Mega COVID-19 Law and employment relations
Authors: Kaja Baškovič, Darja Miklavčič
On 2 April 2020, the Slovenian Parliament adopted the text of the Intervention measures to stem the COVID-19 epidemic and mitigate its consequences for citizens and economy (hereinafter: Mega COVID-19 Law).
The Mega COVID-19 Law has not yet been published in the Official Gazette and is therefore not enforced yet.
Further you will find a short abstract of the provisional measures in the field of employment relations, that are provided for in the new Mega COVID-19 Law.
I. WORK AND PAYMENT OF THE SOCIAL SECURITY CONTRIBUTIONS
The Mega COVID-19 Law stipulates for reimbursement of the salary compensations for employees temporarily waiting for work and employees who are absent from work due to force majeure and the relief from payment of contributions.
The adopted measures apply from 13 March 2020 to 31 May 2020. If the epidemic will not be terminated by 15 May 2020, the deadlines for expiry of measures running out on 31 May, will be prolonged for 30 days.
During the period of enforcing the provisional measures, the provisions of the Act on Measures in the Field of Salaries and Contributions will not be used regarding the partial reimbursement of the salary compensations to the employees waiting for work.
At the same time, the Mega COVID-19 Law stipulates that the Employment Service of Slovenia will examine all received applications from employers enforcing their right to a reimbursement, also the ones submitted before the enforcement of the Mega COVID-19 Law (therefore under Act on Measures in the Field of Salaries and Contributions), in accordance with the provisions from the Mega COVID-19 Law.
1. REIMBURSEMENT OF THE SALARY COMPENSATION AS IT FOLLOWS FROM THE MEGA COVID-19 LAW
Conditions for exercising the right
Employers from the Republic of Slovenia are eligible for reimbursement of the compensation in two cases:
a. when the employer cannot provide work for their employees and sends them to wait for work
Employers, who sent their employees to wait for work until the 31 May 2020 at most, and estimate that their revenue in the first half of 2020 will decrease for more than 20% over the same period in 2019, while at the same time they will not reach more than 50% of revenue growth in the second half of 2020 compared to the same period in 2019, are eligible for reimbursement under the new Mega COVID-19 Law.
In case the annual reports for 2020 will not show the fulfilment of this condition, the employer will have to return all the received aid.
If the employer was not operating during the whole of 2019, the comparison described above is not possible, so the Mega COVID-19 Law stipulates that employers who suffered at least 25% reduction of revenue in March 2020 compared to February 2020, or their revenue will decrease for more than 50% in April or May 2020 compared to February 2020, are also eligible for reimbursement.
Additional condition is that the employers cannot provide work for their employees due to the effects of the COVID-19 epidemic. The law also determines, that the intent behind these provisional measures is the preservation of jobs, however it is not clear, whether the employer must preserve jobs after these measures are in force or how long would such an obligation be binding. Based on the purpose behind the law, it cannot be ruled out that such an obligation will be applicable.
The posting of the employee to wait for work must be in writing and should include provisions on the specified time of the waiting for work, possibilities and the method of calling the employee back to work early and the amount of salary compensation. If an employee uses his annual leave during the temporary wait for work, he is entitled to salary compensation in accordance with the Employment Relationships Act (i.e. 100% salary compensation).
Employee who is posted to temporarily wait for work retains all his rights and obligations that arise from his employment contract, unless this Mega COVID-19 Law stipulates differently. The employer is not allowed to order overtime if such work could be done with the employees who are currently waiting for work.
While the employee is temporarily waiting for work, he or she is required to return to work at the employer’s order, to up to seven consecutive days in a month. The employer must notify the Employment Service of Slovenia in advance about this. The same notice is needed when the employer calls an employee to return to work.
b. when the employees cannot perform work due to force majeure
The proposed Act defines COVID-19 epidemic as force majeure.
All the employers who have paid the salary compensation to employees who were not able to perform work due to force majeure are eligible for reimbursement. In this case the employer must declare that the employees are not performing their work due to force majeure resulting from the childcare due to closing of schools and kindergartens and other objective reasons or because of their inability to come to work due to the ban of public transport or the closing of borders with neighbouring states and are thus receiving salary compensation.
An employer who wants to enforce his right to a reimbursement, must fulfil the same conditions regarding the loss of revenue, as if he would be applying for reimbursement of salary compensations paid to employees who are temporarily waiting for work.
The employer must notify the Employment Service of Slovenia on the day of termination of the employee’s absence that his or her absence due to force majeure has ended.
