Portugal declares state of emergency over coronavirus

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published on 20 March 2020 | reading time approx. 12 minutes

  

The President of the Portuguese Republic, Marcelo Rebelo de Sousa, declared a state of emergency to fight the sharp rise in coronavirus (Covid-19) infections.

 

 

The Presidential decree declaring the state of emergency, and which was approved by the Assembly of The Republic, determines that the state of emergency started today´s midnight and lasts until 23h59 on April 2. Fifteen days is the maximum period in which the state of emergency can take effect under Portuguese law. However, it can be extended indefinitely in 15 day periods if necessary.

 

Beyond restrictions already in place, the declaration allows the Government of Portugal for:

  • compulsive confinement of people in their homes;
  • the requisition of private property to be used for any services;
  • the obligatory opening and functioning, or indeed closing, of businesses;
  • sanity controls to stop people living their areas of residence;
  • the enforced use of public or private sector workers in areas deemed necessary;
  • further restrictions on air traffic in and out of the country and
  • extra powers for security forces and tight controls on meetings or public demonstrations.

 

The Council of Ministers will meet today to decide on exactly what measures will be taken and from when. Though, the Portuguese Government has already announced a set of measures to face difficulties such as a 9.200,00 mio. Euros aid to support companies and households affected by Covid-19 pandemic.

 

Other Portuguese measures regarding coronavirus pandemic

 

Taxation

The Government has approved a flexibilization in the payment of taxes and social contributions, as follows:

  • Postponement of the first Special Payment on Account of the Corporate Income Tax (CIT) from 31 March to 30 June 2020.
  • Extension of the deadline for submission of the Model 22 declaration, and payment of the CIT due, from 31 May to 31 July 2020.
  • Extension of 1st Payment on Account and of the Additional payment on Account (State Surcharge) from 31 July to 31 August 2020.
  • The situations of infection or prophylactic isolation (quarantine) declared or determined by a health authority are considered sufficient conditions for the application of the figure of fair impediment in the fulfilment of tax reporting obligations, in relation to taxpayers or certified accountants.
  • General meetings of commercial companies, associations or cooperatives that must take place by legal or statutory imposition may be held until June 30, 2020.

 

Regarding VAT and withholding taxes for the second quarter of 2020, the government has decided to make tax payments more flexible for companies and the self-employed.

 
Thus, payment obligations can be fulfilled in one of three ways: 

  • immediate payment in the usual terms;
  • payment in three monthly instalments without interest, or in six monthly instalments, with interest for late payment applicable to the last three.

 

In addition, for payments in instalments it will not be necessary to provide any guarantee.

 

These measures are intended for VAT payments under the monthly and quarterly regimes, and for the delivery to the State of the withholding of personal and corporate income tax" and "are applicable to self-employed workers and companies with turnover of up to 10 mio. Euros in 2018, or starting operations as of January 1, 2019.

 
The remaining companies or self-employed workers may request the same flexibility in the payment of tax obligations in the second quarter, when there has been a decrease in turnover of at least 20 percent in the average of the three months prior to the month in which this obligation exists, compared to the same period of the previous year.

 

Social contributions

Regarding the social contributions due between March and May 2020, and to preserve employment, the Government has decided to reduce them to 1/3 in the months of March, April and May. The remaining amount for the months of May, June and July is settled as from the third quarter of 2020, in terms similar to the fractioned payment adopted for taxes payable in the second quarter. However, companies, if they so wish, may make immediate payment on the usual terms.

 
This measure applies, immediately, to companies with up to 50 jobs. Companies with up to 250 jobs can access this mechanism of reduction and fractionation of contributions in the 2nd quarter of 2020, if they have recorded a drop in turnover of 20 percent or more.

 
The Government has also decided to suspend for 3 months the foreclosure procedures related with the non-payment of taxes or social security contributions.

