In follow-up to our first article on the First Aid Package for employers dated 8.4.2020 (link HERE), we are bringing to you the latest updates and information on the broadened scope of the financial aid scheme for employers.
The Slovak Government has approved certain changes in the conditions of eligibility for the job retention scheme during and in the aftermath of a government-declared extraordinary situation, emergency situation or state of emergency. These changes amend Measures 1 and 2 under which employers may apply for the provision of wage contributions.
Measures 3 and 4 have been added to supplement and fine tune the originally proposed financial aid package – they introduce new categories of applicants and specify more precisely the conditions of eligibility for the employers adversely affected by the extraordinary situation. The applications for contributions under Measure 3 may be submitted from 17.4.2020.
Overview of the recent changes in the financial aid scheme:
- Measure 1 – CHANGE (employers who had to close their business operations based on the decision issued by the Public Health Authority – PHA)
The wage contribution limit per employer, originally set at €800,000, has been eliminated. The purpose of this change is to also include the employers with 250+ employees (large companies).
- Measure 2 – CHANGE (the self-employed who had to interrupt or restrict their business activities during the extraordinary situation based on a PHA order or whose sales have decreased as a consequence).
The conditions are now more specific and the scope of eligible applicants is narrower.
- NEW! Measure 3 – aid to the employers affected by the extraordinary situation
Under this measure, also those employers who will retain jobs despite having their business operations affected by the extraordinary situation, are eligible for the support.
The measure comes in two options; the employer may choose only one of them for the entire duration of the wage contribution period:
- the ‘kurzarbeit’ scheme, enables the reimbursement of wages payable to employees to whom their employer cannot assign work due to obstacle to work on the employer’s part (Section 142 of the Labour Code) up to 80% of the employee’s average earnings and subject to a limit of € 880 per employee;
- a lump-sum contribution towards the wage cost of each employee; the amount depends on the rate of decrease in sales.
Option A: Under this option, instead of having to prove a decrease in sales, it is sufficient for the employer to continue to pay wages to those employees who cannot be assigned work due to obstacles to work on the employer’s part. This contribution is not available during the time for which employees receive social security benefits (sickness benefits, carer’s benefits) or are on a leave.
Where the company has a trade union body or employee representative(s) and the employer pays, either based on a collective agreement or under a written agreement with employee representatives, a wage compensation below 80% of the employees’ average earnings, the contribution amount will be adjusted to take into account the actual amount of compensation paid by the employer, subject again to a limit of €880 per employee.
Option B) The second option available to employers is to use the originally introduced scheme, i.e., to apply for a wage contribution in the amount depending on the rate of decrease in sales:
The ‘employee’ for the purposes of this option is any employee to whom the employer assigns work and any employee to whom the employer cannot assign work due to obstacles to work on the employer’s part. Attention! The contribution is not available in respect of those employees who are prevented from working more than 50% of their monthly working hours fund due to work impediments on their part (sickness, care for a family member, etc.) or in respect of those employees who are on a leave during this period.
There are three methods which employers may use to calculate the rate of decrease in their sales (depending on whether they were economically active in the whole of 2019):
- The sales in the respective month are compared with the sales in the same month last year (e.g., March 2020 to March 2019)
- The average monthly sales in 2019 (i.e., 1/12 of total sales in 2019) are compared with the sales in the respective month of 2020 – available only to those engaged in a gainful economic activity throughout 2019;
- The sales in February 2020 are compared with the sales in the respective month of 2020 – available only to those engaged in a gainful economic activity for only a part of 2019 and those who began to perform a gainful economic activity on 1.2.2020 at the latest.
Technical information on the wage contribution available under Measure 3:
For the first month, the employer will submit the application (žiadosť) and statement (výkaz) as an annex to the application (Annex 6A/6B). Since only one of the two options may be selected (i.e. kurzarbeit or lump-sum contribution), the aid in the following months will continue to be provided solely based on the statements submitted (only the annex, without resubmitting the application); the annex itself will constitute a contribution application.
The respective Labour Office will pay the contribution to the employer on the basis of a contribution agreement sent to the employer for signature after the receipt of application. The Labour Office will then inform the employer about the contribution amount approved – this will be done through a notice of contribution. For the following months, the employer will submit the Labour Office only with the statements.
- NEW! Measure 4 – aid to the self-employed, individuals working based on agreements outside the employment and one-man limited liability companies without any other income
The first aid scheme has now been extended to also capture certain natural persons, namely one-man limited liability companies, the self-employed who do not pay social security contributions and individuals working based on agreements outside the employment valid in 2020, also during the extraordinary situation.
According to the Slovak Government, the amount of the lump-sum contribution to alleviate the loss of income for these categories will be €105 for March 2020, and €210 for April and May 2020, respectively.
No further details on the aid designed for these groups of persons with no other income during the extraordinary situation are available at this point. The Ministry of Labour, Social Affairs and Family has scheduled the launch of the contribution applications after 20.4.2020. However, as of the date of this article, the process has not been launched.
We hope you will find this information useful. We are monitoring the situation very closely and we will keep you updated on any new developments.