international employment law firm alliance L&E Global
Portugal

2. State Aid

Government subsidies and special relief resources allocated to support employers, and workers, in their efforts to maintain employment and pull through the crisis.

The extraordinary and urgent measures approved Portuguese Government in response to the COVID-19 pandemic, included, among others credit lines – totalling EUR 460,000,000 - to support companies’ cash flows; credit lines with reduced interest rates for specific industries (tourism, catering and similar, travel, events and similar) or types of company (SMEs and midcaps) – Linha de Apoio à Economia COVID-19 – for a global amount of EUR 6,200,000,000 -.

Companies access to these lines of credit are conditional, among others, of maintenance of permanent jobs until 31‑12-2020, in view of the proven number of these jobs on 01-02-2020 and not carrying out in this period collective or individual redundancy processes, unless under the  lay‑off regime.

As per public communication issued by the European Commission, “these schemes aim to limit the risks associated with issuing operating loans to those companies that are severely affected by the economic impact of the Coronavirus outbreak. The objective of the measures is to ensure that these companies have sufficient liquidity to safeguard jobs and continue their activities faced with the difficult situation caused by the Coronavirus outbreak”[1]. This financial aid is be channeled through banks and other financial institutions.

An extraordinary financial incentive to support normalisation of business activities has also been established for employers that have resorted to the crisis emergency measures of simplified emergency lay-off or extraordinary assistance for training. A one-time payment amount may be applied for to support the resumption of business activities of an amount of EUR 635 per employee.

Same employers (resorting to the simplified emergency lay-off or extraordinary assistance for training) are exemption from paying Social Security contributions that refer to the employees (and directors) covered by the measure.

Other employers may also benefit from the possibility of deferring their social security (and tax) payments[2], if they:

  • engage less than 50 employees, in any case;
  • engage between 50 and 249 employees and have suffered a fall of at least 20% in e-billing turnover in March, April and May 2020, compared to the same period in the preceding year (or, for those who have not been operating for 12 months, the average for their operating period);
  • engage 250 or more employees, and have registered a fall of at least 20% in e-billing turnover in March, April and May 2020, compared to the same period in the preceding year (or, for those who have not been operating for 12 months, the average for their operating period) and additionally meet one of the following requirements:
    1. are a private social solidarity institution or similar entity;
    2. operate in an industry temporarily restricted or limited by Government determination (in the context of the pandemic prevention measures), or belong to the tourism or aviation sectors, and have effectively been closed; or

Unemployment benefits and all other social security system benefits which ensure a minimum standard of living, are extraordinarily renewed until 30 June 2020.

[1] See the communication, available at https://ec.europa.eu/commission/presscorner/detail/en/IP_20_506.

[2] - Contributions normally due in March, April and May 2020, may be paid as followings:

  1. a) 1/3 of the amount to be paid in the month it is normally due;
  2. b) the remaining 2/3 being payable in equal and successive, interest-free instalments, according to one of the following two alternatives:

(i) July, August and September 2020; or

(ii) July to December 2020

Any questions

Ask our member firm Morais Leitão in Portugal