Covid19: Government Measures – Labour
Extraordinary financial incentive to the normalization of the business activity
Extraordinary financial incentive to the normalization of the business activity
1. Objetives
The Extraordinary financial incentive to normalize business activity aims to support the maintenance of employment and reduce the risk of unemployment of the employees whose employers were affected by the business crisis as a result of the pandemic caused by the COVID-19 disease. It is a support provided to the employer in the phase in which the employees’ return normally to work and the business activity normalizes.
2. Employers
Employers must meet the following cumulative requirements:
- have their tax and social security situation regularized before the Social Security and the Tax Authority, including during the entire period of the support.
- to have benefited from the extraordinary support for the maintenance of an employment contract or extraordinary training plan (the incentive is only granted after the simplified lay-off scheme or extraordinary training plan have ceased).
declare, under oath, that they have not submitted and will not apply for the access of the support denominated Support for Progressive Recovery of the Companies (“Apoio à Retoma Progressiva”).
- not dismiss employees under the collective dismissal regime, the extinction of working post regime and inadaptation to the working post regime, provided for in articles 359, 367 and 373 of the Labor Code (CT), in its current wording, nor initiate the respective procedures;
if the employers wish to benefit from Model B of the support described below (i.e. in the amount of 2 RMMG) they must maintain the level of employment verified in the last month of the application of the extraordinary support measures for the maintenance of an employment contract or extraordinary training plan.
Note: The referred duties not to make dismissals and maintain the level of employment must be observed during the period of granting of the support and within 60 days thereafter.
3. Modalities of the support and its payment
The support is provided according to one of the following models:
Model A: support in the amount of a Minimum Monthly Salary – MMS (Eur. 635.00) per employee covered by the measures referred to above (simplified lay-off regime or the extraordinary training plan), paid at once within 10 business days counted as from the date of notification of the approval of the request;
OR
Model B: support amounting to 2 MMS (Eur. 1.270.00) per employee covered by the simplified lay-off scheme or the extraordinary training plan, paid in two instalments:
the first instalment is paid within 10 business days counted as from the date of notification of the approval of the request; and
the second instalment is paid within 180 days counted as from the day following the last day of application of the extraordinary support for maintaining an employment contract or the extraordinary training plan.
4. Determination of the amounts of the support
When the period of application of the simplified lay-off scheme or the extraordinary training plan has been:
superior to one month, the amount of the support shall be determined according to the simple arithmetic mean of the number of the employees covered by each month of application of that support.
inferior to one month, the amount of support under Model A (of 1 MMS) shall be reduced proportionately.
inferior to three months, the amount of support under Model B (of 2 MMS) shall be reduced proportionately.
Note: The proportionality rule is applied according to the number of days of application of the simplified lay-off measures or the extraordinary training plan.
5. Social Security Contributions
Partial exemption: only in the case of Model B (of 2 MMS), other benefits can be conferred, such as the partial exemption of 50% of the employer’s social security contributions in respect to the employees covered by the application of the measures of simplified lay-off regime or extraordinary training plan. When the period of application of the simplified lay-off regime or extraordinary training plan is superior to 30 days, the partial exemption of 50% of the payment of social security contributions in charge of the employer shall refer to the employees covered in the last month of application of such measures (if this last month occurred in July 2020, it shall only be considered the employees covered in June 2020). The partial exemption of 50% of the payment of social security contributions by the employer shall apply as follows:
- during the first month of granting the support after the application of the simplified lay-off regime or the extraordinary training plan, when it is granted for a period of less than or equal to one month.
- during the first two months of granting the support after the application of the simplified lay-off regime or the extraordinary training plan, when it is granted for a period of more than one month and less than three months.
during the first three months of granting the support after the application of the simplified lay-off regime or the extraordinary training plan, when it is granted for a period equal to or greater than three months.
Total exemption: when there is a net creation of employment, through the execution of permanent employment contracts, in the three months following the end of the granting of the support under Model B (of 2 MMS), the employer is entitled to two months of total exemption from the payment of Social Security contributions at the expense of the employer (without prejudice to the provisions of Decree-Law No. 72/2017, dated of June 21, when more favorable). For the purposes of net job creation, the employer must:
- have more employees at its service than the average number observed in the three homologous months.
- maintain the level of employment achieved for a period of 180 days.
Situations which are not considered for the purpose of verifying the obligation to maintain the level of employment, upon proof by the employer:
- expiry of fixed term contracts.
- termination by the employee; in the event of supervening, absolute and definitive, impossibility for the employee to perform his work or for the employer to receive it.
