ANTICORONA PACKAGE – current measures to assist employers (UPDATED POST AVAILABLE)
On 2 April 2020, the National Assembly of the Republic of Slovenia passed the Intervention Measures Act to Curb the COVID-19 Epidemic and Mitigate Its Impact on Citizens and the Economy or the #anticorona package (#PKP1), also known as the “mega act”, which foresees the introduction of new measures to preserve jobs. #PKP1 amends the existing measures pursuant to the Intervention Measures for the Labour Market and Parental Protection Act (ZIUPPP). The act is planned to be published in the Official Gazette of the Republic of Slovenia on 10 April 2020 and enter into force on 11 April 2020. Read on for a summary of the proposed measures in the field of labour and some answers or our positions regarding some of the initial questions. Of course, no case law exists yet.
(NOTE: On 29 April 2020 we published an updated version of this post, which is available at https://www.jadek-pensa.si/en/anticorona-package-current-measures-to-assist-employers-updated-29-april-2020/.)
1. What are the main temporary measures proposed by the #anticorona package in the field of labour?
The main measures are, under certain conditions (more on these under questions 3 and 20):
- A full compensation reimbursement of employees’ salaries who have been temporarily laid-off due to the employer’s inability to provide work due to the consequences of the new coronavirus epidemic in the amount of 80% of the basic salary, and the exemption of payment of contributions tied to salary compensations, both to the maximum mentioned amount (see question no. 10);
- A full compensation reimbursement for employees’ salaries for their absence due to force majeure in the amount of 80% of the basic salary and exemption of payment of contributions relating to such salary compensations, both to the mentioned maximum amount (see question no. 10);
- Exemption of the payment of contributions for retirement and disability insurance and the obligation of paying a crisis allowance in the amount of EUR 200 for working employees;
- extraordinary assistance in the form of a basic monthly income for the self-employed, religious servants and farmers;
- exemption for the payment of contributions for the self-employed, religious servants, partners and farmers;
- a right to compensation during the temporary absence from work due to illness or injury by obligatory health insurance from the first day of the absence onward.
2. How long will the measures from the new #anticorona package apply?
The measure of compensation reimbursement for temporarily laid-off employees and those who are absent due to force majeure will be available for the period from 13 March 2020 to 31 May 2020, regardless of when the act enters into force.
The measure of exemption of payment for all contributions for temporarily laid-off employees can be claimed for the period from 13 March to 31 May 2020.
The measure of exemption on payment for retirement and disability insurance contributions (and the crisis allowance) can be claimed for salaries in April and May 2020.
The new act also proposes a 30-day extension of the temporary measures, if the COVID-19 epidemic is not lifted by 15 May 2020.
3. Who is entitled to claim compensation reimbursement for the salaries of temporarily laid-off employees?
Claiming compensation reimbursement for temporarily laid-off employees will be possible for employers who:
- Are temporarily unable to provide work due to the coronavirus; and
- Will suffer a decline in revenue in the first semester by 20% relative to 2019, and will fail to achieve a growth of over 50% as in the same period in 2019 – if the submitted annual report indicates otherwise, the entire received assistance will need to be returned.
In the event that the company was not operating in 2019, the assistance will be available for those employees who suffered:
- At least 25% decline in income in the month of March 2020 compared to the income in February 2020 or
- At least 50% decline of income in April or May 2020 compared to income in the month of February 2020.
The right cannot be exercised by
- An indirect of direct spending authority, whose income share from public resources was higher than 70 percent in 2019,
- An employer whose main activities are finances or insurance, classified under group K according to the standard classification of activities.
4. What about the event of a force majeure?
An absence due to force majeure equates the accompanying amount of salary compensation with the one received for a temporary lay-off; additionally, the compensation reimbursement for the reason of force majeure will 80% of the basic salary (no longer 50%).
Pursuant to #PKP1, compensation reimbursement for employees who are absent due to force majeure will be available to employers who meet the criteria for claiming compensation reimbursement for employees who have been temporarily laid-off, which was explained in the answer to question no. 3, and who also issue a statement that the employees are not performing the work due to force majeure, which is a consequence of their childcare obligations due to kindergartens and schools being closed and other objective reasons or due to their inability to travel to work due to the halted public transport or closed borders between neighbouring countries and that they receive salary compensation due to this.
