TERMINATION CIGS: THE CLARIFICATIONS PROVIDED BY THE MINISTRY ON THE EXTENSION PROVIDED FOR BY 2026 BUDGET LAW
With Circular No. 5 of 31 March 2026, the Ministry of Labor and Social Policies provided clarifications regarding the scope of application of the income protection measure provided to employees of companies that are winding down or have ceased operations, which is governed by Decree-Law No. 109 of September 28, 2018, as amended by Law No. 299 of December 30, 2025 (“2026 Budget Law”).
Specifically, art. 1 paragraph 172 of the 2026 Budget Law provides for an extension into 2026 of the additional exceptional CIGS measure, for a maximum of six months, which is available if the company has ceased or is ceasing production activities and there are concrete prospects for a significant reduction in workforce.
According to the circular, two possible scenarios – mutually exclusive – emerge in which it is possible to apply for a six-month extension of the CIGS due to cessation of business:
- a first one which would involve the existence of concrete and current prospects for a rapid sale, even partial, of the company, with a consequent reabsorption of employees;
- a second one, in which there are concrete prospects for a significant reabsorption of employment.
In the first scenario, during the preliminary review of CIGS applications, a plan is required that outlines concrete prospects for the sale of the company in accordance with the procedures already applied in 2025, without the need for a prior quantification of the percentage of workers to be rehired.
In contrast, in the second scenario, also during the preliminary review, a plan is required that outlines concrete and significant job retention and provides for the reemployment of at least 70% of the redundant workers.
