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Economic and Social Stabilization Program

Economic and Social Stabilization Program

Decree-Law no. 27-B/2020

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Extension of the extraordinary support for maintaining employment contracts in a business crisis situation and creation of other employment protection measures under the Economic and Social Stabilization Program

Following the approval of the Economic and Social Stabilization Program, the Decree-Law no. 27-B/2020 of June 19th was published in the Official Gazette (“Diário da República”), extending the extraordinary measures for the maintenance of employment contracts for companies in business crisis, as well as creating additional measures for employment protection.

We highlight below some of the most relevant measures:

Amendment of the periods for granting the support for the maintenance of employment contracts for companies in business, as follows:

(i) companies that have made use of the “simplified lay-off” until 30.06.2020 and reached the maximum renewal limit (total duration of three months), may benefit from an additional and exceptional extension of this benefit until 31.07.2020;

(ii) companies that have not made use of the “simplified lay-off” but will submit its application until 30.06.2020, may benefit from this measure that is extended up to a maximum of three months (end of September).

The application for the “simplified lay-off” is now made at “Segurança Social Directa”, via an online form.

An extraordinary financial support was created to ensure the normalization of business activity, as follows:

(i) a financial support corresponding to EUR 635 per employee covered by the “simplified lay-off” or by the extraordinary training plan – one off; or

(ii) A financial support corresponding to EUR 1.270 per employee covered by the “simplified lay-off” or by the extraordinary training plan – during six months.

In the latter case, companies are entitled to a partial exemption of 50% of the employer portion of the social security contributions, in relation to the employees covered by this measure, or a total exemption, in case of net job creation within the three months period following the grant of the above support measures (such exemption is limited to the net created jobs).

In cases where the "simplified lay-off" or the extraordinary training plan has lasted for more than one month, the amount of the benefit is determined according to the average number of employees covered by each month of application of that support. In case the duration was of less than one month (or less than three months for the support mentioned in (ii)), the amount of the support shall be reduced proportionally.

The above supports are subject to additional limitations and duties for the employer, as better described in the law.

An employees’ stabilization financial support was also created for employees who have received a base salary equal to or less than twice the minimum guaranteed monthly wage (EUR 1.270) in February 2020 and who, between April and June, were covered by, at least, one full calendar month by the “simplified lay-off” or by the extraordinary training plan.

This financial support corresponds to the difference between the base salary reported for February 2020 and the complete calendar month in which the employee was covered by the measures above-mentioned, with a minimum of EUR 100 and a maximum of EUR 351.

© 2020 KPMG PORTUGAL – S.G.P.S., S.A., a Portuguese company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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