- retirement of the employee, due to old age or disability.
- dismissal with just cause promoted by the employer.
Situations which variation in the level of employment is not relevant for the purpose of verifying the obligation to maintain the level of employment, upon proof by the employer:
Assignment of the establishment, part of an establishment, or equivalent, when there is a legal or conventional guarantee that the employment contracts covered by the assignment will be maintained by the transferee.
Note: Both partial exemption and total exemption from the payment of social security contributions by the employer are recognized ex officio by IEFP I.P. services and Social Security Institute.
6. Application
The period for opening and closing the applications for the incentive is defined by deliberation of the directive board of IEFP I. P. and disclosed on its website at www.iefp.pt.
The incentive may only be granted once to each employer, and only in one of the support modalities. Only one application must be submitted by each employer.
The support request is made by electronic submission, on the iefponline portal, with the following documents:
- declaration of non-existence of debt or authorization for online consultation of the Tax Authority and Social Security situation.
- declaration of oath that no application has been submitted to have access to the support denominated “Apoio à Retoma Progressiva”.
- proof of IBAN.
- term of acceptance, according to the model made available by IEFP, I.P.
Entity responsible for the analysis and decision on the granting of the incentive: IEFP, I.P. Decision period: 10 business days counted as from the date of submission of the application. This period is suspended in the following situations:
- when there is the request for clarifications or additional information.
- when the hearing of the interested parties takes place.
7. Cumulative supports
The incentive support modalities can be combined with other direct employment support. However, there are some restrictions, namely the following:
- the employer using the extraordinary incentive to normalize business activity cannot access the extraordinary support denominated “Apoio à Retoma Progressiva”;
- the total exemption from the payment of Social Security contributions due by the employer provided for under Model B (of 2 MMS) of the incentive cannot be cumulated with other direct employment support applicable to the same employees.
8. Situations in which the support must be refunded Situation which determines the partial refund to IEFP, I. P. of the amounts already received:
Failure to comply with the specific obligation to maintain the level of employment determines the proportional refund to the EPI, I.P. of the amounts already received, considering the number of jobs eliminated. This without prejudice to the possibility of restoring the jobs eliminated within 30 days counted from the date on which the level of employment decreased.
Situations which determine the total refund to the IEFP, I. P. of the amounts already received:
- failure to comply with the duty to dismiss under the modalities of collective dismissal, extinction of working post and inadaptation to the working post, or to initiate the respective procedures.
- declaration of unlawful dismissal due to an act attributable to the employee, unless the employee is reinstated in the same establishment of the company, without prejudice to his/her category and seniority, under the terms established in article 389 of the CT.
- tax and social security situation that has not been regularized before the Social Security and the Tax Authority.
- the cancellation of the granting of the extraordinary support for the maintenance of an employment contract or the extraordinary training plan.
- the rendering of false statements.
- the employer using both the extraordinary incentive to normalize business activity and the support denominated “Apoio à Retoma Progressiva”.
Note: In the event of non-compliance with the above, the extraordinary incentive to normalize business activity ceases immediately, implying, inter alia, the refund or payment to IEFP, I.P. and ISS, I.P., respectively, of the amounts already received or exempted, without prejudice to criminal liability.
9. Legislation
- Ministerial Order no.170-A/2020, dated of July 13th, regulates the extraordinary incentive measure for the normalization of business activity.
- Decree-Law no. 27-B/2020, dated of June 19th, creates the extraordinary incentive measure for the normalization of business activity.
- Resolution of the Council of Ministers n. º 41/2020, of June 6th, approves the Economic and Social Stabilization Program.
- Ministerial Order no. 94-B/2020, dated of April 17th, suspends the verification of the requirement of non-existence of debts of applicant or promoting entities to the IEFP, I. P., for the approval of applications and payment of financial support by the IEFP, I. P., to the respective entities, within the scope of the employment and professional training measures in force.
- Decree-Law no. 10-G/2020, dated of March 26th, in its current wording, defines the extraordinary support measure for the maintenance of an employment contract and extraordinary training plan.
- Decree-Law no. 72/2017, dated of June 21st, establishes incentives for the recruitment of young people seeking their first job and situations of long-term and very long-term unemployment.
- Decree-Law no. 13/2015, dated of January 26th, defines the objectives and principles of the employment policy and regulates, namely, the implementation and financing of the respective programs and measures.
TFRA will update this information whenever necessary. Finally, we would like to alert that the information contained in this document is of a generic nature, therefore does not exempt consulting the official documentation and legislation in force at any given time.