1. LABOUR CODE AMENDMENT
On 2.4.2020, the Parliament passed an amendment to the Labour Code (effective as of 4.4.2020), which introduces a number of changes in connection with coronavirus. These changes and derogations apply only during a declared extraordinary situation, state of emergency and heightened state of emergency and for two months (2) after it is called off.
- Possibility for employers to order work from home (home-office) and the right of employees to work from home
As long as the measures adopted by the relevant authorities aimed at preventing the occurrence and spread of communicable diseases remain in place, employers may order employees to work from home provided that the agreed type of work makes home-office arrangements possible. Until now, home-office arrangements have been subject to the employee’s consent or they have been available as an option within the system of employee benefits. According to the amendment, an employer may order work from home even if the employee disagrees.
At the same time, the amendment gives the employees the right to work from home if the agreed type of work makes it possible and there are no operational reasons on the employer’s part that would make such arrangements impossible.
- Shortened period to notify changes in work shifts and schedules
According to the amendment, employers must inform their employees of their working schedule at least two (2) days in advance for at least one (1) coming week; this notice period may be shorter provided that both the employer and employee agree. Before the amendment, employers had to inform employees of their work schedule one (1) week in advance.
- Shortened notice period for ordered leaves
The employer must give a notice of an ordered leave at least seven (7) days in advance (originally 14 days) and, in the case of the unused days of leave rolled over from the previous year, at least two (2) days in advance. Also here, the notice period may be shorter if the employee concerned agrees.
- Enhanced employee protection
Employers must excuse the absence from work of those employees who cannot work due to considerable work impediments, such as quarantine or isolation. These employees are not entitled to wage.
Those placed in a home quarantine and those caring for children because of the closure of pre-school facilities and schools are deemed employees on a temporary sick leave. This status, however, grants them immunity from dismissal. In other words, employers may not dismiss them while they are on this type of sick leave.
- Change in the amount of wage compensations payable to the employees of closed businesses
The closure or restriction of company operations on an order issued by a public authority or due to the state of emergency or state of heightened emergency constitute work impediments on the employer’s part. In these situations, the employees who cannot work for these reasons are entitled to a compensation equal 80 % of their average monthly wage, but no less than the minimum wage amount.
Before the amendment, the employers with work impediments on their part had to pay their employees 100 % of the average monthly wage, which got many employers in a very difficult situation. These employers may now ask the Government for a grant towards the wages of their employees, read more below.
2. FIRST AID PACKAGE FOR EMPLOYERS
On 31.3.2020, the Government adopted the so-called ‘First Aid Package’ designed to alleviate the adverse impacts of the pandemic on the employers and to save employee jobs. Absence of such measures would, in all likelihood, force many employers into laying off their employees because payroll expenditures represent one of the biggest cost items for companies.
- Employers and the self-employed who had to close their business operations mandatorily (Measure 1)
Those employers and the self-employed (who are employers) who had to close their operations due to the orders issued by the relevant authorities (Public Health Authority of the Slovak Republic) may ask for a wage grant equal 80 % of the employee’s average monthly wage, subject to the ceiling of EUR 1,100 per employee.
The wage grant is available in respect of every employee to whom an employer or self-employed cannot assign work due to the impediments on the employer’s part as defined by the Labour Code (due to a decision of the Public Health Authority on the closure of business operations). In other words, this particular grant cannot be claimed in respect of the employees working from home (home-office arrangements), employees on a leave, and employees in receipt of benefits from the Social Insurance Agency (carer’s allowance, childcare benefit, and the like).
At the same time, the Government set a ceiling for the total wage grant allocation per applicant/employer to EUR 800,000 for the whole duration of the project.
Grant applications should be submitted and grants will be paid by the local branches of the Office of Labour, Social Affairs and Family within the territorial jurisdiction of which the employer or the self-employed (who are employers) retain jobs (or the employer’s registered office if company has more branches).
