Labour law aspects of the Third COVID-19 Law
Authors: Kaja Baškovič, Karin Dodič, Darja Miklavčič, Nataša Pipan Nahtigal
At its session on 29 May 2020, the Slovenian Parliament adopted the Act Determining the Intervention Measures to Contain and Mitigate the COVID-19 Consequences (the “Third COVID-19 Law”), which was published in the Official Gazette on 30 May 2020. This article sets out the key measures in the area of labour law introduced by the Third COVID-19 Law.
1. Reimbursement of part-time work
Duration of the measure
The main provisional measure in the area of labour relationships introduced by the Third COVID-19 Law is partial reimbursement of part-time work. The measure allows employers to order full-time employees to temporarily perform work part-time while simultaneously waiting for work part-time. Employers will be able to order part-time work between 1 June 2020 and 31 December 2020 at the latest. This measure cannot be introduced for employees during their notice period and for employees who are working part-time on the basis of social security rights.
Any employer who enables its employees to perform at least part-time work will be eligible to obtain partial salary reimbursement or subsidy, provided that the employer:
- is a legal or natural person who was registered in the Slovenian Business Register before 13 March 2020 and is employing full-time employees;
- assesses it cannot provide at least 10% of his employees with at least 90% of the work load; and
- is not a direct or indirect beneficiary of the state or municipal budget, whose share of revenue from public sources in 2019 was higher than 50%.
Before a decision on part-time work can be adopted, employers will need to consult on the scope of the part-time work, number of employees to whom such work will be ordered and the duration of the order with the trade union at the respective employer or – if no such trade union exists – with the works council, and obtain their respective written opinion. According to the Third COVID-19 Law, these consultations should take place every time the circumstances of work change. If there is no trade union nor works council at the employer, the employer will have to notify employees in the usual way prior to adoption of decision on part-time work.
If an employer orders part-time work for some employees, the employer needs to notify the Employment Service of Slovenia (the “Employment Service”) within three working days from the order.
If these conditions are fulfilled (which will have to be confirmed by a written statement each month), the employer will be able to claim the subsidy monthly, for the previous month.
Employee’s rights and obligations
An employee who will temporarily be working part-time will retain all rights and obligations arising from his or her employment relationship, unless these have been changed with the Third COVID-19 Law. Consequently, the employee will be entitled to payment for the time of actual performance of work and salary compensation for the time of waiting for work of the same amount as provided for in the Employment Relationships Act (‘ZDR-1’) where work cannot be performed due to incapability to provide work for business reasons. The employee will also have the right to a break in proportion to the time spent at work, and is obliged to return to work full time following the employer’s order to do so. If an employee is absent from work because of reasons set out in the ZDR-1, he or she will be eligible to receive the salary compensation as provided in his or her full-time employment contract. During this period the subsidy received will also be proportionate. In this case, the basis for the calculation of salary compensation must be the salary that the employee would have received if he or she had worked full-time.
Part-time work must be ordered in writing. The order must determine the scope of part-time work, the duration of part-time work, the distribution of working hours or the method of distributing working hours, the duration of breaks during work, the amount of reimbursement of work-related costs, the amount of salary compensation and the possibilities and the manner in which the employer orders the employee to return to work full-time.
Each employee who is ordered to do part-time work may register in the job-seekers’ register and can benefit from measures to which registered job-seekers are entitled.
Subsidy for employers
The subsidy will be granted to an employer based on a subsidy application that has to be addressed to the Employment Service, together with the evidence on fulfilment of the applicable conditions, no later than 15 days after the ordering of part-time work. Among others, the employer will need to commit not to violate the prohibition of dismissal during the period of receiving the subsidy and an additional month after that (more on this prohibition below). If the employer’s application is granted (the Employment Service will need to decide within 15 days), it will need to conclude a contract on subsidies with the Employment Service.
Subsidies will be paid to employers in monthly instalments, in proportion or in full at the latest 30 days after signing the contract with the Employment Service. The Third COVID-19 Law foresees subsidies of the following amounts:
- EUR 448 monthly for part-time work ranging from 20 to 24 hours a week;
- EUR 336 monthly for part-time work ranging from 25 to 29 hours a week;
- EUR 224 monthly for part-time work ranging from 30 to 34 hours a week; and
- EUR 112 monthly for part-time work of 35 hours per week.
