July 16, 2020 | Advisory

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Extraordinary Incentive for Business Activity

16/07/2020 – EXTRAORDINARY INCENTIVE TO STANDARDIZATION OF BUSINESS ACTIVITY

Entered into force on July 14, 2020 the Ordinance No. 170-A/2020, Official Gazette No. 134/2020, 2nd Supplement, Series I, of 13.07.2020, which regulates the Extraordinary Incentive to the normalization of business activity, provided for companies that have benefited from support for the maintenance of a work contract (Layoff) or from the extraordinary training plan, to be granted by the Institute of Employment and Professional Training (IEFP).

This incentive translates into the attribution of support to the employer during the return of their workers to normal work and the normalization of business activity. This incentive is part of the support for employment during recovery, provided for in the Economic and Social Stabilization Program and is intended to help maintain employment and reduce unemployment among employers' workers affected by the business crisis as a result of the pandemic.

The measure consists in the attribution of support to companies during the return phase of their workers and the normalization of business activity, which is granted in two modes: support in the amount of one minimum wage "per worker covered by the extraordinary support for the maintenance of a contract of work or by the extraordinary training plan paid at once" or, through support in the amount of two minimum wages per worker covered by the extraordinary support for the maintenance of the employment contract or by the extraordinary training plan paid in stages over six months.

In case companies opt for this second modality, they are entitled to a 50% reduction in Social Security contributions in the first three months. And if in the three months following the end of the support there is net job creation, compared to the three months of the previous year, the company is exempt from paying social security contributions for a period of two months, as long as it maintains these workers for half a year.

The analysis and decision on the granting of the extraordinary incentive for the normalization of business activity is carried out by the IEFP (Institute of Employment and Professional Training), upon request, not yet available, to be submitted by the employer. The IEFP issues a decision within 10 working days from the date of submission of the application.

Similar to what happens with the simplified lay-off, companies that use this extraordinary support cannot fire workers for the next two months. The verification of the maintenance of the employment level is done “unofficially”, that is, with the administrative data contained in the Social Security and which will have to be made available to the IEFP. But there are cases of employees leaving that do not count towards the level of employment, for example, when the term contract ends. Or when the worker quits or there is a dismissal for just cause.