Labour Offices will be accepting unsigned electronic applications as of Monday, 6.4.2020, 12:00 noon. Complete information on the submission of applications and on the procedure can be found on the following websites: www.pomahameludom.sk and www.neprepustaj.sk
- Employers and the self-employed who did not have to close their business, but whose sales have declined as a consequence of the extraordinary situation (Measure 2)
Those employers (other than public authorities) who were not ordered to close or restrict their business operations by the relevant authorities, but whose sales have declined by at least 20 %, may apply for a grant towards their employee wages. The grant amount is commensurate to the decline in sales as follows:
Decline in sales in March 2020
Grant for March 2020
Decline in sales in April 2020 and the subsequent months of the ‘extraordinary situation’
Grant for April 2020 and each subsequent month of the ‘extraordinary situation’
10 % – 19.99 %
20 % – 39.99 %
20 % – 29.99 %
40 % – 59.99 %
30 % – 39.99%
60 % – 79.99 %
40 % and more %
80% and more
Employers may choose to apply any of the following options to calculate the decline in sales:
- Compare the sales in the respective month of 2020 with the sales in the same month last year (2019);
- Compare the average monthly sales in 2019 (i.e., 1/12 of total sales in 2019) with the sales in the respective month of 2020 – available only to those engaged in gainful economic activity during the whole of 2019;
- Compare the sales in February 2020 with the sales in the respective month of 2020 – available only to those engaged in gainful economic activity for only a part of 2019 and who started to perform gainful economic activity no later than by 1.2.2020.
Employers must present the details concerning the decline in sales in a declaration of honour, a document intended for employers to demonstrate compliance with the grant eligibility conditions.
Employers may be submitting their wage grant applications as of Wednesday, 8.4.2020, 12:00 noon, to the respective Office of Labour, Social Affairs and Family. Detailed information and instructions are available at: www.pomahameludom.sk and www.neprepustaj.sk.
Common conditions for Measures 1 and 2:
The precondition for the provision of a wage grant under Measures 1 and 2 is to retain the jobs of the affected employees also beyond the duration of the extraordinary situation, for at least two (2) months after the month in respect of which the employer has applied for the grant. The ‘job retention commitment’ means that the employer must refrain from taking any steps towards terminating employment of an employee, whether by dismissal or consensually, irrespective of the reason, be it due to redundancy or dissolution (organisational changes). The job retention commitment must be a part of the declaration of honour.
In the declaration of honour, employers and the self-employed must also state the following:
- payment of wage compensation equal 80 % of the employee’s average wage;
- information on the number of employees as of 31.3.2020;
- confirmation that, as of 31.12.2019, the company was not an ‘undertaking in difficulty’ (applies also to the self-employed);
- due payment of all mandatory contributions to the health, social and pension insurance funds;
- no breach of the ban on illegal employment during two (2) years prior the submission of the application;
- non-existence of overdue financial liabilities towards the Labour Office;
- statement that the company is not in bankruptcy or under receivership, that it has no debt repayment schedule imposed under a separate law, and that there are no outstanding dues to its employees;
- the company is not subject to a final judgment prohibiting it from receiving grants or subsidies or from receiving aid and support provided from EU funds (for legal persons).
Only the entities established and active no later than on 1.2.2020 are eligible to apply for the grant.
The grants available under Measures 1 and 2 will be provided for the period starting from 12.3.2020 and ending as of the end of the calendar month in which the Public Health Authority quashes its decision on the closure or restriction of business operations.
Correctness and truthfulness of the information presented in the declaration of honour
All the facts stated by the applicant in the declaration of honour may be subject to ex post checks. However, it is not clear yet how these checks will be performed.
What is known at this point is that by declaring that the information presented in the declaration of honour is correct and true, the employer confirms that he is aware of the legal consequences of any untruthful declaration, including the penal sanctions imposable under the Criminal Code (criminal offences of fraud, subsidy fraud, damaging the EU’s financial interests).
How to file a wage grant application (based on the information available as of now)
Once filled in, the employer will send the unsigned application together with annexes to the e-mail address of the relevant Labour Office, after which the employer will receive an e-mail notification confirming the dispatch of the application. Those employers who have electronic signatures may file the application through www.eslovensko.sk.
The relevant Labour Office will process the application and draw up the Financial Grant Agreement; Labour Offices will start sending these grant agreements to employers only from 14.4.2020, either to the employer’s electronic mailbox at slovensko.sk, or by post. The grant agreements must be signed and sent back to the Labour Office, either electronically or by post.
