Effectiveness of provisional measures considering the revocation of the epidemic
Authors: Kaja Baškovič, Nataša Pipan Nahtigal
The Government of the Republic of Slovenia adopted the Ordinance on the revocation of the epidemic of contagious disease SARS-CoV-2 (COVID-19), which entered into force on 15 May 2020 and will be applicable from 31 May 2020. This Ordinance affects the duration of some of the measures and deadlines set with the Act Determining the Intervention Measures to Contain the COVID-19 Epidemic and Mitigate its Consequences for Citizens and the Economy (“Intervention Act”).
In the first part of this article we summarize provisional measures which only remain in force until 31 May – this applies mostly to measures adopted in the labour law field or targeting the self-employed, as well as to some additional measures aimed at helping the economy.
In the second part of this article we present the beginning and course of the deadlines that are linked under the Intervention Act to the moment of the revocation of the epidemic.
1. REVOCATION OF THE PROVISIONAL MEASURES
The termination of many measures adopted to contain the COVID-19 epidemic is tied to the Government’s revocation of an individual measure, some are in force until an explicit date, whereas some of them could pursuant to article 20 of the Intervention Act be prolonged by 30 days after 31 May, i.e. until 30 June, if the epidemic was not revoked before 15 May. The above mentioned Ordinance will only be applicable from 31 May, which can raise a question whether the epidemic was in fact revoked before 15 May. However, we believe that the likely interpretation will be that the Ordinance revoked the epidemic before 15 May, therefore the provisional measures will cease to apply.
Measures in the field of labour law
- On 31 May the reimbursement of the salary compensations for employees temporarily waiting for work or not performing work due to force majeure, as well as the relief from contribution payments for occupational insurance and pension and disability insurance for employees still performing work, will cease. At the same time, this means that the crisis subsidy for employees who work, will not be paid for work performed in June. In connection with absence from work due to force majeure one should also consider the fact that the public transport started operating again on 11 May and that kindergartens and schools for the first three grades opened their door, making most cases of force majeure absences unjustifiable even before 31 May.
- At the same time, the relief measure will expire according to which the cost of salary compensation during temporary absence from work due to illness or injury is paid by the compulsory health insurance from the first day of the employee’s absence.
- The Intervention Act regulates temporary compensation due to loss of employment from the first day of unemployment, in cases when the individual’s employment agreement was terminated after 13 March due to business reasons or the expiration of the employment period, even if such employee does not otherwise fulfil the conditions to obtain the unemployment compensation in accordance with the Labour Market Regulation Act. This type of monetary compensation is available to the individual for the duration of the provisional measures, meaning that this measure will also expire on 31 May.
Details about the above mentioned labour law measures are can be found here.
- When the mentioned labour law measures will cease to apply, the measures determined with the Act on the Interim Measure of Partial Reimbursement of Wage Compensation, which entered into force on 28 March 2020, will become applicable again. This act stipulates that employers are eligible to receive partial reimbursement of salary compensations (in the amount of 40% of the paid compensation) for employees temporarily waiting for work at home, if the following is fulfilled: i) the employer submits a description of his business situation due to consequences of the epidemic, ii) it must follow from the said description that he cannot provide work to at least 30% of his employees, and iii) the employer submits a statement on preservation of jobs by at least six months after the respective employees return to work.
- Moreover, employers will be entitled to a full salary compensation reimbursement for employees ordered to stay in quarantine while such employees cannot work from home.
More on the measures introduced by this act can be found here.
Provisional measures aimed to help the self-employed and farmers
- The self-employed will no longer be eligible to receive the basic monthly income after 31 May. Additionally, the self-employed, religious servants, persons insured as shareholders and farmers will no longer be exempted from payment of social security contributions.
- From June onwards, the self-employed will again need to pay instalments of the personal income tax prepayment for income earned by performing activities.
Other measures aimed to help the economy
- The arrangement regarding corporate income tax for legal entities is the same as provided for the personal income tax of self-employed, namely, legal persons will need to start paying again instalments of prepayment of corporate income tax for the year 2020.
- Postponement of civil enforcement proceedings and suspension of tax enforcement proceedings expire on 31 May. Such suspension or postponement are already not applicable in urgent matters decided by the court during the epidemic and for the recovery of claims for child support and compensation for lost maintenance due to the death of the maintenance provider.
- 31 May is also the expiration date of certain construction-related measures and the exemption of payment of the contributions for the National public broadcasting organization.
The mentioned measures aimed to help the economy are discussed in detail here.
2. DEADLINES TIED TO THE REVOCATION OF THE EPIDEMIC
The Intervention Act tied some deadlines to the “announcement of the cancellation of the epidemic”, to the “announcement of the revocation of the epidemic” or “the revocation of the epidemic”, while some deadlines are extended “for the duration of the epidemic”.
