Exoneration

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ERTEs directly caused by loss of activity as a result of COVID-19, including the declaration the state of alarm.

1. How do ERTEs directly caused by COVID-19 affect Social Security contributions?


As a general rule, in cases of suspensions of contracts or reductions to working days, companies are obliged to pay their contributions.


Royal Decrees-Law 8/2020, of 17 March,  18/2020, 12 May,  and 24/2020, 26 June,  exceptionally provide that in ERTEs  authorised based on temporary force majeure linked to COVID-19,  as well  in employment adjustment plans for economic, technical, organisational or production causes (ETOPs), the company shall be exempt from paying the business contribution, including contribution for unemployment, Wage Guarantee Fund and Vocational Training, with the percentages and terms provided for in the above mentioned regulation.


In the case that working hours are reduced, companies are obliged to pay their own and the employee's contributions for the part of the working day in which the activity is carried out, and they are exempt from paying the contributions for the part of the working day not carried out.


Exemption rates will vary depending on whether the company, as of 29 February 2020, had 50 or less, or more, employees registered in the Social Security.

2. How long does the exemption from payment of the business contribution last?

For the duration of the period of suspension of contracts or reduction of working hours.

3. Should working people whose employment contract is suspended cancel their Social Security?

Generally no: However, if during the period in which the contract is suspended, the worker does not receive the corresponding unemployment benefit, they must de-register from Social Security. Once the suspension has ended, they must re-register for Social Security.

4. In order for a company to qualify for the exoneration, must the worker be entitled to and receive the unemployment benefit?

Yes.

If, during the period in which the contract is suspended, the worker does not receive the corresponding unemployment benefit, they must de-register from Social Security. Once the suspension has ended, they must re-register for Social Security.

If, during the period in which their working day is reduced, the worker does not receive the unemployment benefit corresponding to these shorter days, they must only remain registered for the Social Security corresponding to the hours they have worked.
Royal Decree-Law 8/2020 determines that working people affected by these Temporary Employment Regulations (ERTEs) are entitled to the contributory unemployment benefit even if they do not have the necessary minimum occupation period stated. Furthermore, the duration of this benefit is not calculated for the purpose of using the maximum periods for these benefits.

It should be noted that during the period of validity of the extraordinary public health measures taken by the authorities to combat the effects of the spread of COVID-19, applications for the unemployment benefit made outside the legally established time limits shall not incur a reduction in the duration of entitlement to the corresponding benefit.

6. How should workers affected by ERTEs be reported to the General Treasury of Social Security?

Through the usual variation of data procedures in the area of affiliation.
Depending on the rules laid down in the application regulation, notification shall be sent as follows:

  1. Exemptions due to ERTEs for the months of  MARCH-APRIL listed in RDL 8/2020.

    The communication will be made by reporting in the AFI file, or through the online contract modification service, the V, W or X values, as appropriate, of the TYPE OF INACTIVITY field, as well as the starting date of the situation.

    ‘V’ is used to communicate situations involving the suspension of the work contract, ‘W’ is used to communicate situations involving the reduction of working days and, finally, ‘X’ is used to communicate situations in which a reduction of working days and a part-time strike are both found.

    In the case of ‘W’s and ‘X’s, the part-time coefficient identifying the part of the working day actually worked must also be reported.

    Once the suspension of the employment contract or reduction of the working day is over, the TYPE OF INACTIVITY field must be communicated.

  2. Exemptions due to ERTEs for the months of  MAY-JUNE listed in RDL 18/2020.

    Depending on the situation of each worker, the relevant notifications must be sent as detailed below:

    i. Notification of the situation of workers whose contracts remain suspended
    Will continue to be identified with the values V, W or X  in the TYPE OF INACTIVITY field, as appropriate, regardless of whether the company is in full or partial force majeure. Therefore, no specific notification regarding affiliation must be sent regarding these workers until they resume their activity, in full or in part, or increase their previously reduced working hours.
    Regardless of the above, the Sworn Statement of Total or Partial Force Majeure must be sent for all exemptions to apply.
    ii. Notification of  the situation of workers  resuming their full or  partial activity in situations of force majeure
    For workers resuming their activity from the moment the company changes to a situation of partial force majeure and which, therefore, have made the relevant sworn statement with the date activity could be resumed- corresponding responsible declaration with the date on which the activity could be restarted (Cause for Unusual Contribution 059), the content of the TYPE OF INACTIVITY field regarding affiliation must be changed by the usual procedures, replacing values V, W or X, as appropriate, with values R-TOTAL ACTIVE.WORK. or S- PARTIAL ACTIVE WORK.

    iii. Notification of the situation of workers  who, having been reinstated, return to a situation of suspension or reduced working hours.
    This will be notified by changing, regarding affiliation, the content of the TYPE OF INACTIVITY field, replacing  values R or S, as appropriate, with values Y- TOTAL SUSPENSION or U- PARTIAL SUSPENSION.