The new act therefore actually defines the meaning of force majeure for the purposes of this regulation, i.e. absence due to childcare obligations as a result of closed kindergartens and schools and other objective reasons or the inability to travel to work due to halted public transport of closed borders between neighbouring countries.
5. What are the employer’s initial obligations to qualify for the temporary measures as per the #anticorona package?
In addition to meeting the conditions stated in the answer to question no. 3, an employer cannot exercise the right to compensation reimbursement for salaries in the event that:
- The employer does not pay obligatory contributions and other financial and non-financial obligations collected by the tax authority, if the employer has unpaid due obligations on the day the application is submitted. It is also regarded that an employer does not meet the requirements from this indent if on the day the application was submitted he had not submitted all the tax returns for income from an employment relationship for the period of the past five years up to the day the application was submitted;
- An insolvency proceeding has been brought against him.
#PKP1 further states that an employer who receives or received funds must return the entirety of the funds if he launches a liquidation proceeding during the period:
- Of receiving the funds and
- After the period of receiving the funds that is equal to the period of receiving the funds.
An employer will also have to return the received funds along with the default interest if any profit appropriation, business performance bonuses or management bonuses are awarded in the period from the act entering into force until the end of 2020.
6. What obligations does the employer have during the period of compensation reimbursement?
The employers have the following obligations during the period of receiving compensation reimbursement for employee salaries:
- Paying salary compensations (except the contributions),
- Ban on ordering overtime, if the work can be performed by temporarily laid-off employees,
- Prior informing of the Employment Office, if the employer orders the employee to return to the workplace or the day the absence has ended if the employee was absent due to force majeure.
If an employer does not meet these requirements, he will be obligated to return the received funds threefold.
7. Is at least 30% of the employees being temporarily laid off a precondition to claiming compensation reimbursement for employees who have been temporarily laid-off due to the inability to provide work pursuant to the new #anticorona package?
8. Are termination options limited?
The Act does not stipulate the expressed obligation by the employer to make a commitment not to terminate employees during the period of being included in the measure or for a certain period afterward.
Explanations to the proposals of some articles do imply that employers are not to terminate during the time of being included in the measure, however, the text in the articles themselves does not contain this, so it seems these explanations related to older or working versions of the act that were not appropriately adjusted to the text of the act as it entered into force.
The act also stipulates that during the period of the temporary measures, the provisions of ZIUPPP do not apply, which leads to the conclusion that during the measures pursuant to #PKP1, there is no obligation of preserving employment and a ban on termination that had been projected by the ZIUPPP.
9. What are the main rights and obligations of an employee who has been temporarily laid-off pursuant to #PKP1? Is it possible to rotate temporarily laid-off employees?
An employee must be temporarily laid-off in writing. Here, it is regarded that the electronic form (e-mail) is equivalent to regular mail if the data is accessible in electronic form and is suitable for later use. The written lay-off must include the period of the temporary lay-off, the options and manner for ordering the employee to return to work prematurely and the amount of salary compensation.
While being temporarily laid-off, an employee is obligated to return to work for up to seven consecutive days in a current month at the employer’s request. The employer must inform the Employment Office about this ahead of time.
Since the text of the act mentions seven consecutive days, this could be understood as still allowing employees being called to work to a greater extent, but for fewer than seven consecutive days, e.g. three days in a week, three days the following week, with a two-day break in between. The contents of the law are not clear on this. With regard to the principle of equal treatment of employees, we believe the act could be construed as allowing for rotations.
10. Does the new #anticorona package project any limitations for compensation reimbursement for employees who have been temporarily laid-off or absent due to force majeure? Is it possible to pay higher compensations?
The act stipulates that salary compensation for temporary lay-off and absence due to force majeure in the amount of 80% of the basic salary must not be lower than the minimum salary in the Republic of Slovenia. The employer is therefore limited only by the lowest possible amount, otherwise pays compensation normally in the amount of 80% of the basic salary as compensation calculation pursuant to the Employment Relationships Act for temporary lay-offs for business reasons.
It is important to note that the employer will be reimbursed for the compensation only up to the amount that does not exceed the average salary for 2019 in the Republic of Slovenia, calculated per month minus the insurance contributions.