This subsidy can be combined with other measures intended to maintain jobs, however the combined aid cannot lead to excessive compensation of salary costs per individual employee, and the total state aid granted to any particular employer has to be limited as foreseen in the European Commission State Aid Temporary Framework adopted to enable Member States to support the economy in the context of the coronavirus outbreak.
Any employer ordering employees to work part-time will need to periodically pay proportional parts of their salaries and salary compensation, respectively. Additionally, it shall not be allowed to:
- start dismissal proceedings for business reasons during the period of receiving the subsidy and for an additional month thereafter for an employee who has been ordered to work part-time; or
- dismiss a higher number of employees, unless the redundancy program has been adopted before 13 March 2020 and the employer did not claim subsidies for the employees subject to the redundancy programme under the Third COVID-19 Law or under the Act Determining the Intervention Measures to Contain the COVID-19 Epidemic and Mitigate its Consequences for Citizens and the Economy (ZIUZEOP); and/or
- order over time work or distribute working time unevenly during the period of receiving the subsidy if this work could have been performed by the employees temporarily waiting for work.
Employers will need to record employees’ working time, which will show their time of arrival and departure from work.
Control and publicly accessible data, return of the received funds, sanctions
If an employer does not fulfil the above conditions or does not notify the Employment Service about the order of part-time work within three days, it will need to return the received funds with the statutory default interest.
Provisions regarding liquidation proceedings as defined by the Companies Act pursuant to the Third COVID-19 Law are the same as under ZIUZEOP. If these proceedings are initiated during the period of receipt of the subsidy or during a subsequent period equal to the period of receipt of the subsidy, the received subsidy will need to be returned with statutory default interest. The same consequence is foreseen if the employer distributes profits, purchases its own shares or own business shares, or pays bonuses or awards to management or salary elements for business performance to management in 2020 or for 2020.
Supervision of granting and payments of subsidies will be conducted by the Employment Service, while inspection will be carried out by the Labour Inspectorate of the Republic of Slovenia. Additionally, the Employment Service will publish a list of subsidy recipients and the amount of subsidies received on its website. Employers will need to consent to the publication as part of the subsidy application.
Breach of conditions in the Third COVID-19 Law can lead to high penalties for employers and the responsible individuals.
Voluntary applicability of the measure
Part-time work can also be ordered by employers who will not be eligible for a subsidy or will not even apply for a subsidy.
2. Continuation of the measure of reimbursement of salary compensation to employees temporarily waiting for work
Duration of the measure
The Third COVID-19 Law extends (with some changes) until 30 June 2020 the validity of the partial salary reimbursement measure for employees temporarily waiting for work that previously applied until 31 May 2020.
This measure is available to all employers in Slovenia who cannot provide work to their employees due to the consequences of the epidemic, except to employers who:
- are direct or indirect state or municipal budget users and whose public revenue share in the year 2019 was exceeding 70%;
- perform financial or insurance activities falling within group K under the standard classification of activities and employed ten or more employees on 13 March 2020;
- are foreign diplomatic representations and consulates, international organisations, representations of international organisations and institutions, associations and agencies of the European Union in Slovenia;
- have unpaid taxes or social security contributions; or
- are subject to bankruptcy proceedings.
Employers whose revenues will decrease by at least 10% in 2020 compared to 2019 due to the epidemic are entitled to the reimbursement of salary compensation. If not in business throughout the entire year 2019 or 2020, employers whose average monthly revenues in 2020 decreased by more than 10% due to the epidemic compared to average monthly revenues in 2019 will be also entitled to the measure. If the employer has not yet operated in 2019 at all, it is eligible to apply the measures if it estimates that the average monthly revenue in 2020 will fall by more than 10 % due to the epidemic compared to the average monthly revenue prior to 12 March 2020. Subsidies will be awarded on the basis of the employer’s assessment of this revenue. However, if the conditions set out in this paragraph are not met when submitting annual reports for 2020, the employer will have to return the received funds at a later date.
