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COVID-19: Contributions to Employers and Self-Employed Persons for Maintenance of Employment (Job Positions) During State of Crisis 

by Lenka Subenikova

Published: April, 2020

Submission: April, 2020

 



In our previous legal alert we informed that Act on Employment Services[1]was amended so that allowances to maintain job positions and to maintain employees during the emergency situation, state of emergency and state of distress (the “State of Crisis”) can be provided to a broader group of employers compared to the currently available options under the Act on Employment Services. On 31 March 2020 the Government of the Slovak Republic approved details of the project supporting the maintenance of employment during the State of Crisis (the “Project”) and set out criteria under which allowances within this Project will be provided.


The Project is divided into the following two parts:


Support for employers that closed or limited their operations during the State of Crisis based on the respective decision of the Public Health Authority of the Slovak Republic (the “PHA”)


Employers are entitled to this allowance if they maintain job positions despite the fact that they had to stop or limit their operation during the State of Crisis based on the respective decision of the PHA.


The allowance shall be provided in the amount corresponding to the respective payment (by an employer) of an employee’s wage compensation in the amount of 80% of the employee’s average earnings, up to a maximum cap of EUR 1,100. As regards employers that paid out to the employees only 60% of the employees’ average earnings as the wage compensation during when the employees were not working, please see below.


Support for employers and self-employed persons whose sales decreased during the State of Crisis


Employers are entitled to this allowance if their operations were not affected by the decision of the PHA, but they maintain job positions despite the fact that their sales decreased during the State of Crisis.


This support is also addressed to a self-employed person who, during the State of Crisis,


  • had to stop or limit his/her operation based on the decision of the PHA, or
  • experienced decrease in his/her sales, or
  • maintains job positions despite the fact that he/she had to stop or limit the operation based on the decision of the PHA, or
  • maintains job positions despite the fact that he/she experienced decrease in sales.

This allowance shall be provided either in the form of:


  • payment of part of an employee’s wage compensation (payable by employers and self-employed person who are employers to their employees); that means that the allowance shall be provided to the employers “per employee”, or
  • flat contribution to compensate the loss of earnings (for self-employed persons).

The amount of the allowance is dependent on the decrease in sales compared to the same period in 2019, or alternatively compared to the average for 2019. If the applicant did not operate its/her/his business in 2019, February 2020 shall be taken into account as the comparable period. The below table specifies the amount of the allowance:


Decrease in sales March 2020 April 2020 and following months of State of Crisis
≥ 20 % EUR 90 EUR 180
≥ 40 % EUR 150 EUR 300
≥ 60 % EUR 210 EUR 420
≥ 80 % EUR 270 EUR 540


The maximum amount of the allowance for one applicant is EUR 200,000 per month.


General conditions of the Project (applicable to both parts of the Project)


General conditions that an applicant being an employer needs to fulfil to be entitled to the allowance:


  • payment to the respective employee the employee’s wage compensation in the amount of 80% of the employee’s average earnings (or at least 60% if agreed with the employees’ representatives prior to the date when the amendment to the Labour Code concerning the special provisions during the State of Crisis came into force; as of the date of this post, the respective amendment did not apply yet),
  • covenant that the applicant shall not terminate the employment relationship with the employee due to “organizational reasons” (such as due to redundancy) – either by notice or by agreement – in the next two months following the month for which the allowance is sought,
  • submission of data on the number of employees as of 31 March 2020,
  • the applicant was not a company“in difficulties”as of 31 December 2019,
  • as of 1 February 2020, the applicant must have already existed and carried out its activities.

The applicant must also fulfil the following conditions set out by the Act on Employment Services:


  • fulfilment of tax obligations,
  • fulfilment of the duty to pay advance payment of health insurance premiums and social insurance premiums, and the contribution for old-age pension saving,
  • the applicant did not breach the ban of illegal employment within two years prior to the submission of an application for the allowance,
  • the applicant does not have any outstanding financial liabilities towards the labour offices,
  • the applicant is not in bankruptcy, liquidation, receivership or has no payment schedule under a special regulation (under the act on bankruptcy and restructuring),
  • the applicant does not have records of unsettled claims of its employees arising from employment,
  • no sanction prohibiting to receive subsidies or help and support from the European Union funds was imposed to the applicant.

The applicant shall prove the fulfilment of the above conditions (and also the condition regarding the decrease in sales, where applicable) by an affidavit. However, all facts stated by the applicant in the affidavit will be subject to a further (later) review and inspection.


Maximum amount of allowance


The total allowance that the applicant may receive (per period of the Project) is EUR 800,000.


Relevant authority


The allowance will be paid out by the local office of labour, social affairs and family competent for the district, in which the employer or the self-employed person maintains job positions (i.e. not necessarily where the employer has its registered seat).


Lower wage compensation


In case the employer paid a wage compensation of 60% of the employee’s average earnings pursuant to an agreement with the employees’ representative (until the date when the amendment to the Labour Code concerning the special provisions at the time of State of Crisis came into force; as of the date of this post, the respective amendment did not apply yet), for purposes of the calculation of the allowance the wage compensation that was paid out to the employee shall be taken into account i.e. the maximum amount of the allowance shall be of EUR 880 (the maximum cap of EUR 1,200 reduced on a pro-rata basis).


***


We monitor the current development in this area and will continue to post updates on the above information. This post was prepared on 1 April 2020.


[1]Act No. 5/2004 Coll. on employment services and on a change and supplement of particular laws, as amended.


 



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