The amount of the reimbursement of the salary compensation
The employee is entitled to a compensation of 80% of the salary in both situations (i.e. when an employee is posted to wait for work or when he or she cannot perform work due to force majeure). The Mega COVID-19 Law additionally stipulates that the paid compensation cannot be lower than the minimum salary in the Republic of Slovenia.
It is not clear whether this applies in case of part-time employment as well as if this provision obliges employers who are not seeking reimbursement from the state.
The law also provides for certain exemptions regarding compensations for employees who are not working under the regulations on health insurance or parental care or who are employed part-time based on the same regulations.
The Republic of Slovenia will cover the total paid compensation reduced for the contributions of the insured, but not exceeding the average salary in the Republic of Slovenia for year 2019, calculated on a monthly basis.
Relief from contribution payment
Additionally, the employers are exempted from contribution payments for all social security contributions for the salary compensations paid between 13 March and 31 May for employees who are temporarily absent from work and for employees who are not performing work due to force majeure, since the contributions will be fully covered by the Republic of Slovenia.
The relief from contribution payment is not applicable for certain categories of employers (e.g. budget users).
Enforcing the right to reimbursement of the compensation
The employers will enforce the right to reimbursement of the compensation by submitting an online application to the Employment Service of Slovenia within 8 days after the posting of the employees to wait for work, but no later than 31 May 2020.
If the employer sent his employees to wait for work or if the employees were not able to perform work before the enforcement of the Mega COVID-19 Law, the employer will be able to enforce his right to reimbursement for a period from 13 March 2020 on, with an application submitted within 8 days after the enforcement of the Mega COVID-19 Law.
The reimbursement of salary compensations will not be available for 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;
- are not fulfilling their statutory and other monetary non-tax liabilities in accordance with the act governing the financial administration, that are collected by the tax authority or if they have unpaid debts on the date of application (same applies for employers who did not submit all withholding tax returns for the last five years); or
- have insolvency proceedings started over them.
Together with the application, an employer will need to submit a statement (i) on temporary posting of employees to wait for work at home or (ii) on incapability of performing work due to force majeure, for the correctness of which he will be criminally and materially liable. In addition, he will have to provide evidence of posting employees to wait for work at home or of justified absence due to force majeure resulting from the care of children due to closing of kindergartens and schools or the inability to come to work due to the ban of public transport or the closure of borders with neighbouring countries.
Furthermore, the Mega COVID-19 Law stipulates that the employer needs to submit a statement in accordance with Article 21 of said law, however this article is not mentioning any statements.
It cannot be ruled out that the employer had in mind the statement on preservation of jobs, since Article 21 stipulates that reimbursement of salary compensation is adopted in order to preserve jobs.
The Employment Service will need to decide on the submitted application within 8 days with a resolution, that should include the subject matter, the basis for calculating the compensation, the method of calculating and the amount of the reimbursement, the content of claims for salary compensation including their annexes, the reasons for rejecting the claim for compensation, the deadline of the Republic of Slovenia for payment, the repayment period, monitoring, reporting, sanctions for breach of contract and monitoring its execution.
The reimbursement for the employers who paid the salary compensation, except the ones whose compensation of employee’s salaries is not borne by the employer will be awarded monthly, in proportion or in full on the 10th day of the month following the payment of the salary compensation.
The employer is entitled to reimbursement of the salary compensation for an actual monthly or weekly workload, and also for a holiday or other day off if the employee would have worked on such a day.
Seasonal work in agriculture
An employee posted to wait for work at home due to the COVID-19 epidemic, can be posted by the Employment Service to a holder or a member of the agricultural holding that expressed the need for temporary or occasional work in agriculture.
Supervision and the repayment of three times the received aid
Administrative and financial supervision over the execution of the Act will be done by the Employment Service, while the inspection will be carried out by the Inspectorate of the Republic of Slovenia.
If an employer during the period of receiving the reimbursement of the salary compensation is not paying the net salary compensation or is ordering overtime even though he could perform this work with the employees waiting for work or is not notifying the Employment Service before the return of the employee to work, he will have to repay three times the received aid.
If an employer starts liquidation proceedings during the period of receiving the reimbursement or after this period, which is equal to the period of receiving the reimbursement, he will have to return the received aid in full.
2. RELIEF FROM PAYMENT OF THE CONTRIBUTIONS FOR PENSION AND DISABILITY INSURANCE FOR EMPLOYEES WHO STILL WORK AND A CRISIS SUBSIDY
The Republic of Slovenia will pay the contributions for pension and disability insurance in April and May 2020 for all the employees who are still performing work. The Mega COVID-19 Law does not make it clear whether the right will have to be enforced or will its exercise be automatic. Moreover, it is not clear if the Republic of Slovenia will cover only the part of the contributions paid by the employer, or will it also cover the contributions the employer pays at the employee’s expense.