Employers who have the status of a humanitarian organisation under the Humanitarian Agencies Act and employers who have the status of a disabled persons’ organisation under the Disabled Persons Organisations Act are entitled to the measures irrespective of whether or not they fulfil conditions related to the decrease in revenues.
Employee’s rights and obligations
An employee who is temporarily waiting for work and for whom the employer will receive salary compensation will retain all rights and obligations arising from the employment relationship, unless otherwise provided by the Third COVID-19 Act. While the employee is temporarily waiting for work, he or she has a duty to return to work at the employer’s order, for up to seven days in the current month. The employer will have to notify the Employment Service beforehand of this.
During the temporary wait for work, the employee will be entitled to payment of salary compensation in the amount determined by the ZDR-1 for temporary inability to provide work for business reasons (i.e. compensation of 80% of salary); this compensation may not be lower than the minimum salary in Slovenia.
If upon ordering temporary waiting for work an employee is entitled to be absent based of health insurance or parental care regulations, or acquires this entitlement during the waiting period, her or she will not be paid salary compensation under the Third COVID-19 Act, since he or she will be entitled to the appropriate salary compensation or payment of contributions on the basis of the social insurance. If an employee is entitled to part-time work in accordance with the social insurance where temporary waiting for work is ordered or obtains this entitlement during this period, his or her salary compensation is paid in proportion, and the employee retains the right to receive or pay social security contributions as if he or she was working.
The amount and the method of claiming compensation
The state will reimburse employers up to 80% of salary compensation if this compensation does not exceed the maximum amount for unemployment set out in the Labour Market Regulation Act (EUR 892.50 gross). 80% of the salary compensation covered by the state includes both salary compensation and contributions for all social insurance. In addition, it is stipulated that the amount of monetary reimbursement by the state may not exceed 80% of the value of the paid compensation, therefore the employer covers the remaining amount of reimbursement up to 20% of the salary and contribution compensation. If an employer is a direct or indirect state or municipal budget user whose public revenue share is lower than 70%, it will be able to claim reimbursement of salary compensation for the share of income from non-public sources.
This compensation can also be combined with other measures, however the combined aid must not lead to excessive compensation for salary costs of an individual employee and the total state aid granted to any particular employer has to be limited as foreseen in the European Commission State Aid Temporary Framework as adopted to enable Member States to support their economies in the context of the coronavirus outbreak.
Employers will enforce the right to reimbursement by submitting an online application to the Employment Service within eight days after the posting of the employees to wait for work, but no later than 30 June 2020. The application will have to be accompanied by a statement of the estimated decrease in revenue, and the employer will subject to criminal and tort liability relating to the accuracy of this statement. The Employment Service will have to decide on the submitted application by a decision within 15 days.
During the period of receiving the reimbursement of the salary compensation, employers will have to pay salary compensation to employees, will not be allowed to order overtime work if this work could be performed by employees waiting for work, and will have to notify the Employment Service before the employees’ return to work. Failure to comply with the above may result in an obligation to return the funds received. At the same time, the employer will have to return the received funds if it initiated liquidation proceedings (as defined by the Companies Act) during the period of receipt of the funds or during a subsequent period equal to the period of receipt of the funds. During the period of receipt of salary compensation, the employer will also not be allowed to dismiss the employee concerned.
Monitoring of the implementation of this part of the Third COVID-19 Law will be performed by the Labour Inspectorate of the Republic of Slovenia, and the Third COVID-19 Law also regulates special Employment Service rights on the basis of which it may exercise administrative and financial control of fulfilment of employers’ contractual obligations; these include review of an individual employer’s computer programmes, documents and procedures.
Breach of conditions in the Third COVID-19 Law can lead to high penalties for employers and their respective responsible individuals.
3. Termination of application of the Act on the Interim Measure of Partial Reimbursement of Wage Compensation
The Third COVID-19 Law stipulates that provisions on partial reimbursement of salary compensation under the Act on the Interim Measure of Partial Reimbursement of Wage Compensation cease to apply from the entry into force of the Third COVID-19 Law. Other provisions related to deferral of payment of contributions remain in full force.