According to the latest information provided by the Ministry of Labour, Social Affairs and Family, Labour Offices should transfer funds to the employers’ bank accounts within 24 hours of the receipt of the signed grant agreements.
The Minister also stated that the Government would prepare an aid scheme for large employers.
3. TAXES, ACCOUNTING, SUPPORT TO SMALL AND MEDIUM-SIZED ENTERPRISES
Act No. 67/2020 on certain extraordinary measures in the financial area in connection with the spread of the dangerous communicable human disease COVID-19 (“Act”) entered into force on 4.4.2020.
The Act introduces measures for the areas falling under the purview of the Ministry of Finance. Their objective is to alleviate the adverse impacts of the COVID-19 pandemic (“pandemic”).
The measures introduced by the Act apply from 12.3.2020 until the end of the calendar month in which the Government calls off the ‘extraordinary situation’ (“pandemic period”) and until expiry of the last time limit provided for by the Act. What follows is a brief overview of some of the measures contained in the Act.
MEASURES IN THE AREA OF TAX ADMINISTRATION
The measures introduced by the Act in the area of tax administration regulate the filing of documents (Section 3), failure to respect time limits (Section 4), service of documents (Section 5), suspension of tax audits (Section 6), public lists maintained by the Financial Administration (Section 7), suspension of tax proceedings (Section 8), extinguishment of the right to asses tax and statutory limitation on and extinguishment of the right to collect tax arrears (Section 9), tax arrears (Section 10), suspension of tax execution (Section 11) and administrative infractions and sanctions (§ 12).
- Failure to respect time limits
A failure to respect a time limit which has lapsed during the pandemic period will be pardoned if the taxpayer complies with the lapsed obligation by the end of the calendar month following the end of the pandemic period. However, the time limits for the filing of tax returns and payment of taxes are not subject to the waiver.
- Suspension of tax audits
At the request of a taxpayer who is subject to a tax audit, the tax audit which started before the pandemic period will be suspended. If a tax audit started during the pandemic period, the suspension becomes effective as of the day following the first day of the audit. A tax audit which was suspended before the pandemic period will rest suspended until the end of the pandemic period even if the reasons for suspension have ceased to exist.
In the case of a tax audit checking the eligibility for a VAT refund, which is performed during the pandemic period, the tax administrator may issue a partial audit protocol even if it does not contain final audit findings and the evaluation of evidence. The tax audit is deemed suspended upon the issue of the partial audit protocol.
- Public lists maintained by the Financial Administration
During the pandemic period, the Financial Directorate of the Slovak Republic will not update the public lists of tax debtors, VAT payers whose registration has been revoked, and the list of expunged VAT payers.
- Suspension of tax proceedings
Tax proceedings which started before the pandemic period will be suspended for the duration of the pandemic period at the taxpayer’s request. The legal effects of the acts performed during the pandemic period until the effective date of the Act are not affected. Tax proceedings suspended before the beginning of the pandemic period will rest suspended for the duration of the pandemic also if the reasons for suspension have ceased to exist during the pandemic period. Tax proceedings started during the pandemic period are deemed suspended as of the day following their beginning.
The above provisions do not apply, inter alia, to the proceedings involving the refund of tax overpayments.
- Extinguishment of the right to asses tax and the statutory limitation on and extinguishment of the right to collect tax arrears
During the pandemic period, the running of (i) the time limit for the extinguishment of the right to assess a tax (ii) the time limit after which the right to collect tax arrears becomes statute barred and (iii) the time limit for the extinguishment of the right to collect tax arrears, shall be suspended.
- Tax arrears
According to the Act, the taxes unpaid by the deadlines for payment which have expired during the pandemic period and which are paid by the end of the calendar month following the end of the pandemic shall not be considered tax arrears.
- Suspension of tax execution
Tax executions are suspended for the duration of the pandemic period. However, the legal effects of the acts performed during the pandemic period until the effective date of the Act remain unaffected.
MEASURES IN THE AREA OF ACCOUNTING
The Act provides that the time limits laid down in the Act on Accounting are deemed respected if the accounting unit complies with its duties by the end of the third calendar month following the end of the pandemic period or by the deadline for the filing of tax returns set by the Act, whichever occurs first.
