WHAT ARE THE AMENDMENTS REGARDING THE PROVISION OF FINANCIAL AID DURING THE COVID-19 STATE OF EMERGENCY?
24 April 2020
The State of Emergency Measures and Actions Act (the “Act”) has been once again revised with the latest amendments being promulgated in the State Gazette on April 9, 2020. One of the adopted amendments relates to the so-called “60:40” scheme for payment of compensations to employers aiming to preserve the employment during the state of emergency declared by a Decision of the National Assembly on March 13, 2020. The amendment stipulates that the state will pay not only 60% of the insurable income of each employee for whom compensation is claimed for, but also 60% of the social security contributions due by the employer.
This novelty resulted in amendments to the specific conditions for the provision of compensation adopted by the Council of Ministers in Decree No. 71/04.16.2020 promulgated on 21.04.2020 (Decree No. 71).
In reaction to the various and numerous questions regarding the “60:40” scheme actual implementation, the Ministry of Labour and Social Policy came up with clarifications part of which were included in Decree No. 71.
Here is a close analysis of the major amendments, as well as answers to some of the most significant practical questions:
Categories of employerseligible for the compensation
There are no amendments regarding the companies which may receive compensation. These are:
- all employers performing activities which fall directly within the economic sectors with a prohibition or restriction of activityimposed for the time of the state of emergency. The list of the identified sectors remains unchanged with two additional sectors being included into the initial list: “drivers’ training” and “daycare for young children (private)”.
- all companies with a complete or partial suspension of activity or such with a part-time regime of work introduced and least a 20% decrease of the revenue.
Amount of the compensation
With the revision introduced by Decree No. 71, the state will pay 60% of the amount of the insurable income of each employee for January 2020 and 60% of the paid social security contributions due by the employer for the same month. Employers who have already applied for receiving compensations will be eligible for the compensation in its amended amount.
The National Insurance Institute (NSI) will transfer the compensation on monthly basis relying on consolidated information provided by the National Employment Agency.
No compensations for employees taking unpaid leave
An additional restriction regarding the employees whom the employer cannot claim compensation for has been introduced. In addition to the restrictions initially provided for, no compensation will be paid for employees taking unpaid leave.
Amendments in terms of cases where part-time regime of work has been established
The amount of the compensation for part-time employees remains unchanged – it shall be paid in proportion to the time not worked, yet for no more than 4 hours a day. The revision, however, stipulates the amount of the remuneration to be paid by the employer in such cases. The employer is obliged to pay the employees their remuneration in its full amount as determined for full-time work, as well as the social security contributions due for the respective month.
The above amendments shall take effect as of April 21, 2020 and shall also apply to employers who have applied for compensation prior to this date.
Answers to other commonly asked questions
In response to the questions put by the businesses, the Ministry of Labour and Social Policy published answers to some of the practical questions regarding the payment of the compensations. The clarifications made allow us to now draw the following conclusions with a greater degree of certainty:
- Compensation can be received for employees who, not by their own choice, take their paid annual leave as a result of the suspension of the activity in relation to the state of emergency (Art. 1 173a, Para 1 of the Labour Code).
- Any employer who has received compensation shall be obliged to keep the workers and employees the compensation has been paid for employedfor an additional period equal to the period of receiving the compensation. During this period, however, the employer may still introduce reduced or part-time work in compliance with the regulatory requirements.
- One of the requirements for the employers for the period of receiving the compensation is not to terminate employment contracts of workers and employees on several specific grounds set forth in the Labour Code – closing down the entire enterprise or part of it, reducing permanent positions, work reduction or suspension of more than 15 working days. This requirement is applicable not only to the employees for whom compensation is paid but is valid for all employment contracts as well.
Detailed analysis of the procedure and conditions for the provision of financial support to the businesses during the state of emergency is accessible here.
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