Im­pact of the ac­tions tak­en by the Gov­ern­ment in the con­text of San­i­tary Emer­gency caused by COVID-19

Impact of the actions taken by the Government in the context of Sanitary Emergency caused by COVID-19

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In the last cou­ple of days, dif­fer­ent branch­es of the Gov­ern­ment have elab­o­rat­ed a set of poli­cies in or­der to re­duce the dam­age to the econ­o­my caused by the quar­an­tine de­creed on March 20th in the con­text of COVID-19. At Ler­man & Szlak we con­sid­er it nec­es­sary to keep the com­mu­ni­ty in­formed about the ac­tions tak­en by the au­thor­i­ty and their im­pact.

De­cree N° 329/2020:

1) Worker´s fir­ing and lay­offs based on re­duc­tion of ac­tiv­i­ty or force ma­jeure and fir­ings with­out ex­pres­sion of cause are banned un­til April 31st. If any of this hap­pens they would be in­valid.

2) Fir­ings based on jus­ti­fied caus­es (Ar­ti­cles 242 through­out 244 of the la­bor law) and lay­offs based on dis­ci­pline mea­sures (Ar­ti­cles 67, 68, 218 and 220 of the law) are still al­lowed. Arrange­ments be­tween em­ploy­ers and em­ploy­ees re­gard­ing the con­clu­sion of the con­tract by mu­tu­al con­sent (Ar­ti­cle 241 of the law) are al­so al­lowed.

3) Lay­offs based on Ar­ti­cle 223 bis of the la­bor law are al­so avail­able, need­ing and an agree­ment be­tween em­ploy­er and em­ploy­ee ‑or be­tween an em­ploy­er and the cor­re­spond­ing union- to re­place the worker´s salary with a spe­cial mon­ey grant for as long as the re­duc­tion of ac­tiv­i­ty or force ma­jeure con­tin­ues. Nev­er­the­less, the em­ploy­er must keep pay­ing the con­tri­bu­tions to the so­cial se­cu­ri­ty es­tab­lished by laws N° 23.660 and 23.661.

4) In or­der to ap­ply the lay­offs based on Ar­ti­cle 223 bis of the la­bor law to 15% of the reg­is­tered work­ers (in com­pa­nies with less than 400 em­ploy­ees), 10% (be­tween 400 and 1.000 em­ploy­ees) and 5% (more than 1.000 em­ploy­ees), the com­pa­ny first needs to en­ter a spe­cial “Pre­ven­tive Cri­sis Pro­ce­dure” at the La­bor Min­istry. How­ev­er, the Min­istry re­mains close due to the iso­la­tion poli­cies tak­en by the Gov­ern­ment. In con­se­quence, lay­offs above the giv­en per­cent­ages of the to­tal work­ers are not pos­si­ble by the time be­ing.

De­cree N° 332/2020:

1) The de­cree sanc­tions the “Emer­gency As­sis­tance Pro­gram to Jobs and In­dus­try”. This pro­gram grants a se­ries of ben­e­fits to busi­ness­es that com­ply with at least one of the fol­low­ing:

  • Per­form ac­tiv­i­ties dam­aged by the quar­an­tine.
  • Have an im­por­tant amount of em­ploy­ees in­fect­ed with COVID-19, in quar­an­tine or not cur­rent­ly work­ing due to be­ing in a risk group or tak­ing care of a rel­a­tive due to COVID-19.
  • Have an im­por­tant re­duc­tion in their sales since March 20th.

Busi­ness­es ex­clud­ed from the pro­gram in­clude those which per­form ac­tiv­i­ties that con­tin­ue in spite of the quar­an­tine and the ones that aren´t able to probe an im­por­tant re­duc­tion in their ac­tiv­i­ties.

2) Busi­ness­es will ap­ply to the pro­gram on­line. The de­cree al­lows the Chief of Staff to es­tab­lish cri­te­ria to be met in or­der to ac­cess the ben­e­fits of the pro­gram.

3) Those busi­ness­es will be able to choose be­tween one of the fol­low­ing ben­e­fits:

  • Post­pone so­cial se­cu­ri­ty pay­ments cor­re­spond­ing to March and April un­til a fu­ture date fixed by the rev­enue ser­vice.
  • Re­duc­tion of the so­cial se­cu­ri­ty pay­ments cor­re­spond­ing to April, on­ly for com­pa­nies with up to 60 em­ploy­ees. The Chief of Staff will be in charge of fix­ing the amount of that re­duc­tion.

4) A “Com­pen­sato­ry Salary Al­lowance” (CSA) will be avail­able to com­pa­nies ac­cept­ed in­to the pro­gram with up to 100 em­ploy­ees. The CSA is an amount that Gov­ern­ment will pay to each work­er of the com­pa­ny. How­ev­er –if it´s low­er than the employee’s salary- the com­pa­ny must pay the dif­fer­ence. The CSA varies de­pend­ing on the amount of work­ers of the com­pa­ny:

  • Up to 25 work­ers: 1 min­i­mum wage (AR$16.875)
  • Be­tween 26 and 60 work­ers: 75% of the min­i­mum wage (AR$12.656,25)
  • Be­tween 61 and 100 work­ers: 50% of the min­i­mum wage (AR$8.437,50)

If the com­pa­ny ap­plies lay­offs based on Ar­ti­cle 223 bis of the la­bor law, the CSA could be tak­en as part of the spe­cial mon­ey grant paid as a re­place­ment of the salary. In this sce­nario, the amount of the CSA would be re­duced by 25%.

5) Com­pa­nies with more than 100 em­ploy­ees will be able to Ac­cess the pro­gram “RE­PRO As­sis­tance due to San­i­tary Emer­gency”. Work­ers of the com­pa­nies with­in this pro­gram will re­ceive a spe­cial mon­ey grant be­tween AR$6.000 and AR$10.000. Their em­ploy­ers must pay the dif­fer­ence be­tween that amount and the cor­re­spond­ing salary.

De­cree N° 333/2020: The cus­tom du­ty for im­por­ta­tion of sev­er­al med­ical and san­i­tary el­e­ments is re­duced to 0.

Ex­tra­or­di­nary re­cess in Gov­ern­ment agen­cies: All le­gal and reg­u­la­to­ry dead­lines are sus­pend­ed un­til April 12th in Na­tion­al In­sti­tute on In­dus­tri­al Prop­er­ty (IN­PI) and the Gen­er­al In­spec­tion of Jus­tice (IGJ).

Al­though the ban on fir­ings and lay­offs deep­ens the dif­fi­cul­ties in busi­ness­es af­fect­ed by the slow­down of the econ­o­my, the Emer­gency As­sis­tance Pro­gram to Jobs and In­dus­try could mean an im­por­tant aid to soft­en the dam­age caused to com­pa­nies. In or­der to as­sure that the pro­gram would re­al­ly help small and medi­um busi­ness­es, first we should wait for the cri­te­ria that the Gov­ern­ment will es­tab­lish to ac­cess the ben­e­fits men­tioned in this post.

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Angela works closely with Team Lerman & Szlak, specializing in online intellectual property research and content.

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