Spain’s ERTE scheme extended to January – 5 key updates for workers and businesses

Spain’s department of Labour yesterday agreed to extend the ERTE scheme until 31st January, 2021.

More than 3.4 million Spanish workers received financial aid via the nationwide furlough scheme at the peak of the COVID-19 lockdown, but 660,000 still remain signed on.

The ERTE was due to end today, 30th September – but unions representing still-struggling tourism and hospitality industries have spent the last month fighting for to get an extension, or face mass unemployment.

The extension will enter into effect on Thursday.

Here are the key points:

• Existing ERTE’s granted due to ‘fuerza mayor‘ will continue automatically. If a business has not been able to reopen or reemploy a large part of its workforce – and trades in a sector hit by lockdown restrictions – the government will cover between 75-85% of social security contributions until January. Sectors considered hard-hit by restrictions include tourism, hospitality and cultural activities.
• A new ERTE structure will be set up for businesses shutdown by pandemic restrictions from 1st October. Qualifying factors include both national and international negative forces, such as a lack of UK tourists. The ERTE will be valid only as long as restrictions last – but the government will pay 90-100% of social security contributions depending on number of employees.
• Another new ERTE structure will be introduced for businesses operating at reduced capacity from 1st October due to current or future restrictions. For companies with fewer than 50 employees, the government will also pay 100% of contributions in October, 90% in November, 85% in December and 80% in January. For companies with more than 50 employees, the government will pay 90% of contributions in October, 80% in November, 75% in December and 70% in January. Both this structure and the one above are open to businesses from any sector, provided they can demonstrate a cause-and-effect drop in income related to restrictions.
• A legal modification will mean that workers on an ERTE for more than six months will NOT receive a reduction in government payments. Previous rules indicated a drop from 70% to 50% of a worker’s salary after six months on the furlough scheme. Workers who are taken off an ERTE and fired this year or next will also have their unemployment benefits recuperated.
• A ban on firing ERTE workers for a period of six months after returning them to work is still in effect.