If, during the pandemic period, an accounting unit has objectively been unable due to personal or technical reasons to comply with its duties in line with the Act on Accounting because of the negative consequences of the pandemic, but complies with its duties by the end of the third calendar month following the end of the pandemic period, the accounting unit shall not be deemed in breach of duties.
INCOME TAX MEASURES
The Act also concerns the time limits laid down in the Income Tax Act.
- Income tax return
Income tax returns must be filed no later than by the end of the calendar month following the end of the pandemic period. The tax due must be paid by the same deadline. The Act contains a provision whereby the selected taxpayers may apply for the deferral of the income tax return filing deadline by 3 or 6 months.
- Assignation of a percentage of income tax paid
The declaration on the assignation of a percentage (2%, 3%) of income tax paid for those taxpayers whose annual tax clearance was performed by their employer and the deadline for which has expired during the pandemic period may be submitted by the end of the second calendar month following the end of the pandemic period.
Upon the employee’s request, the employer must issue a tax payment confirmation for the purposes of tax assignation no later than by the 15th day of the second calendar month following the end of the pandemic period.
During the pandemic period, the recipients of the assigned tax donations may also use the support available to alleviate the negative impacts of the pandemic.
- Reporting and annual tax statements
The annual statement of the tax paid and income earned from dependent activities, on withheld tax advances, on the employee bonus, on the tax bonus and on the tax bonus on interest paid, the deadline for the filing of which expires during the pandemic period, may be filled by the end of the second calendar month following the end of the pandemic period. Income tax is payable by the same deadline.
The annual tax statement and the calculation of income tax, the deadline for which expires during the pandemic period, will be issued by the employer no later than by the end of the calendar month following the end of the pandemic period. The employer must deliver to the employee a confirmation of the annual tax statement no later than by the end of the second calendar month following the end of the pandemic period.
On the date of the annual tax statement, but no later than on the payroll accounting date for the second calendar month following the end of the pandemic period, the employer shall return the employee any difference between the calculated income tax and the sum of the income tax advances withheld, the tax bonus or its part and the tax bonus on interest paid or its part, up to the limit stipulated in the Income Tax Act.
FINANCIAL AID MEASURES
The Ministry of Finance may provide financial aid in order to mitigate the adverse impacts of the pandemic and keep the small and medium-sized companies (“small employers”) afloat.
This financial support takes the form of (i) a guarantee for loans provided by the Export-Import Bank of the Slovak Republic and the Slovak Guarantee and Development Bank (“Bank”) or (ii) reimbursement of interest on loans provided by the Bank. The financial aid limits and the situations in which it may be provided are laid down in a separate regulation.
- Loan guarantee
A guarantee for a loan provided by the Bank is a commitment by the Ministry of Finance that the Ministry will discharge the obligations of a small employer under a loan agreement signed between the Bank and the small employer if the small employer defaults. This guarantee may be provided if, as of the loan agreement signature date:
- the borrower is not a small employer licensed to provide paid employment intermediation services under a separate regulation or a temporary work agency;
- the small employer has not been in default for more than 180 days with the payment of its dues to the Social Insurance Agency and the health insurance company;
- the small employer is not subject to bankruptcy proceedings or restructuring; and
- the other conditions set by the Bank have been met.
If a small employer defaults on his obligations payable under the loan agreement, the Ministry of Finance will honour its loan guarantee to the Bank. Consequently, the Ministry of Finance will record on its books a claim against the small employer in the amount of the guarantee paid (“claim under a called guarantee”). The small employer will then be liable to repay to the Ministry of Finance the claim, together with interest according to the Communication from the Commission on the revision of the method for setting the reference and discount rates.
- Interest reimbursement
A small employer may receive the reimbursement of interest from the state budget if, during the period stipulated in the loan agreement the employer maintains the level of employment defined in the loan agreement and, at the end of the stipulated period, the employer is not in default with payments to the Social Insurance Agency and the health insurance company above the limit set in the loan agreement.
Do not hesitate to contact us should you need detailed information on any of the points presented in the article, we are constantly monitoring the situation.
Dajana Csongrádyová, Zuzana Judiaková
 Commission Regulation (EU) No 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid
Commission Regulation (EU) No 1408/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid in the agriculture sector