The Rules and the Criteria for Compensation of the Employers by the State Under the 60/40 Scheme – Now a Fact

As a response to the wide-spreading global COVID-19 pandemic and as part of its package of social and economic measures in the fight against the virus and its reflection on the business in the country, on 30th March 2020 during an extraordinary meeting, the Council of Ministers adopted the final text of the Decree for determining the conditions and the procedure for payment of compensation to employers with the aim of preserving employment of workers and employees during the state of emergency declared with a decision of the National Parliament of 13th March 2020 (the Decree). As of today, 31st March 2020, employers may apply before the Employment Agency for granting under the so-called 60/40 scheme.

Pursuant to this scheme, the right to compensation amounting at 60 % of the gross remuneration of the worker or the employee shall be granted to an employer who, by means of its own internal order or following an order of a state authority issued during the declared state of emergency, has terminated the operation of the whole undertaking, or parts thereof, or only with regard to certain workers and employees, or has introduced part-time work. In the latter case the compensation shall be paid proportionally to the idle time, but for no more than four hours.

Hereby we shall indicate the categories of employers who are entitled to apply for the payment of compensation, as well as the criteria they should meet:

 

1. The employer has terminated the operation of the undertaking following an order of a state authority:

For the operation of the whole undertaking, parts thereof or only with regard to certain workers and employees for the whole period of the State of Emergency, declared with a decision of the National Parliament of 13th March 2020, Act, or only for parts of the said period.
The workers and employees affected by the regime under the previous paragraph, for which the employer may request payment of compensation, should be engaged in the sectors and economic activities listed in Appendix No. 1 to the Decree, as follows:

retail trade in malls (except for trade in food, medicine, cigarettes); passenger transport; hotel industry; restaurants; fast food establishments; drinking establishments; movie; theaters; tour operators; activities in the fields of culture, sports and entertainment etc.

In case the employers do not fall within one of the above-mentioned sectors, alternatively each of them (with specific exceptions indicated in the Decree) shall be entitled to apply for the payment of compensation provided the following conditions are met:

 

2. The employer has terminated the operation of the undertaking or has introduced part-time work by means of its own internal order

For the operation of the whole undertaking, parts thereof or only with regard to certain workers and employees for the whole period of the State of Emergency, declared with a decision of the National Parliament of 13th March 2020, Act, or only for parts of the said period.

2.1. The employer under this category, however, shall have to certify a 20% reduction in its revenues for the month preceding the filing of the application for payment of compensations compared to a precedent period of time depending on the time of company establishment.

2.2. The employment agreements with the employees and workers, for which compensation is requested, should have been concluded prior to 13th March 2020, whereas compensation shall not be due for workers and employees on sickness leave, on maternity leave, on leave for the adoption of a child younger than 5 years old or on childcare leave, as well as for workers and employees for which the employer otherwise receives funding for remuneration and social security contributions.

For both categories of employers – under item 1 and item 2, the following prerequisites should be fulfilled:

  • The employer should not have any tax obligations and mandatory social security contributions due.
  • The employer should not be insolvent and there should not be any insolvency or liquidation proceedings initiated against the employer.
  • The employer should not be subject to a penal decree which has entered into force or to a court decision for a violation connected to labor relations in the last 6 months.

We would hereby like to underline that the employer shall be obliged to keep the working positions of the workers and employees for the period for which compensation for their remunerations is received, as well as to pay the full amount of the remunerations to the workers and employees for each month, along with the social security contributions which are due.
The employer shall not terminate employment agreements with its workers and employees on the basis of art. 328, para. 1, items 1, 2, 3 or 4 of the Labor Code, during the period for which compensation is received.

After the employer is approved in the course of the application procedure before the Employment Agency, the employer may be entitled to compensation for the whole period of the state of emergency or parts thereof, but for no longer than 3 months.

For other current topics related to the legislation stipulating legal relations in the state of emergency, you can find information on our website: www.penkov-markov.eu. Of course, you can contact us for further information and cooperation also at [email protected].


The above provides general information related to the adoption of the Measures and Actions in the State of Emergency Act, whereas it is not exhaustive, but rather serves as a guide for interpreting the news as of 31st March 2020.

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