Legal challenges in light of coronavirus (COVID-19) – Guidelines Anti-Corona Package 1 – #PKP1
Yesterday, on March 24, 2020, the Government released to the public the first guidelines for a large legislative package of measures aimed at mitigating the effects of the epidemic of COVID-19 virus on citizens and the economy. The government has referred to the legislation as a package called the Anti-Corona Package 1, which, according to the guidelines presented, will focus primarily on (i) measures to preserve jobs, (ii) measures to improve the social situation of people, especially those with low pensions, (iii) measures for exceptional assistance to the self-employed, (iv) measures to maintain business operations of companies, (v) measures to improve the liquidity of companies, (vi) reduction of remuneration and wages and exemption from payment for distribution services, (vii) measures to support agriculture and (viii) measures in the field of public procurement. The envisaged measures are broken down below, however it should be noted that these guidelines have not yet been drafted in the form of legal provisions, nor have they been discussed at by the National Assembly. Thus, there may be significant discrepancies between the guidelines and the final legal provisions of the Anti-Corruption Package, as will be adopted in the National Assembly. Nevertheless, it is important to prepare for legislative measures in advance, as speed and flexibility are key to maintain the economy and safeguarding citizens. Also, the measures are extensive and can have a significant impact on performance of companies or even their survival. The anticipated measures under Anti-Corona Package 1 will be effective for the period from the entry of the law into force until the end of May.
i) measures to preserve jobs
The foreseen measure in this field is that all contributions of employees who are temporarily laid off in line with the labour legislation would be paid by the state and the related rights of the insured are fully preserved. In addition, the state would additionally co-finance another 20% of the net compensation of employees, whereby it is stated in the measure that eligibility of co-financing would be determined after the end of the financial year. In addition, it is important to point out that from the first day of the sickness onwards, sickness leave compensation will be fully covered by the Health Insurance Institute of Slovenia. We also emphasize that a detailed presentation of all measures in the field of labour law, including those included in the above mentioned Government guidelines, are already available on our website at: https://www.jadek-pensa.si/en/at-victoriam-challenges-and-measures-for-employers-during-the-coronavirus-outbreak/.
ii) measures to improve the social situation of people, especially those with low pensions
The Government places particular emphasis on measures to improve the social situation of people, and especially of pensioners, as they are exposed to the highest risk to the dangers of an epidemic due to their age. It is also important to emphasize that the status of workers who do not work due to force majeure (either because of childcare, inability to come to work, etc.) is equalled with the status of employees who have been temporarily laid-off. In addition, it is envisaged that workers who are laid-off due to the consequences of the COVID-19 epidemic will be automatically entitled to unemployment benefits. Also, households will be liable to pay public services that will not be performed in time of the outbreak of the virus COVID-19. Also, pensioners will be paid a solidarity allowance, the amount of which will depend on the amount of pension they are otherwise receiving.
iii) measures for exceptional assistance to the self-employed
The self-employed are envisaged to receive exceptional assistance to which they will be entitled if they sign a special statement declaring themselves affected by the crisis. However, it should be noted that the accuracy of the information provided will be subsequently verified and in the case of false information received assistance shall be returned. Those self-employed who, due to the crisis, will not be able to carry on with their business will be entitled to a monthly basic income of 70% of the net minimum wage, and during this period, contributions of the self-employed will be written off. Contributions will be paid by the state during this period and the rights of the insured will be preserved. The payment of advances of personal income tax will also be deferred until assessment of income tax.
iv) measures to maintain business operations of companies
In the area of measures that help keeping companies in operations, it is envisaged that the state will pay all contributions for both the employer and the employee for pensions insurance for the work of employees who will continue working. It is important to note that it is envisaged that the rights of the insured will be preserved.
v) measures to improve corporate liquidity and support to research projects
The state intends to eliminate the liquidity problems of companies, primarily by establishing a guarantee scheme, which will enable purchasing of receivables from Slovenian companies. It is envisaged that the payment of the advances on corporate income tax and corporate income tax for sole practitioners will be frozen. The state also intends to freeze the enforcement of contractual penalties for delays in the delivery of supplies and services to the public sector while reducing payment deadlines for payments from public funds to private suppliers to 8 days. Further, the state intends to allocate part of the unused funds from the European Social Fund for the purpose of assisting companies and research institutions involved in the research and development of products that aim towards managing the consequences of the coronavirus.
vi) reduction of remuneration and wages and exemption from payment for distribution services
It is envisaged that attendance fees and other remuneration of members of supervisory boards of companies directly or indirectly state-owned companies will be reduced by 30 percent. The salaries of officials at the national level will also be reduced by the same percentage. It is also envisaged that there will be an exemption from the payment of TV signal distribution services by RTV.
vii) measures to support agriculture
The state intends to support agriculture by providing financial support in the amount of 80 percent of full-time minimum wage to farmers or members of their farms suffering from COVID-19 disease due to their inability to work. It is further envisaged to reduce or write off pension and disability insurance contributions to farmers and members of their farms. Also, a measure is envisaged that would reduce cadastral income tax payment by a 50 percent for 2020. Certain measures are also foreseen for fishing vessels and for breeders of aquatic organisms.
viii) measures from the field of public procurement
An important measure is also envisaged in the scope of the Public Procurement Act1, namely thresholds for the application of the law to so called record order contracts increase from EUR 20,000 to EUR 40,000 for goods and services and from EUR 40,000 to EUR 80,000 for construction.
1. Public Procurement Act (in Slovenian: Zakon o javnem naročanju; Official Gazette of the Republic of Slovenia, no. 91/14 as amended, “ZJN-3”).