As the Ordinance on the revocation of epidemic of contagious disease SARS-CoV-2 (COVID-19) became valid on 15 May and it will become applicable on 31 May, it can be questionable whether the date of the “announcement of the revocation / cancellation” of the epidemic or the “date of the revocation of the epidemic” is 15 May or 31 May. Another possible interpretation is that the deadlines linked to the announcement of the revocation / cancellation of the epidemic start on 15 May, while the deadlines linked to the revocation of the epidemic start on 31 May. Due to the ambiguity and numerous interpretation options, we advise you to fulfil the obligations as if the deadline began on 15 May and the epidemic lasted until 15 May. The deadlines below are calculated in line with this interpretation.
The measures tied to these deadlines are described here.
- When deferring the payment of obligations from a credit or other agreement concluded on the basis of the Act Governing Rescue and Restructuring Aid for Companies and Cooperatives in Difficulty, the debtor may submit an application for deferral of payment to the Ministry of Economic Development and Technology no later than three months after the epidemic is revoked, therefore this should be done before 15 August 2020. If the borrower wants to defer the payment of obligations from the loan agreement concluded with a public fund the founder of which is the Republic of Slovenia, the deadline for submitting the application is longer – namely six months following the epidemic revocation – therefore this should be done before 15 November 2020.
- One of the provisional measures was also determination of a shorter payment deadline of 60 days when the creditor is a public authority, while the debtor is a private-law entity. This shorter deadline will be applicable for one year after the announcement of the cancellation of the epidemic, therefore until 15 May 2021.
- If a bank or another person bound to comply with the Prevention of Money Laundering and Terrorist Financing Act carried out customized know your client procedures in accordance with the Intervention Act, it must carry out standard know your client procedures for identifying these clients no later than within one month after the announcement of the cancellation of the epidemic, i.e. by 15 June 2020.
- In the field of public procurement contracts the Intervention Act stipulates for an extension of contractual deadlines for the duration of the epidemic (except in relation to the supply of goods constituting protective equipment necessary for an efficient fight with the epidemic). In Slovenia the epidemic was declared on 13 March, therefore, following the above cautious interpretation, contractual deadlines should be extended by 2 months and 2 days. Contractual penalties for delays in public procurement matters also apply again after revocation of the epidemic.
- Reporting deadlines in accordance with the Environmental Protection Act, the Water Act and their respective underlying regulations expire on the 60th day after the epidemic is revoked, therefore on 14 July 2020.
- If a consumer does not agree to receive the voucher and requests the tour operator to refund all his payments, the tour operator must return all the payments within 12 months after the revocation of the epidemic, therefore before 15 May 2021.
- Certain presumptions and measures in the field of insolvency will also cease to apply. Contrary to the above described measures, the Intervention Act does not link insolvency measures to the revocation of the epidemic, but to the cessation of measures in accordance with article 20 of the same act. Therefore, deadlines with respect to the following insolvency presumptions and measures begin running on 31 May 2020:
- Irrebuttable presumption of insolvency, which applies if the employer is more than a month late with the payment of salaries and contributions to employees counting from the receipt of the reimbursement of such salaries and contributions, will remain in force for four months after the cessation of measures under article 20 of the Intervention Act, which means until 30 September 2020.
- The provision under which the management is not obliged to file a proposal for the commencement of compulsory settlement or bankruptcy proceedings if the company’s insolvency arose as a result of declaring the COVID-19 epidemic, remains in force for three months after the cessation of measures under article 20 of the Intervention Act, therefore until 31 August 2020, unless there are no indications that the company will be able to solve the insolvency situation.
- In all bankruptcy proceedings initiated by creditors no later than 31 August 2020 (i.e., within three months after the cessation of measures in accordance with article 20 of the Intervention Act), an extended four-month period applies during which the court may postpone the creditor’s proposal for the commencement of bankruptcy proceedings and during which the debtor can justify his request to postpone the decision on the creditor’s motion for the commencement of bankruptcy proceedings if the debtor’s insolvency is the result of declaration of the COVID-19 epidemic. In these bankruptcy proceedings, the debtor may also justify the postponement of the decision on the creditor’s proposal to initiate bankruptcy proceedings by providing evidence that he has eliminated insolvency through other financial restructuring measures or with a sufficient volume of business.
- If, due to the objective consequences of declaring the epidemic, the company’s bodies have not been able to timely carry out certain actions and measures required under bankruptcy legislation, they must start implementing them no later than one month after the cessation of measures under article 20 of the Intervention Act, therefore before 30 June 2020. 30 June 2020 is also the final deadline for fulfilling certain management obligations under bankruptcy legislation.
- If a petition for bankruptcy has been filed against the employer, the employee who has previously requested protection of his rights within the prescribed time and in the prescribed manner shall be entitled to rights in accordance with the Public Guarantee, Maintenance and Disability Fund of the Republic of Slovenia Act, regardless of article 18 of the said act, in the event of termination of such employee’s employment by 30 June 2020 (i.e., one month after the cessation of measures under article 20 of the Intervention Act).