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COVID-19 AND STATE OF EMERGENCY IN PORTUGAL

COVID-19 AND STATE OF EMERGENCY IN PORTUGAL

COVID-19 AND STATE OF EMERGENCY IN PORTUGAL

On March 11, 2020 the World Health Organization (WHO) qualified the public health emergency sweeping across the world, caused by the disease COVID-19, as an international pandemic.

The situation quickly developed, and all countries were forced to adopt strong restrictions of rights and freedoms.

On March 18, 2020 the President of the Republic of Portugal declared a national emergency for the duration of two weeks (Decree of the President n.º 14-A/2020). The state of emergency started at 00:00 AM of March 19, 2020 and has been already renewed until April 17, 2020.

The Government thus implemented the state of emergency by Decree n.º 2-A/2020, and afterwards by Decree nº 2-B/2020.

Teleworking is now mandatory for workers under all forms of contracts, whenever their functions allow.

There are lists of businesses and establishments that were forced to shut down, and lists of establishments that must remain open throughout the state of emergency, such as supermarkets, food stores, medical services, medical stores, cosmetics and hygiene stores, pharmacies, drugstores, veterinarians, flowers and seeds stores, and other essential activities, all listed.

All other services activities open to the public, not listed as essential, must be suspended.

Schools and nurseries have been closed since March 13, 2020. For that reason many parents are not able to go to work, and the Government has established partial compensation for those cases: the employer must pay 2/3 of the salary, and shall be reimbursed of 1/3 by social security.

The Government has established a moratorium for credits conceded to families and small businesses by banks, and an extraordinary extension of unemployment benefits and all social protection benefits that guarantee the minimum survival of the people for those whose entitlement period or renewal term would expire during the situation of emergency.

Restrictions to circulation were also established. People that are not under mandatory confinement or attached to a special duty of protection, are only allowed to circulate under the following reasons, among others (all listed):

  • for the purpose of purchasing goods and services;
  • to go to work or for professional reasons;
  • to look for work or answer a work related offer;
  • for health reasons;
  • for emergency support of domestic violence victims and children and young people at risk;
  • for assistance of vulnerable persons, disabled people, children, parents, elderly people or dependent);
  • Accompaniment of minors;
  • for short-term outdoor fruition, or walking pets;
  • travel to schools when exceptionally allowed;
  • for short-term outdoor non collective exercise;
  • social volunteer work;
  • participation in court procedures;
  • visit to post offices, bank agencies, insurance offices

All court procedural delays are suspended, except in procedures that deal with fundamental human rights (as in the cases of minors at risk and prisoners). Tenants are temporarily protected from termination notices received that should have been executed during the period of the state of emergency and mortgages regarding the primary house of the debtor may not be executed during the same period.

Tax and social security obligations are suspended until June 30, 2020, and may be settled afterwards in instalments and without interests, under certain conditions.

All religious services are prohibited whenever they implicate a gathering of persons.

Job protection measures have been established in order to protect employment: a special conservatory measure was established for employers that were forced to shut down or suspend their businesses, or have experienced a 40% or more decrease in business: these employers may reduce the working hours of their employees or even suspend their work contracts, and pay them 2/3 of their salaries. Social Security shall reimburse the employer of 70% of their payments to the workers. On the job training is also promoted and funded by social security, in order to protect jobs. Also, the employer shall be exempt of social security contributions during the period of these measures application.

General meetings of shareholders of commercial companies, associations or cooperatives which should take place by law or by statute until March 31st, may take place until June 30, 2020.

The Government also announced the provision of four credit lines ensured by the banking system to the most affected sectors, with the value of 3.000 million euros. The Government announced that those credit lines will have a spread between 1% and 1,5%, depending on the loan maturity. The guarantee given by the state shouldn’t cover the entire capital, but instead vary between the 80% and the 90%. These credit lines will have no payments for the first 12 months, shall be paid within 4 years and are destined to the following sectors:

  • Restaurants and Similar: 600 million euros (270 million euros for micro, small and medium-sized enterprises);
  • Tourism – Travel Agents, Animation and Organization of Events or Similar: 200 million euros (75 million euros for micro, small and medium-sized enterprises);
  • Tourism – Enterprises and Accommodations: 900 million euros (300 million euros for micro, small and medium-sized enterprises);
  • Industry – Textiles, Clothing, Footwear, Extractive industries (ornamental rocks) and wood sector and cork: 1.300 million euros (400 million euros for micro, small and medium-sized enterprises).

A 200 million euros credit line is now available to the micro, small and medium-sized enterprises, under the following conditions: 1,5 million euros as a maximum per company; guaranteed up to 80%, offset by 100%; and total subsidy of guarantee provision.

The candidate companies must have liquid positive annual results in the year before the application date, or (in case the results are negative) they may access the credit line when the situation is remedied on the mid-term review approved until the operation date. They may not have incidents not yet settled with banks, on the trade date, must have fulfilled all tax and social security obligations. They must also declare that there was a reduction of at least 20% on the turnover in the previous 30 days.

Most banks have launched measures and credit lines for affected companies.

The Government also approved a moratorium of six months, until 30 September, that prohibits revoking the contracted credit, its suspension or prorogation until the end of that period, in order to guarantee the continuity of financing families and companies and prevent possible defaults.

Finally, the Government established an exceptional and temporary regime of justified absences from work for family assistance and has changed the general rules for attribution of EU structural and investment funds, as a way to allowing the anticipation of payment requests, on what concerns balances.