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Factsheet for measure PT-2020-13/433 Updated – measures in Portugal

Extraordinary financial incentive to support the normalisation of business activity

Incentivo financeiro extraordinário para apoio à normalização da atividade da empresa

Country Portugal , applies nationwide
Time period Temporary, 27 March 2020 – 30 June 2021
Context COVID-19
Type Legislations or other statutory regulations
Category Promoting the economic, labour market and social recovery
– Measures to support a gradual relaunch of work
Author Heloisa Perista and Maria da Paz Campos Lima (CESIS) and Eurofound
Measure added 09 April 2020 (updated 10 May 2021)

Background information

This exceptional and temporary measure, set by Decree-Law 10-G/2020 of 26 March, aims  to respond to the COVID-19 pandemic, aiming at maintaining employment and the mitigation of situations relation to business crisis for companies.

Following  the period of temporary reduction of the normal working time or suspension of the employment contract provided for in the legislation under simplified conditions, businesses are entitled to an extraordinary financial incentive to support the normalisation of the activity, in order to facilitate a gradual relaunch of work.

The Resolution of the Council of Ministers no. 41/2020, of 6 June, extends the extraordinary support for the maintenance of employment contracts and establishes a transitional regime replacing the regime in force of ‘simplified layoff’ by a support to progressive recovery.

Content of measure

Companies in crisis situation as a result of:

  • a complete halt in the activity or
  • an abrupt and sharp decrease of activity of at least 40% of revenue have access to a temporary and extraordinary financial incentive to support the normalisation of the activity.

Following  the period of temporary reduction of the normal working time or suspension of the employment contract provided for in the legislation under simplified conditions, the employers are entitled to this temporary and extraordinary financial incentive to support the upturn of the business activity.

This incentive is paid as a lump sum by the Institute of Employment and Vocational Training (Instituto do Emprego e Formação Profissional, I.P. - IEFP, I.P.).

The amount to be paid is equal to the value of one national minimum wage per worker.

Updates

The following updates to this measure have been made after it came into effect.

15 January 2021

The Decree-Law n.º 6-C/2021, of 15 January, extends the extraordinary support for the progressive recovery of activity in companies in a situation of business crisis. This legal diploma establishes:

  • The payment by the Government of 100% of the salary up to three times the minimum monthly guaranteed wage (minimum wage) to workers covered by the extraordinary support to maintain their work contract, provided for in Decree-Law n. º 10-G/2020, of 26 March.
  • The workers covered by the reduction or suspension measures in a situation of business crisis, provided for in article 298 of the Labour Code, which was motivated by the COVID-19 pandemic and which commenced after 1 January 2021, are now entitled to full payment of their normal gross remuneration up to a value equal to three times the minimum wage.
  • The extraordinary support for the progressive resumption of activity is guaranteed until the first semester of 2021, and it is extended to members of the statutory bodies who exercise management functions in companies with registered social security contributions and who have employees under their responsibility.
  • Likewise, the payment of 100% of the remuneration up to three times the minimum wage is ensured to the workers covered, while the partial exemption from social security contributions, payable by the employer, is maintained for micro, small and medium enterprises.
  • A simplified financial support aimed at micro-enterprises is created, in the amount equivalent to two minimum wages per worker who has been covered in 2020 by the extraordinary support to maintain the employment contract or by the extraordinary support to the progressive resumption of activity.
13 July 2020

The Resolution of the Council of Ministers no. 41/2020, of 6 June, that approved the Economic and Social Stabilization Programme extends the extraordinary support for the maintenance of employment contracts and establishes a transitional regime replacing the regime in force of ‘simplified layoff’ by a support to progressive recovery (2.2.1). It introduces also a one-off measure, the Stabilisation Complement to improve income of workers under layoff (2.3).

  • Companies that remain closed as determined by the government continue to benefit from the simplified layoff regime; the simplified layoff, in the model currently in force, is extended until the end of July;
  • Companies that have a reduction of revenue equal to or greater than 40% may benefit, between August and December 2020, from a support mechanism for progressive recovery;
  • Companies that have benefited from the simplified layoff regime can now benefit from an extraordinary incentive to normalize business activity, choosing one of two modalities: one minimum wage (€635) one-off or two minimum wages over six months, per job in lay-off.

Use of measure

Information released by the Ministry of Labour, Solidarity and Social Security (MTSS) – April 2020 - 'COVID-19 | Informação relativa a famílias e empresas no âmbito do MTSSS'

Information on 7 April:

Layoff around 40,000 companies/ encompassing around 642,000 workers. In terms of sectors 24.2% are companies in the Accommodation and Food Services, 19.9% in Wholesale and Retail, 9.3% in Manufacturing Industry and 8.9% in Human Health and Social Support Activities.

Information on 6 June:

According to the information provided by the Resolution of the Council of Ministers 41/2020, of 6 June, that approved the Economic and Social Stabilization Programme, the simplified layoff regime covered around 100,000 companies and 800,000 workers.

Target groups

Workers Businesses Citizens
Does not apply to workers Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Public employment service
European Funds
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Consulted Consulted
Form Consultation through tripartite or bipartite social dialogue bodies Consultation through tripartite or bipartite social dialogue bodies

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Peak or cross-sectoral level

Involvement

Tripartite consultation involving the government, the trade union confederations CGTP and UGT and the employer confederations CIP, CCP, CTP and CAP at the Standing Committee for Social Concertation.

Views and reactions

Social partners were consulted at the Standing Committee for Social Concertation. Their views are not known.

Sources

  • 20 March 2020: Decreto-Lei n.º 10-G/2020, Diário da República n.º 61/2020 Suplemento, Série I de 2020-03- (dre.pt)
  • 06 June 2020: Resolução do Conselho de Ministros n.º 41/2020 (data.dre.pt)
  • 15 January 2021: Decreto-Lei n.º 6-C/2021 (data.dre.pt)

Citation

Eurofound (2020), Extraordinary financial incentive to support the normalisation of business activity, measure PT-2020-13/433 (measures in Portugal), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/PT-2020-13_433.html

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