If the employee’s salary had been lowered after being scheduled for a shorter work time by the employer, the basis for the salary compensation for the temporary lay-off is calculated from the last three months prior to being put on a shorter work time.
11. What about contribution exemptions for employees who have been temporarily laid-off due to force majeure?
The employer is exempt from paying contributions for employees who have been temporarily laid-off and for whom they are entitled to compensation reimbursement pursuant to this act, as well as for employees who are not working due to force majeure and are receiving salary compensation, for all social insurance from the salary compensation from 13 March to 31 May, but only to the amount of the salary compensation of an average salary for 2019. The state will therefore cover social insurance contributions for the employees, as well as the employer’s contributions up to the aforementioned amount.
In contrast, the employer is obligated to calculate and pay the accompanying taxes. The employer does have the option of asking for a deferral on the tax payment (including tax return). Read more on that here.
The act is not clear whether the employer will still be responsible for the difference in the contribution amount that will be covered by the state in the case a higher compensation is paid than the average salary for 2019.
12. What is the procedure for claiming compensation reimbursement?
The employer will be able to exercise the right to compensation reimbursement with an application submitted electronically to the Employment Office of the Republic of Slovenia within 8 days of temporarily laying-off an employee, but no later than 31 May 2020.
Applications can also be submitted by employers who had temporarily laid off employees or whose employees were unable to perform work due to force majeure before this act entered into force, within 8 days or the act entering into force, if they meet all the conditions for exercising the rights pursuant to the act. In that case, an employer will be able to claim compensation reimbursement retroactively from 13 March 2020 onward.
The application must include:
- If applying for compensation reimbursement due to force majeure, a criminally and materially binding statement that the employees are not performing work due to force majeure as the result of childcare obligations due to kindergartens and schools being closed and other objective reasons or the inability to travel to work due to halted public transport or closed borders between neighbouring countries and that they are receiving salary compensation, and certificates of the employees’ justifiable absence due to force majeure as the result of childcare obligations due to kindergartens and schools being closed and other objective reasons or the inability to travel to work due to halted public transport or closed borders between;
- If applying for compensation reimbursement due to temporary lay-offs, a criminally and materially binding statement that the employer is temporarily unable to provide work as a result of the pandemic consequences and documentation of the employees temporary lay-off due to the temporary inability to ensure work for business reasons.
The Employment Office of the Republic of Slovenia will issue a decision on the application within 8 days.
13. When will the employer receive the compensation reimbursement?
The compensation reimbursement will be paid monthly proportionately or in full on the 10th day of the month following the month for which compensation is being paid. The diction here is somewhat unclear and can be construed as being paid with a one-month delay. The month of the compensation reimbursement is the following month, meaning the month of May for work done in April. The 10th day of the month following the month of compensation could therefore be June.
14. What would be the amount of compensation of the employees absence due to force majeure (childcare, halted public transport), if the employer did not exercise the benefits according to #PKP1? Does a 50% compensation apply pursuant to the ZDR-1 or 80% pursuant to #PKP1?
#PKP1 equates the compensation for force majeure with the absence due to temporary lay-offs (80%).
We believe that in this case, #PKP1 applies as a special provision and that in the case of an absence due to force majeure related to childcare, halted public transport and closed borders during #PKP1 warrant an 80% compensation (and not 50% according to the ZDR-1).
15. What is the relationship between #PKP1 and ZIUPPP?
#PKP1 does not annul the provisions of ZIUPPP, but it does project that the provision of the ZIUPPP regarding the right to partial compensation for employees who have been temporarily laid-off are not used during the implemented measures from the new #PKP1.
In practice, this means that compensation reimbursement for temporarily laid-off employees can be claimed from 13 March 2020 until the expiration of the temporary measures of the #PKP1 (projected until 31 May or 30 June 2020) per the provisions of #PKP1, while during the period after the expiration of the temporary measures per #PKP1, the compensation reimbursement will be claimed according to the provisions of the ZIUPPP.
16. Will claiming compensation reimbursement for temporarily laid-off employees pursuant to the ZIUPPP and pursuant to the new #PKP1 require separate applications?
