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Spain extends temporary redundancy schemes until January 31

Move comes after last-minute agreement with unions and employers' associations

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29 September 2020 05:11 PM

by

ACN | Madrid

Following a last-minute agreement with unions, employers' associations, the Spanish government announced on Tuesday that it will be prolonging the country's temporary redundancy scheme, known as ERTO for its acronym in Catalan, until January 31.

According to Spain's labor minister Yolanda Díaz, this furlough deal "considers, saves, protects and defends all companies and all workers" and "leaves no one behind."

Companies that have been dealt a severe economic blow as the pandemic curtails their activity will now be able to apply for furlough extensions as well as have 75% to 85% of their social security fees waived if approved.

This agreement also creates two new ERTO categories for companies affected by health and safety restrictions depending on whether these measures constrain or limit their activity, and allows them to benefit from 70% to 100% social security fee waivers.

In temporary redundancy schemes, employers temporarily suspend their workers' contracts but they are still paid. The government covers 70% of salaries up to 1,100 euros (or up to 1,400 euros for people with children). Normally workers are paid this amount for six months and then 50% of them after that period, but Tuesday's agreement will allow them to continue earning 70% of their salary. While companies sometimes pay the rest, they are not obliged to do so.

There are currently around 750,000 furloughed workers in Spain, although at the height of the Covid-19 lockdown this figure stood at a staggering 3.4 million people.

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  • Spanish labor minister Yolanda Díaz (Pool Moncloa/JM Cuadrado)

  • Spanish labor minister Yolanda Díaz (Pool Moncloa/JM Cuadrado)

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