To-the-Rescue: Mega COVID-19 Law Proposal

To-the-Rescue: Mega COVID-19 Law Proposal

Yesterday the Slovenian Government presented the main features of the so-called Mega COVID-19 Law that addresses instant help to the economy and the general population.
The wording of the law has not yet been made available and there are a lot of open questions. The Government intends to agree on the final wording of the proposal by the end of this week and then send it to the Slovenian Parliament for final confirmation. In the process, the proposed measures, as described below, will mostly likely be subject to further changes.

The Government has also announced new legislation packages, which could be presented to the public in the next weeks.

The measures proposed in the Mega COVID-19 Law can be divided into six groups:

1.  Preservation of jobs

The Intervention Act adopted by the Slovenian Parliament on March 20, 2020 provides for a partial reimbursement of the salary compensation for employees who were sent to wait for work at home. This right is restricted to employers who cannot provide work to more than 30% of their employees. The new proposal no longer includes this restriction and therefore the partial reimbursement will be available to all employers.

The reimbursement scheme under the new proposal is the following:

  • The state will cover the salary compensation in full if the employer is not able to provide work to at least 30% of its employees.
  • The state will cover 20 % of net salary compensation to all other employers that have sent their employees home to wait for work. In this respect, it is not clear at the moment whether this 20 % compensation was meant as an add-on to the existing 40 % compensation that was confirmed by the Parliament last week, or is this the new compensation percentage.
  • The social security contributions for all employees waiting for work at home will be covered by the state, instead of the employer.

The proposed measures also affect sick leave payments. If an employee is on sick leave during the epidemic, the compensation of his or her salary will be covered by the Health Insurance Institute of Slovenia already from the first day of the employee’s absence from work.

Simultaneously, the Government proposed certain salary bonuses for public service employees due to the increased workload (from 10% to 200%). At the press conference, the prime minister encouraged private companies to follow the same policy – the before-mentioned measures should give the companies enough manoeuvring space to achieve that.

2. Improvement of social status of people with a lower income

The proposal provides for equal treatment of all employees who are unable to work. Under the current legislation, the employees who are not able to come to work due to ban on public transport, or due to staying home and taking care of their children, are entitled to a compensation in the amount of 50% of their salary. The Mega COVID-19 Law would increase this percentage to the same one that is applied to employees who are waiting for work at home (i.e. 80 %).

All employees whose employment contracts will be terminated during the COVID-19 epidemic, will be eligible for unemployment benefits. Their situation will be reviewed again at the end of the epidemic, when the pre-epidemic rights will be applied.

The proposal also introduces payment suspension relating to public services that are currently not operating (e.g. kindergartens).

3. Measures to help the self-employed

The proposal suggests for the state to cover the social security contributions for the self-employed affected by the epidemic. Those that have been unable to operate or whose business has been materially affected will also be entitled to a basic monthly income in the amount of 70% of the minimum wage, which will be covered by the state.

In order to claim these rights, the affected self-employed will have to issue an online statement to announce that their business has been affected by the COVID-19 epidemic. These statements will be publicly accessible and subsequently reviewed for accuracy. In case the statement was made under false pretences, the self-employed will be obliged to return the help received from the state.

The proposal stipulates that these measures will be in force for two months, with a possible situation-dependent extension period.

An additional measure regarding the self-employed is a suspension of advance payment for personal tax until the final assessment of personal income tax for the year 2020 is made.

4. Measures to improve liquidity and to assist health research projects

Under the proposed legislation, the state will be paying all pension contributions for employees who are still working, namely until the end of the COVID-19 epidemic.

The advance payment of the corporate income tax will be temporarily suspended.

To further improve liquidity, the Government is proposing to set up a guarantee scheme and to allow the Slovenian bad bank or another state entity to purchase receivables due from Slovenian companies.

Another significant proposal is that the payment deadline for payments from public sector to private suppliers is reduced to 8 days. In addition, the enforcement of contractual penalties for late delivery to public sector entities will be suspended.

Unused funds available from the European Social Fund will be directed towards companies and institutions involved in research and development of vaccines and other protective agents that help manage the COVID-19 epidemic.

5. Reductions of attendance fees and salaries

The proposal is proposing to reduce the attendance fees and other compensations paid to supervisory board members of companies that are majority-owned, directly or indirectly, by the state. The proposed decrease is 30%. The same reduction rate applies to certain state officials throughout the whole duration of the epidemic.

6. Measures helping the agriculture sector

The proposed measures include financial help to farmers and members of agricultural holdings, namely in the form of 80% of the minimum wage for those who have been infected with COVID-19, payment or deferral of payment of social security contributions, 50% decrease of the cadastral income, compensation for lost income etc.