 

Labour

Contingency Plans
The companies should implement internal Contingency Plans that should involve health and security services at work, the company, employees and their representatives, and should contain, in order to prevent contamination, rules such as: 

  • Risk assessment on the impact that the proliferation of the virus may have on the company's production structure;
  • Area of isolation and the circuits to it;
  • Structure of responsibilities on information and communication duties related to the presence of the virus in the workplace;
  • Provision of relevant contacts;
  • Availability of useful equipment and products (masks, wipes, antiseptic solutions, use of sanitizing products, frequent hand washing and, at least, 20 seconds under water).

 

These plans should be communicated to employees for their proper implementation and protection.

 

Infection situations
In cases where there is a suspicion of infection by Covid-19, one of three situations occurs:

  1. Directorate-General of Health (health authority) determines that the employee, regardless of whether he is a dependent or self-employed worker, must be isolated;
  2. The employer, after consulting his service of health and security in the workplace (internal, external or common), may determine to subject the employee to isolation;
  3. Option for remote work, as long as the employee is able to perform his/her work at distance.

 

Necessity of the Employee’s Isolation by decision of the General Directorate of Health (DGS)
If the DGS determines that the employee, regardless of being a dependent or self-employed worker, should be isolated. There is an equalization of the illness due to infection of Covid-19 with hospitalization, therefore, the person infected by Covid-19 will be entitled to a sickness benefit.

 
However, this sickness benefit will not be subject to a guarantee period, rate of professionalism and waiting period, according to nº 2 of article 19º of the Decree-Law nº 10-A/2020, of March 15th.  This benefit is calculated by applying a percentage to the reference remuneration. This percentage corresponds to 100 percent for the first 14 days when the employee cannot perform his activity due to his infection by Covid-19 (prophylactic isolation situation), in accordance with nº 4 of Article 19º of the Decree-Law nº 10-A/2020. The attribution of the benefit in question is immediate (nº 3 of article 19º and article 20º of the Decree-Law nº 10-A/2020). After this period, the percentage shall be calculated in general terms, in accordance with the provisions of nº 1 of article 16º of the Decree-Lawnº 28/2004, of February 04th, by reference to line b) of nº 1of the Order nº 2875-A/2020, of March 3rd (55 percent up to 30 days, 60 percent up to 90 days and 70 percent up to 365 days).

 
Necessity of Employee’s Isolation by Employer's Decision
The employer, after consulting his service of health and security in the workplace (internal, external or common), may determine to subject the employee to isolation. Nothing prevents the employer from deciding to instruct the employee to stay at home, whenever there is a well-founded suspicion that he has the coronavirus, opting, if possible, for remote working.

 
Remote working: Teleworking
In the case of remote working, more specifically teleworking, the employer and the employee may agree to apply this regime. However, the employee, who may perform his duties at a distance, may opt for the teleworking regime without the employer's agreement, in accordance with the provisions of article 29º of the Decree-Law nº 10-A/2020. This occurs to protect the health of the employee, however, with account, weight and measurement. In other words, employees in services considered essential cannot opt for teleworking. For example, the teachers responsible for the children of those who work in the health area, the armed forces, essential public services, security services (e.g. doctors, nurses, firemen), which are essential for the treatment and combat of Covid-19, in accordance with the provisions of nº 1 of article 10º of the Decree-Law nº 10-A/2020.

 
The telework system implies that the dependent worker will not be entitled to financial support, more specifically to exceptional family support, which is perceptible once the employee is able to continue to perform his duties from his home and, consequently, will receive the appropriate remuneration.

 
Working arrangements for health professionals
A mention should also be performed concerning the working arrangements of health professionals during the suspension of teaching activities. The following results from Order nº 3301/2020, of March 15th:

  1. In a couple where only one of the members is engaged in a health-related activity, the health professional shall not be able to assist his/her children or other dependents, who are under 12 years of age or have some chronic illness/disability, therefore, the other member of the couple will be responsible for providing the assistance;
  2. If the couple is composed only of health professionals, they shall alternately provide family assistance or, preferably, resort to the educational establishment provided for in article 10º of Decree-Lawnº 10-A/2020;
  3. If the household is composed of only one health professional, he must give preference to the educational establishment provided for in Article 10º of the Decree-Law nº 10-A/2020.