  3. Exemptions due to ERTEs for the months of  JULY-AUGUST AND SEPTEMBER listed in RDL 24/2020.

    In addition to presenting the sworn statement, workers, the period of suspension or reduced working hours and resumption of activity affected by the different types of employment adjustment plans must be identified using the values in the TYPE OF INACTIVITY field reported in the BNR 16/2020, of 16 July.

    Below is a table comparing the new TYPE OF INACTIVITY field values.

    Table comparing new values of the field
    TYPE OF INACTIVITY
    TYPE OF INACTIVITY
    CAUSE OF UNUSUAL CONTRIBUTION
    CPC 59
    CPC60
    CPC61
    CPC62
    TOTAL SUSPENSION
    V
    A1
    E
    A7
    B4
    PARTIAL SUSPENSION
    W
    A2
    F
    A8
    B5
    PAR.SUS.+STRIKE
    X
    G
    TOTAL REINSTATEMENT
    R
    A3
    A9
    B6
    PARTIAL REINSTATEMENT
    S
    A4
    B1
    B7
    TOTAL SUSPENSION
    Y
    A5
    B2
    B8
    PARTIAL SUSPENSION
    U
    A6
    B3
    B9

7. When should the TYPE OF INACTIVITY and CAUSE FOR UNUSUAL CONTRIBUTION (CPC) fields, which identify the different situations of the worker in an ERTE for force majeure or ETOP for COVID-19, be reported?

These situations can be reported from the day the situation starts until the penultimate day of the following month.

8. Should the payment of contributions be made for workers affected by the suspension of employment contracts or a reduction in working hours?

Yes. The payment of contributions of the contribution account code (CCC), where the workers affected by these situations are registered, must be made within the established time periods.

9. Is it necessary to communicate any information in the Base File so that the General Treasury of Social Security can calculate the exoneration of contributions?

No. The TGSS will automatically calculate the exempted and non-exempted quotas according to the data in the General Affiliation File for each worker. To do this, the user must first communicate the type of inactivity in the area of affiliation.

10. How many settlement receipts will be generated in the case of contribution exemptions for the suspension of contracts and reduction of working hours authorised on the basis of temporary force majeure or ETOP linked to COVID 19?

A receipt will be generated for the exonerated party and another receipt for the non-exonerated party.

10. How should contributions be made?

In the case of employment contract suspensions reported using a ‘V’ in the TYPE OF INACTIVITY field, the General Treasury of Social Security will automatically apply the contribution exemption depending on the number of workers registered on 29 February 2020.

In the case of reductions in working hours reported using a ‘W’ or ‘X’ in the TYPE OF INACTIVITY field, the contribution for the period of activity will be made in accordance with the general rules applicable to part-time contracts, and therefore the number of hours of work carried out in the period of reduction of the working day must be communicated within the scope of the contribution. With regards to the contribution for the period of inactivity due to the reduction in working hours, the General Treasury of Social Security will automatically apply the exemption from contributions according to the number of workers registered on 29 February 2020.

11. How should contributions be made?

In the case of total suspension of the employment contract due to COVID-19 duly reported  with the relevant values in the TYPE OF INACTIVITY field, the Social Security General Treasury will automatically apply the contribution exemption depending on the number of workers registered in the Social Security on 29 February 2020.


In the case of reductions in working hours or partial suspensions of employment contracts linked to COVID-19 reported with the relevant values in the TYPE OF INACTIVITY field, the contribution for the period of activity will be made in accordance with the general rules applicable to part-time contracts, and therefore the number of hours of work carried out in the period of reduction of the working day must be communicated within the scope of the contribution. With regards to the contribution for the period of inactivity due to the reduction in working hours, the General Treasury of Social Security will automatically apply the exemption from contributions according to the number of workers registered on 29 February 2020.

12. What about the fixed-amount bonuses for people whose employment contracts have been suspended or whose working hours have been reduced by these ERTEs?

In the case of a reduction in working hours (partial ERTE) the fixed-amount bonuses shall be applied to the non-exempt quota and the excess to the exempt quota.

5. What are the requirements for applying exemptions for ERTE linked to COVID-19?

Requirements for applying exemptions for ERTE due to force majeure or regulated employment adjustment plans for economic, financial, organisational or production causes -ETOP-, the latter in RDL 24/2020, linked to COVID-19 vary depending on the circumstances  of the company and each of the workers, as well as the period in which it intends to apply contribution exemption.

