final provision of RDL 8/2020, following its new wording under first final provision, section seventeen, of Royal Decree-Law 11/2020, states that “ the measures established in this royal decree-law will apply for one month after the state of emergency ends.” 

Does this new wording mean that ERTEs due to force majeure will not end abruptly when the state of emergency is lifted but may be extended for a further month, meaning the abrogation of the first additional provision of Royal Decree-Law 9/2020, which states that the maximum duration of these ERTEs cannot be extended “beyond the period that the extraordinary situation resulting from COVID-19 continues in line with article 28 of the same regulation, meaning that its maximum duration will be the term of the state of emergency decreed”?

Does establishing this additional month mean that special unemployment benefits for ERTEs both due to force majeure and due to objective causes (that may have established a duration beyond the end of the state of emergency) will only continue to be received for one month after the state of emergency ends, meaning abrogation of article 25.3.b) RDL 8/2020, under which “the duration of the benefits will be extended until the end of the period of work contract suspension or temporary reduction of working hours from which they arise”?

3.Negotiating ERTEs due to objective causes after state of emergency

It is unclear at this point what the terms should be for negotiating ERTEs due to objective causes during the current state of emergency, to be applied when it ends. Many companies that have applied ERTEs due to force majeure are considering their future actions for after the state of emergency, given that the negative effects of this situation will continue. The question arises whether, now, when the state of emergency is still in effect, it is possible to implement the ordinary ERTE procedure established in article 47 Spanish Workers Statute to apply it after the state of emergency. This is not a trivial question given that, in certain cases, the relevant person will be different.

4. Duration of  prohibition on making workers redundant due to causes resulting from COVID-19 under article 2 Royal Decree-Law 9/2020

This could be subject to a narrow interpretation, which would limit the duration of the prohibition to the term of the state of emergency (and its extensions), given thatthird final provision of Royal Decree-Law 9/2020 establishes its term “during the state of emergency decreed by Royal Decree 463/2020 and its possible extensions.” Or it could be interpreted broadly, extending the prohibition beyond the state of emergency.n.

5.Moratorium on social security contributions

Finally, we are still awaiting the ministerial order mentioned in article 34 Royal Decree-Law 11/2000, promising to regulate the application for and granting of moratoriums on social security contributions for April, May and June.

Not all the aspects related to this possibility have been clarified, and many companies are awaiting this regulation to make their decisions for the future.

Ultimately, although an apparently improvised legislation lacking responses to all the possible realities that must be faced can be explained by the difficulty and speed of the events, issues such as those indicated in this article must be clarified urgently in the labor sphere if we want to better adapt labor relations in the immediate future.

Autor: Fco. Ramón Lacomba Pérez