 

Whether the healthcare professional does not provide care for his children or other dependent under the age of 12 or who has a disability/chronic illness, or confines the care to an educational establishment, the health professional will be entitled to an exceptional financial family support. 

 
Absences of the Employee
Several questions remain concerning the employee’s absences:

  • The dependent worker who is unable to work in order to assist his/her children or other dependent person during the period of prophylactic isolation, while the teaching activities are suspended, is violating the employment contract? His absences are considered unjustified? No.
  • Apart from this prophylactic period, the employee’s absences are justified? If the employee does not perform his work because he is assisting his/her children or other dependent person, who is under 12 years of age or who is chronically ill/disabled, during the period of suspension of teaching activities, his absence is considered justified.
  • The employee should report the absence to the employer as soon as possible in a separate form (Mod. GF B-DGSS).

 
However, to consider an absence justified is insufficient in relation to the needs of the employee, which justified the attribution of exceptional benefits and supports. Therefore, according to the provisions of nº 2 of article 21º of the Decree-Law nº 10-A/2020, two types of benefits were granted in the event of absence from work to assist children under 12 years of age or with chronic illness/disability related to the prophylactic isolation period:

  • Childcare benefit and
  • Grandchild care benefit.

 

If the beneficiary of these benefits has recently started working and has no income corresponding to 6 months of work, the benefits will be calculated by reference to the total remuneration he obtained, from the beginning of the 6 months prior to prophylactic isolation until the day before that isolation, to be divided by the result of the multiplication of 30 for the number of months the employee worked.

 

Exceptional supports
Regarding exceptional supports, each employee will be entitled to a family support, which will correspond to 2/3 of the basic remuneration and which will be supported by the employer and the Portuguese Social Security. In this case, the employer will pay 33 percent and the Social Security the remaining 33 percent to the employee. However, the two thirds mentioned above cannot be less than 635.00 Euros (guaranteed minimum monthly wage), and cannot exceed 1,905.00 Euros (which corresponds to three minimum wages). It should be noted that the employee will receive two thirds of the basic remuneration through the employer, which shall receive the share of the Social Security.

 

Exceptional family support is required by the employer, unless remote work can be implemented.

 
Exceptional support for the Self-Employed Workers
This exceptional family support also applies to the Self-Employed Workers, however, with different outlines. If the self-employed worker has made 3 consecutive contribution declarations in the last 12 months he/she can obtain exceptional support to assist his/her children or other dependent under the age of 12 or who has a chronic illness/disability, for as long as the period of suspension of teaching activities persists.

 
Therefore, the self-employed worker shall be entitled to receive 1/3 of the average of what he/she earned in the last 3 months of the present year. This way, the employee should receive at least 438.81 Euros (Ordinance nº 27/2020, of January 31st) and at maximum 1,097 Euros. For instance, an employee who receives an average, by reference to the last 3 months, of 800.00 Euros, would receive a support of 266.66 Euros, however, cannot receive this amount because he/she is entitled to receive at least 438.81 Euros. Therefore, the self-employed will receive 438.81 Euros instead of receiving 266.66 Euros. Nevertheless, the self-employed will have to fulfill his/her social security obligations.

 
It should be noted that family support and assistance support shall not be given to both parents at the same time, regardless of whether they are self-employed or dependent workers. 

 
Self-employed workers are also entitled to extraordinary support to the reduction of their economic activity, provided that they have declared three consecutive months of contributions in the last 12 months, only if they are totally out of activity or if there has been a total shutdown of their sector, and subject to a commitment of honor from the self-employed worker or, in the case of organized accounts, from a certified accountant. This support is granted for 1 month with the possibility of extension for the same period up to a maximum of 6 months.

