COVID-19: The regulation on the Extraordinary Incentive for Business Regularization has been approved in Portugal
Labor and Employment Law Alert Portugal
Ordinance no. 170-A/2020 of July 13th has been approved and regulates the attribution of financial support to companies during the returning phase of its employees to normal work provision and normalization of business activity.
This incentive aims to support the maintenance of employment and to reduce the risks of unemployment for employees working for companies affected by the business crisis as a result of the pandemic caused by the COVID-19.
Companies which have benefited from the following measures provided for in Decree-Law no. 10-G/2020, of March 26th, may accede the extraordinary incentive for the normalization of business activity:
Extraordinary support for the maintenance of employment contracts (“Simplified lay-off”);
Extraordinary training plan.
2. Access to the incentive
The extraordinary incentive for the normalization of business activity will only be awarded upon termination of the extraordinary support for the maintenance of employment contracts or the extraordinary training plan, both provided for in Decree-Law no. 10-G/2020 of March 26th.
The following obligations arise from the award of this incentive:
Prohibition of termination of employment contracts – Companies accessing this incentive will not be able to proceed with redundancy based terminations (individual or collective redundancies and dismissal caused by inadaptability), nor will they be able to initiate the corresponding procedures as set out in articles 359, 367 and 373 of the Portuguese Labor Code;
Maintenance of the level of employment - Companies accessing the extraordinary incentive in the amount of Euros 1.270,00 (corresponding to two minimum monthly wages) shall have to maintain the same level of employment as that which existed in the last month of implementation of the measures concerning the extraordinary support for the maintenance of employment contracts (“simplified lay-off”) or the extraordinary training plan.
The following situations shall be excluded from the above mentioned limitations: (i) forfeiture of term employment contracts; (ii) termination by the employee; (iii) in the event of supervening, absolute and definitive impossibility for the employee to perform his work or for the employer to receive it; (iv) in the event of retirement of the employee, due to old age or disability; (v) dismissal with fair cause promoted by the employer. It is for the employer to document and attest these situations.
i. The obligations resulting from the granting of the extraordinary incentive for the normalization of business activity are defined in the statement of acceptance of the incentive;
ii. The compliance with the obligations must be observed during the period of granting of the support and within the following 60 days;
iii. During the period of granting of the incentive, companies shall prove to have a good standing before Social Security and Tax Authorities;
iv. The breach of these obligations determines the immediate termination of the support and the refund or payment of the amounts already received or exempted.
5.Payment of the incentive
The payment of the incentive is made as follows:
The payment of the incentive under the modality of one minimum month wage (Euros 635,00), is made in one installment, within 10 working days as from the date of communication of the approval of the application to the incentive;
The payment of the incentive under the modality of two minimum month wages (Euros 1.270,00), is made in two installments with the same amount, under the following terms:
i. The first installment is paid within 10 working days as from the date of communication of the approval of the application to the incentive;
ii. The second installment is paid within 180 days following the last day of application of the extraordinary support for the maintenance of employment contracts (“simplified lay-off”) or the extraordinary training plan.
6. Conditions for the application
Companies shall reunite the following requirements/conditions:
Have a good standing before Social Security and Tax Authorities;
Have benefited from one of the following measures:
i. Simplified lay-off; or
ii. Extraordinary training plan
Make a sworn statement under which the Company declares not to have requested, nor will request, the access to the progressive resumption support measure foreseen in the Resolution of the Council of Ministers no. 41/2020, of June 6th.
The date of opening and closing of the period of applications to the extraordinary incentive for stabilization of business activity is defined by deliberation of the directive board of the IEFP, I.P., and disclosed on the website www.iefp.pt.
The extraordinary incentive for the normalization of business activity can only be granted once to each employer, and only in one of the modalities foreseen in the Ordinance no. 170-A/2020 of July 13th. Therefore, only one application should be submitted by each employer.
The application is made through electronic submission at https://iefponline.iefp.pt/, and shall be accompanied by the following documents:
Declaration of non-existence of debt or authorization for online consultation of the tax situation before Tax Authorities and contributive situation before the Social Security;
The full exemption from the payment of Social Security contributions provided for in the modality corresponding to two minimum monthly wages of this extraordinary incentive cannot be cumulated with other direct employment support measures in relation to the same employees.