Temporary lay-offs to keep jobs safe extended until June 30

At first, companies were only allowed to lay staff off until they reopened – which is starting to happen in most of the country around now – and was causing widespread concern amongst traders who feared they would not be able to afford to pay salaries until they started making money again.

Although concessions have been made for business owners' rent or mortgage on their premises, taxes and Social Security payments, utility bills and other costs whilst they have not been able to trade, it will take time before they are completely back on track financially; especially as many are still limited to how many customers they can attend to on the premises, potentially cutting their takings.

Not prolonging the lay-off period beyond immediate reopening could put jobs in danger, but firms being allowed to keep staff temporarily off duty with no pay means employment is more likely to be kept safe.

Employees laid off can claim dole money instantly, even if they have not made sufficient contributions either throughout their working life or since they last needed to claim, and existing dole entitlement they have built up will not be affected or depleted by claiming as a result of the lockdown forcing businesses to close.

Once the legal lay-off period is over, on June 30, employees will all go back to work and their jobs must be kept safe for a minimum of six months from then.

The only exception to this is if their company is at risk of having to call in the receivers, the prelude to shutting down altogether, unless they make staff redundant.

Spanish laws covering job loss mean that a person who is sacked, rather than made redundant, has to receive the maximum pay-off, so under normal circumstances, 'finding a reason' to fire someone will not save a firm redundancy money.

And if someone is sacked, it is up to the company to prove they were justified in doing so, not up to the worker to prove they should not have been.

This legislation, already in place, will prevent unscrupulous firms from firing staff for 'gross misconduct' or on disciplinary grounds in order to 'get around' the six-month rule.

Although the national employment and economy organisation, the CEOE, was reluctant to allow lay-offs to continue beyond immediate reopening or for jobs for returning workers to be guaranteed for the next six months, Spain's work ministry wants to take every possible step to keep staff in their positions in order to avoid soaring unemployment statistics.

During the financial crisis, which properly started to bite in around 2008 to 2009, unemployment rocketed to nearly 25% and topped five million, leaving up to 22% of the population and one in four children either in or teetering on the edge of genuine poverty.

After more than a decade of pulling itself out of the economic mire and with the country and its banks now in a financial position to support ailing businesses, Spain is determined to do everything in its power to avoid sliding back into one of its darkest moments in living memory.

Yolanda Díaz has set up a taskforce of government officials, unions and business owners' associations, which will meet – via video-conference – every second Wednesday and try to work out between them which industries need extra funding to help them stay afloat.

Among the conditions in place for the rest of the year, companies with more than 50 employees are not permitted to pay dividends to their shareholders; they will not be permitted to lay staff off – meaning they have to keep paying them, whether they are able to work or not – if they are domiciled in a tax haven, and that any firm which is in a position to start taking their workers back before June 30 must do so, even if only part-time, although some of the shortfall in their wages will be made up through their dole allowance.

Companies which still cannot reopen are exempt from paying Social Security for staff and on behalf of their owners if they have 50 employees or fewer, and those who have more only have to pay 25% of their contributions.

For these smaller firms, for the month of May, the State will pay 85% of staff's Social Security contributions – which go towards their eventual retirement pension and fund benefits such as unemployment, permanent or partial sickness or disability, maternity and paternity leave, widows', widowers' and orphans' pensions, among others – and will pay 70% of these contributions in June, for staff who have returned to work.

For those still laid off, the State will pay 60% of their Social Security for May and 45% for June.

The idea is to encourage companies to get their workers back on board as soon as possible.

In the case of firms with more than 50 employees, the State will pay 60% for May and 45% for June for those who return to their jobs, and 45% and 30% respectively for those still laid off.

Any firms who fail to keep laid-off staff members' jobs in place for a minimum of six months from the date of their reincorporation will be obliged to refund all the Social Security payments for these employees which they have been exempt from paying.