  1. Requirements for applying exemptions provided for in Royal Decree-Law 8/2020, for applying exemptions for ERTE due to force majeure for COVID-19, for the months of March and April
    Applying the exemptions provided for in Royal Decree-Law 8/2020 requires you to identify each worker affected by the ERTE due to force majeure by reporting the relevant values in the TYPE OF INACTIVITY field.
  2. Requirements for applying exemptions provided for in Royal Decree-Law 18/2020, for applying exemptions for ERTE due to force majeure for COVID-19, for the months of May and June
    Unlike with Royal Decree-Law 8/2020, in order to apply the exemptions provided for in Royal Decree-Law 18/2020, you must not only identify the workers affected by the ERTE due to force majeure by reporting the relevant values in the TYPE OF INACTIVITY field, pursuant to the provisions of  Article 4.3, the company must also notify the Social Security General Treasury that it is:
      • In a situation of total force majeure derived from COVID-19 because it is affected by the causes referred to in article 22 of Royal Decree-Law 8/2020 that prevent resumption of its activity, or
      • In a situation of partial force majeure derived from COVID-19 from the moment the causes reflected in article 22 of Royal Decree-Law 8/2020 allow the partial resumption of its activity.
        This notification shall be sent in a sworn statement using the RED System on the continuation of total force majeure –Cause for Unusual Contribution 058- or on the beginning of partial force majeure –Cause for Unusual Contribution 059. The sworn statement must be submitted, for each contribution account code and accrual month, before the request for the calculation of the corresponding contribution settlement.
        Exemptions shall not apply without submitting this sworn statement.
  3. Requirements for applying exemptions for ERTE due to force majeure for COVID-19 provided for in Article 4.1 of Royal Decree-Law 24/2020 for the months of July, August and September
    As provided in  Royal Decree-Law 18/2020, to applying exemptions for the months of May and June, Royal Decree-Law 24/2020 requires the submission of a sworn statement on total force majeure –Cause of Unusual Contribution 58– or Partial Force Majeure –Cause for Unusual Contribution 59.
    These sworn statements must be submitted using the RED System.
  4. Requirements for applying exemptions for ERTE due to economic, technical, organisational or production causes provided for in Article 4.2 of Royal Decree-Law 24/2020
    Companies that decided to spending contracts or reduce working hours due to economic, technical, organisation or production causes related to COVID-19, with the special features referred to in Article 23 of Royal Decree-Law 8/2020, of 17 March, must submit a sworn statement on the continued validity of the employment adjustment plan -Cause for Unusual Contribution 60.
    Therefore, companies that decided  to suspend contracts or reduce working hours due to economic, technical, organisational or production causes related to COVID-19 shall not be entitled to exemption and need not submit the sworn statement after the entry into force of Royal Decree-Law 24/2020 of 26 June.
    This sworn statement must be submitted using the RED System.
  5. Requirements for applying exemptions for ERTE due to economic, technical, organisational or production causes -ETOP- provided for in Royal Decree-Law 24/2020, when it begins after finalising an employment adjustment plan due to force majeure based on Article 22 of Royal Decree-Law 8/2020
    Companies with an employment adjustment plan due to economic, technical, organisational or production causes -ETOP- related to COVID-19, when the effects of the plan began after finalising an employment adjustment plan based on the cause provided for in Article 22 of Royal Decree-Law 8/2020, must submit a sworn statement -Cause for Unusual Contribution 61.
    This sworn statement must be submitted using the RED System.
  6. Requirements for applying exemptions for ERTE due to force majeure beginning after 1 July 2020 as provided for in section 2 of additional provision one of Royal Decree-Law 24/2020
    Companies and entities which, after 1 July 2020, cannot develop their activity due to the adoption of new restrictions or containment measures imposed on any of its work centres, following the authorisation of a workforce adjustment plan due to force majeure based on the provisions of Article 47.3 of the Workers' Statute, must submit  a sworn statement –Cause for Unusual Contribution 62.
    This sworn statement must be submitted using the CASIA application, filling out the form provided for the user.
    Along with the sworn statement form, they must provide the ruling by the labour authority authorising the workforce adjustment plan due to force majeure.


13. What about the fixed-amount bonuses for people whose employment contracts have been suspended or whose working hours have been reduced by these ERTEs?

In the case of a reduction in working hours (partial ERTE) the fixed-amount bonuses shall be applied to the non-exempt quota and the excess to the exempt quota.

14. How should waiving the workforce adjustment plan be notified to the Treasury?

Companies waiving the workforce adjustment plan before the labour authority must  notify this express waiver to the Social Security General Treasury through the RED System - Cause for Unusual Contribution 63.


Notifying the express waiver means that termination of the employment contract suspension or reduced working hours need not be reported for each of the workers affected by the workforce adjustment plan, leaving the TYPE OF INACTIVITY field blank as this action will automatically be taken by the system.

15. How should the waiver of exemptions of companies or trading companies that are going to distribute dividends be notified to the Treasury?

In accordance with Article 5.2, trading companies or other legal entities that opt for workforce adjustment plans related to COVID 19 and use the public resources allocated to them, may not distribute dividends for the fiscal year in which these workforce adjustment plans apply, except if they have paid the amount corresponding to the exemption applied to social security contributions in advance and have waived it.

Waiver of exemptions in order to distribute dividends must be notified to the Treasury using the CASIA application, filling out the form provided for the user.

This notification must be sent using the CASIA application, filling out the form provided for the user.

Presenting this waiver entails requesting the Social Security General Treasury to update the above mentioned settlements in order to pay the sums arising as a result of the new calculation.

This restriction on distributing dividends does not apply to entities which, as of 29 February 2020, had less than fifty workers or similar registered with the Social Security.

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