No. The temporary measures pursuant to both regulations can be claimed with a single application to the Employment Office of the Republic of Slovenia. During the temporary measures from the new #PKP1, all of the applications for compensation reimbursement for temporarily laid-off employees will be processed according to the provisions of the new #PKP1, even if the application had been submitted pursuant to the provisions of the ZIUPPP in the period from 29 March 2020 to the enforcement of the new #PKP1.
17. Is it better to submit an application for compensation reimbursement for temporarily laid-off employees pursuant to the po ZIUPPP or is it better to wait for the #PKP1to enter into force and claim compensation reimbursement solely pursuant to this provision?
Pursuant to the new #PKP1, employers will be entitled to assistance with compensations for all temporarily laid-off employees from 13 March 2020 onwards; during this period, all applications will be processed pursuant to the #PKP, which means in practice also for the time the ZIUPPP (29 March 2020) entered into force does not require submitting applications pursuant to the ZIUPPP. It is worth noting that the ZIUPPP also projected compensation reimbursement for temporarily laid off employees in quarantine, which is not projected by the #PKP1, so the application pursuant to the ZIUPPP can also be submitted for this purpose. There is a separate application available on the portal for employers at the Employment Office of the Republic of Slovenia.
Exercising rights pursuant to the ZIUPPP is subject to certain additional conditions or obligations for the employers. Read more on that here.
18. Are applications submitted pursuant to the ZIUPPP subject to any loss of rights as per the #PKP1?
No, the act does not state any rights being lost from the new act if the application had been submitted pursuant to the ZUIPPP.
19. How long can employees be temporarily laid-off for the employer to qualify for compensation reimbursement?
Employees can be temporarily laid-off until no longer than 31 May 2020. If the pandemic is not lifted by 15 May 2020, the stated time period is prolonged by 30 days.
20. What about exemptions for contributions for employees who are working? Which cases warrant a crisis allowance?
#PKP1 projects the partial exemption for contributions for employees in the private sector who are working and sets a crisis allowance. Qualifying for this measure does not require qualifying for the condition of decreased income in 2020, however the obligation does apply that from the enforcement of the act onward until the end of 2020, no profit appropriation, business performance bonuses or management bonuses are allowed or the exempt funds will need to be return to the state with accrued default interest.
The new act provides that employers are exempt from paying contributions for retirement and disability insurance in the months of April in May 2020 for all employees who have obligatory insurance based on their employment relationship.
The employer will still be obligated to cover contributions for health insurance, have unemployment and parental protection. The contribution for retirement and disability insurance is currently being covered entirely by the state. An explanation to the draft of the act provides that the employer is exempt from both paying the contribution for the insured person (the contribution is only calculated and deducted) and the payment of the employer’s contribution (the contribution is only calculated).
On the other hand, the employers pay each employee who is working and whose last monthly salary did not exceed 3 times the minimum wage (about EUR 2800 gross) a monthly crisis allowance in the amount of EUR 200, which is exempt from all taxes and contributions.
Direct and indirect state and municipal spending authorities and financial and insurance activities that fall under group K according to the standard classification of activities are not entitled to exemption of contributions for employees who are working.
An exemption of contributions also applies to those employees who are on vacation and are receiving a salary compensation.
We believe the so-called monthly crisis allowance in the amount of EUR 200 is only paid in the case in which the employer is claiming exemption of payment of retirement and disability insurance contributions in the months of April in May for employees who are working or are on vacation. The obligation of paying a monthly crisis allowance does not fall to employers who are not claiming exemption for contributions.
In relation to this, it is not yet clear whether this exemption will require submitting a separate application or whether a special form will be required. We project the possibility will be offered to employers to claim this benefit directly when accounting calculates salaries and tax and contributions tied to an individual salary payment.
21. Are employees working from home also entitled to crisis allowance?
If an employer chooses to exercise the exemption of retirement and disability contributions for employees who are working, a crisis allowance must be paid to all employees regardless of whether they are working from home or in the employer’s premises and under the condition that their monthly gross salary did not exceed three times the minimum wage or about EUR 2800 gross.
22. What about compensations for absences due to medical reasons?
For employees who have been temporarily detained from work for health reasons from the day the act was enforced to the do za measures pursuant to the #PKP1 no longer apply, but no later than 31 May 2020, the compensation is covered by the health insurance office from the first day of the absence onward.