 
The support for reduced activity includes another advantage, which consists in the payment of the due contributions after the months in which the support in question is received, and may be paid in monthly instalments up to 12 months.

 

The Employer

On the employer's side, extraordinary support has also emerged. In this direction and in order to minimize the economic impact of Covid-19 on companies, the Ordinance nº 71-A/2020, of March 15th, was published, defining the circumstances of its attributions, regarding extraordinary and temporary support. In nº 2 of article 1º of this Order we find 4 measures, which are transcribed bellow:

  • Extraordinary support for maintaining an employment contract in a business crisis situation, with or without training;
  • The extraordinary Training Plan;
  • The extraordinary financial incentive to support the normalization of the company's activity; and
  • The temporary exemption from the payment of social security contributions by the employer.

 

These supports are given to private companies, including, for example, associations, self-employed workers and Private Social Solidarity Institutions (IPSS). However, they must be in one of the two situations referred to in nº 1 of article 3º of the Ordinance in question:

  • The total shutdown of the company's or establishment's activity resulting from the interruption of global supply chains, suspension or cancellation of orders;
  • The sharp and abrupt drop of at least 40% in billing in the 60 days preceding the application to the Social Security, with reference to the same period or, for those who have started the activity less than 12 months ago, at the average of this period.

 

Companies must have their tax and social security situation duly settled in order to apply for the extraordinary supports.

 
Moreover, there is nothing to prevent companies from obtaining other supports.

 
Simplified Lay off
The employer has the right to a support in the amount of 2/3 of the remuneration in order to be able to pay the wages to his employees. Under the terms of nº 4 of article 305º of the Labor Code, by remission to nº 6 of article 5º of Ordinance nº 71-A/2020, the employer shall pay 30 percent of the basic remuneration of each employee and the remaining 70 percent of the basic remuneration of each employee of the employer shall be paid by the Portuguese Social Security.

 
This support for the subsistence of the employment contract is granted for 1 month and can be extended for the same period up to a maximum of 6 months.

 
What if the worker has training outlined by IEFP, I.P. (Portuguese employment centre)? There is an increased support to the subsistence support of the contract because it is an investment in the development of skills of the employee. In this case, the Social Security pays 30 percent of 438.81 Euros (value of 1 IAS) to the employer and the employee equally. Currently, the 30 percent corresponds to 131.64 Euros, half of this amount shall be paid to the employer and the other half shall be paid to the employee.

 
Support for Professional Training
Professional training support will only be granted if the employer has not obtained the extra support for maintaining the employment contract. Therefore, a training plan, prepared by IEFP, I.P., should be implemented, which will occur at distance whenever possible. This support will have a maximum duration of one month and is intended for training corresponding to half of the normal working time.
It results from the provisions of nº 3 of article 6º Ordinance nº 71-A/2020 that the extraordinary support to be granted to each employee is supported by the IEFP, I. P., and is granted according to the hours of training attended, up to the limit of 50 percent of the gross remuneration, with the maximum limit of RMMG (635.00 Euros).

 
The training support must be communicated to the employee and requested to IEFP, I.P.

 
Incentive for the Normal Activity of the Company
Concerning the incentive for the normal activity of the company, it will be granted to the company by the IEFP, I.P., in the amount of 635.00 Euros for each employee, only once. 

 

Temporary Exemption of the Company from Paying Contributions
The company's temporary exemption from the payment of social security contributions is granted officiously by the Portuguese Social Security, which does not remove the obligation to declare quarterly. If the declarations do not correspond to the reality, the companies must pay the contributions due under the exceptional regime.

 

 

Finally, it should be noted that these measures, although extremely relevant, are up to date at the present time, which means that the may suffer alterations. We are available to provide any further clarification that may be necessary or to advise on the best procedure to adopt in Portugal. 
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