Covid-19: Simplified “Lay-off” in Portugal

published on March 2020 | reading time approx. 2 minutes

What is it? »
How does it work? »
What is the economic support? »
What will the inspection be like? »
Duration? »

What is it?

The creation of extraordinary support for the maintenance of employment contracts in companies in a situation of business crisis with the right to compensation analogous to a simplified lay-off scheme was approved by Resolution nº 10-A/2020, of March 13th.

This (simplified) mechanism aims the temporary suspension of employment contracts or the temporary reduction of the normal working period.

How does it work?

This regime may be used by companies in a business crisis situation, which have their tax and social security situation regularized before the Tax and Customs Authority, and that the need to suspend the activity related to the COVID-19 outbreak is motivated by:

Total shutdown of the company’s or establishment’s activity resulting from the interruption of global supply chains, suspension or cancellation of orders;
An abrupt and sharp drop of at least 40 per cent in invoicing in the 60 days preceding the application to the Social Security, with reference to the same period or, for those who started the activity less than 12 months ago, to the average of this period.

In order for this simplified scheme to operate, it will be necessary to make a communication to the employees (the agreement of the worker is not required) accompanied by the following documents attesting to the circumstances that justify the suspension of the activity:

A declaration by the employer;
A certificate from the company’s certified accountant.

This is followed by a hearing of shop stewards and work committees when they exist.

What is the economic support?

The employees covered by this regime must receive a minimum monthly gross remuneration of 2/3, and the amount to be earned by the employee may not be less than 635.00 Euros and more than 1,905.00 Euros.
The social security shall provide 70 per cent of this amount, the remainder being borne by the employer.

What will the inspection be like?

The Companies that benefit from this support may be monitored at any time by the competent public authorities.

In this case, the companies should prove the facts on which the application is based and the renewals thereof by documentary evidence, whereas and the following documents may be requested:

Balance sheet for the month of the support, as well as for the corresponding month;
Value Added Tax (VAT) declaration for the month of the support, as well as for the two immediately preceding months, or the declaration with reference to the last quarter of 2019 and the first quarter of 2020, depending on whether the applicant is in the monthly or quarterly VAT regime respectively, which shows the intermittence or interruption of the supply chains or the suspension or cancellation of orders; and
Additional evidence to be established by order of the member of the Labor and Social Security Government.