The Ordinance regulating the procedures, conditions and terms of access to the extraordinary incentive to the normalization of business activity, provided for in Article 4 of Decree-Law 27-B/2020, to be granted by the Institute of Employment and Professional Training, I. P. (IEFP, I. P.), came into force yesterday.
The extraordinary incentive to normalization of business activity aims to support the maintenance of employment and reduce the risk of unemployment for employees and employers affected by the pandemic crisis.
Who are the beneficiaries and when will the incentive be granted?
The measure covers employers who have benefited from the extraordinary support for the maintenance of employment contracts or the extraordinary training plan ("simplified layoff measures"); and will take place after the application of the extraordinary support for the maintenance of the employment contracts or the extraordinary training plan have ceased.
What are the modalities of this support?
There are two modalities:
A. Support in the amount of a minimum guaranteed monthly wage ("MGMW") per employee covered by the simplified layoff measures, paid one-off; (Modality A)
B. Support in the amount of two MGMW per employee covered by the simplified layoff measures, paid in stages over 6 months. (Modality B)
And what is the incentive’s amount?
The following criteria must be used to determine the amount of support concerned:
i. When the period of application of the simplified layoff measures exceeds one month, the amount of support shall be determined according to the simple arithmetic average of the number of employees concerned by each month of application of such support;
ii. When the period of application of the simplified layoff measures has been less than one month, the amount of the support provided for in A. shall be reduced proportionately;
iii. When the period of application of the simplified layoff measures has been less than three months, the amount of support provided for in B. shall be reduced proportionately.
The proportionality rule is applied according to the number of days of implementation of the measures - extraordinary support for maintaining the employment contract and extraordinary training plan.
It should also be noted that modality B. provides for the right to partial waiver of 50% of the employer's social security contributions, with reference to employees covered by the extraordinary support for maintaining the employment contract or extraordinary training plan.
In case there is net job creation, through the execution of permanent employment contracts, in the three months following the end of the granting of Modality B support, the employer shall be entitled, in respect of such contracts, to two months' total exemption from the payment of social security contributions, without prejudice to other measures already provided for which are more favourable.
Exemptions from social security contributions are recognised ex officio when the application is submitted.
How should the incentive be requested?
The opening and closing dates of the period to apply for the incentive are defined by IEFP, I.P., and have not been defined until the present date and time.
The application for support is made through an online application - at https://iefponline.iefp.pt/- and must be complemented by the following documents:
a) Declaration of non-existence of debt or authorization for online consultation of the tax and social security situation before the Social Security Services and the Tax and Customs Authority;
b) Declaration of honour of non-submission of application for access to the extraordinary support for the progressive resumption foreseen in the Resolution of the Council of Ministers nº 41/2020, of June 6th;
c) Proof of IBAN;
d) Term of acceptance, according to model provided by IEFP, I. P.
Once the application is submitted, the IEFP examines all the documentation and issues a decision within 10 working days, but this period may be suspended (i) when clarifications or additional information are requested or (ii) when the hearing of interested parties is held, under the terms of the Administrative Procedure Code.
What are the employer’s obligations?
The employer is obliged to maintain the level of employment observed in the last month of the application of the simplified layoff measures.
When the last month of application of the measures took place in July 2020, the month immediately preceding the application of those measures shall be considered for this purpose.
For the purposes of maintaining the level of employment, the following terminations of contracts, subject to proof by the employer, shall not be accounted:
i. Term employment contract expiry;
ii. Following 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;
iii. In case of retirement of the employee, due to age or disability;
iv. Following dismissal with just cause by the employer.
Situations in which the variation in the level of employment results from the transfer of an establishment, part of an establishment, or equivalent, when there is a legal or conventional guarantee of the maintenance by the transferee of the employment contracts covered by the transfer, are also not taken into account.
The employer is also obliged to keep regularized the tax and social security situations before the Social Security Services and Tax and Customs Authority.
The fulfilment of the established duties must be observed during the period of granting of the support, as well as in the 60 following days.
How is the support payment made?
Modality A (1 MGMW one-off) - payment is made at once, within 10 working days from the date of notification of approval of the application.
Modality B (2 MGMW over six months) - payment is made in two equal instalments over the following periods:
i. The first instalment shall be paid within 10 working days as of the date of notification of approval of the application;
ii. The second instalment shall be paid within 180 days of the day following the last day of implementation of the measures - extraordinary support for the maintenance of the employment contract or extraordinary training plan.
When the communication of the approval of the application for the extraordinary incentive to normalize business activity occurs on a date prior to the end of the extraordinary support measures for the maintenance of an employment contract or extraordinary training plan, the periods established above shall be suspended until the first working day after the last day of application of the measures.
The payment of the above mentioned amounts is subject to the fulfilment of the employer's duties, as described above - during the period of granting of the support and within 60 days thereafter.
Non-compliance situations and refund of supports
If the employer fails to comply, the extraordinary incentive to normalize business activity ceases immediately, implying the refund or payment to IEFP and ISS of the amounts already received or exempted, without prejudice to the right to complain for evidence of possible crime.
Failure to comply with the duty to maintain the level of employment shall result in the refund to the IEFP of the amounts already received, taking into account the number of jobs eliminated, without prejudice to the possibility of them being restored within 30 days of the date on which the level of employment fell.
The following situations determine the total refund to the IEFP of the amounts already received:
a) Failure to observe the prohibition on termination of employment contracts under the terms of collective redundancy, dismissal for termination of employment and dismissal for inadequacy, or to initiate the relevant procedures;
b) Declaration of unlawful dismissal for an act attributable to the employee, except where reintegration takes place , without prejudice to his/her category and seniority;
c) Failure to comply with the duty to keep the tax and contributory situations regularized;
d) Cancellation of the granting of the extraordinary support for the maintenance of an employment contract or the extraordinary training plan;
e) False statements.
If the refund is not made voluntarily within the period established by IEFP, default interest will be due at the legal rate in force as of the end of that period.
When the prohibition of cumulating supports has not been complied with, as provided below, the employer must return and pay to IEFP and ISS, the entire amount already received and exempted under the supports.
This support measure is object of monitoring, verification, auditing or inspection actions by the IEFP, I.P., ISS, I.P., or other entities with powers to do so, namely to verify compliance with the applicable rules and the obligations assumed, namely the obligation to maintain jobs and the level of employment.
What types of supports can be cumulated and what is their sequence?
- We highlight that an employer who makes use of the extraordinary incentive to normalise business activity cannot access the extraordinary support for a gradual recovery.
- Modalities A and B above can be combined with other direct employment support.
- Total exemption from the payment of social security contributions payable by the employer cannot be combined with other direct employment support applicable to the same employees.
The extraordinary incentive to the normalization business activity can only be granted once by each employer, and only in one of the modalities e