In addition, the Mega COVID-19 Law stipulates for employers to pay monthly crisis subsidy in the amount of EUR 200 to all still working employees, provided their last monthly salary was not exceeding three times the minimum salary.
Direct and indirect state or municipal budget users and employers performing financial and insurance activities falling within group K of the standard activities classification, are not entitled to these measures.
3. REPAYMENT OF THE RECEIVED FUNDS AND CRIMINAL PROVISIONS REGARDING WORK AND PAYMENT OF THE SOCIAL SECURITY CONTRIBUTIONS
The entities that have claimed (i) reimbursement of the salary compensation for employees temporarily waiting for work, (ii) reimbursement of the salary compensation for employees who were not able to perform work due to force majeure, and (iii) relief from contribution payment, and have shared the profit or paid part of the salaries for business performance or award to management in 2020, after the enactment of the Mega COVID-19 Law, will have to repay the received funds together with the statutory default interest. It is not clear whether this provision refers to all pay-outs in 2020 (therefore also the ones related to 2019, but paid in 2020).
If an entity claiming rights under Mega COVID-19 Law successively verifies that it did not fulfil the necessary conditions for their enforcement, it notifies the Financial Administration of the Republic of Slovenia and repays the received aid within 30 days of the declaratory decision.
The control over this part of the Mega COVID-19 Law will be performed by the Financial Administration of the Republic of Slovenia.
For violating the provisions of the Mega COVID-19 Law the employer and the employer’s responsible person can be fined. The amount of the fine is specified in a range and depends on the size of the employer.
II. HEALTH CARE AND HEALTH INSURANCE UNDER THE MEGA COVID-19 ACT
The salary compensation to which the employees are entitled to on the day of enforcement of the Mega COVID-19 Law because of temporary absence from work due to illness or injury, or are entitled to such compensation after the enforcement of the Mega COVID-19 Law, is covered by compulsory health insurance. Compensation covered by the compulsory health insurance will be offered until the expiry of reasons for temporary absence from work or until the expiry of reasons for the adoption of the measures in the Mega COVID-19 Law, however not longer than 31 May 2020.
The amount of the paid or reimbursed compensation is the same as determined by the Employment Relationships Act and the Health Care and Health Insurance Act. The Health Insurance Institute of Slovenia will pay the compensation to the individual within 30 days after his or her request and reimburse the paid compensation to the employer within 60 days of his request. Both requests should be submitted to the Health Insurance Institute of Slovenia electronically not later than 30 September 2020. These provisions are not applicable for direct or indirect budget users.
III. OTHER SIGNIFICANT MEASURES RELATED TO EMPLOYMENT RELATIONSHIP
1. RESIDENCE OF FOREIGNERS
Foreigners who have had a valid legal title of legal residence in the Republic of Slovenia until 13 March 2020, and are not able to leave the territory of the country for objective reasons during the enforcement of measures intended to control and limit the COVOD-19 epidemic, are allowed to further reside in the Republic of Slovenia until the termination of measures due to which they are objectively not able to leave the country or arrange an adequate legal title of residence are ceased.
2. NOTICE OF VACANCIES AND ALLOWANCE FOR EXPOSURE AND OTHER SPECIAL LOADS
The Mega COVID-19 Law includes a section named “Salaries and salary compensations and transfers in the public sector” that offers two provisions, for which it is not possible to conclude with absolute certainty that they are not also meant for the private sector, namely regarding the notice of vacancies and the allowance for exposure and other special loads during the epidemic.
Due to the urgent work needs during the COVID-19 epidemic the Mega COVID-19 Law allows for fixed-term employment without the notice of a vacancy, however not longer than until 30 September 2020. It follows from the explanations that “urgent needs during the COVID-19 epidemic” are an additional case in which an employment contract for fixed duration can be concluded compared to the Employment Relationships Act.
Employees, including the ones posted abroad, who are exposed to above-average danger for their health or are overworked due to the management of the COVID-19 epidemic, are entitled to allowance for exposure and other special loads for the duration of the epidemic, amounting to not more than 100% of the basic salary hourly rate of the employee.
The law predicts that the funds for financing such subsidy will be provided from the budget of the Republic of Slovenia, yet the wording of the law does not make it clear how this provision will be practiced in the private sector.