Murgova & Partners Attorneys at Law | View firm profile
As the pandemic progresses, it is understandable why the public attention is focused not only on the health aspects of the spread of COVID-19, but also on the economic impact of the crisis, both nationally and internationally.
A number of companies are facing serious choices to make, which may be decisive for their short and long term business. For both – employers and employees, the issue of maintaining jobs, ensuring the security of the payment of salaries of the staff, and generally creating a new compass for business in the new conditions, is vital.
In parallel with the development of the project of the Act on measures and actions during the State of Emergency, announced by a decision of the National Assembly of the Republic of Bulgaria of 13 March 2020 (promulgated in the SG, issue 28 of 24.03.2020), the state, branch organizations and representatives of employers and employees focused their efforts on developing the first short-term measure to support the business – the so-called “Measure 60/40”. At the date of preparation of the current alert, the Council of Ministers has adopted Decree No. 55 of 30.03.2020 (amended by virtue of Decree No 71 of 16.04.2020) laying down the conditions and procedure for payment of compensation to employers in order to preserve the employment of employees in the event of a state of emergency, announced by a decision of the National Assembly of 13 March 2020. Additionally, and given the nature of the State aid in the allocation of the funds, the Decree was sent to align its provisions with those of the European Union.
With this alert we present you the most important aspects of the application procedure.
Employers who can benefit from the compensation mechanism:
There are two groups of Employers that can participate in the procedure:
Group № 1: Employers, who, due to the state of emergency by virtue of their explicit order, issued on the basis of a governmental order, have terminated the work of the company, part of the company or of individual employees.
This group includes mainly companies that carry out retail, transport, tourism, catering, creative, cultural, sports and other activities listed in the Annex to the Decree.
Group № 2: Employers outside the specified group in Item 1, whose economic activity falls within any sector of the Classification of Economic Activities (NACE.BG-2008), with the exception of Sectors A (Agriculture, Forestry and Fisheries), K (Financial and insurance activities), O (Government), P (Education), Q (Human health and social work), T (Household activities as employers) and U (Activities of extraterritorial organizations and services).
What conditions should the employer meet in order to receive the state aid?
Every employer, whether he falls under Group № 1 or Group № 2, must meet the following general requirements:
ü To be a local natural person, a legal entity or a foreign legal entity who conducts business in the Republic of Bulgaria;
ü To be free of tax liabilities and compulsory social security contributions in accordance with the tax legislation established by an effective act of a competent authority and for which the employer has not taken any actions for rescheduling, deferral or collateral.
ü Not to be declared insolvent or not to be in insolvency or liquidation proceedings;
ü To keep the employment of workers and employees for whom compensation will be paid for additional period not less than the period for which the compensation was paid;
ü Not to terminate the employment contracts of employees on the specified in the Procedure grounds (e.g. closure of part of the enterprise, redundancy, etc.) during the period for which the compensation is paid;
ü There should not be a violation of the requirements of the labor legislation (the Labor Code or the Law on Labor Migration and Labor Mobility), established by a penal decree or court decision, within a period of 6 months prior to the issuance of the termination order or of the order establishing part-time work.
In addition, applicants who fall under Group № 2 should also meet the following additional conditions:
ü To have terminated the work of the company, part of the company or of individual employees (by virtue of an order issued on the basis of Article 120c, paragraph 1 of the Labor Code)
ü To have established part-time work in the company or in its unit (by virtue of an order issued on the basis of Article 138a, paragraph 2 of the Labor Code),
as well as
ü To have a sales revenue reduction of at least 20% for a period that depends on whether the Employer’s Company is registered before or after 01.03.2019.
Application filing procedure and what documents are required?
ü Application form with the declarations required for it (according to an approved template);
ü List of the affected employees (according to an approved template);
ü Certified copy of an order for termination of employment or establishment of part-time work;
ü Other documents to cover the DCM conditions for the group concerned.
The documents shall be submitted electronically, by mail or in exceptional circumstances on-site at the relevant Labor Office Directorate.
The procedure is open for application for the period from 31.03.2020. Each company is entitled to apply for compensations for the entire period of the declared state of emergency (but not exceeding 3 months). The documents shall be examined in the order of their filing and within 7 working days of their submission, and within 2 days of the finalization of their examination, the applicant shall be informed whether the requested State aid will be granted.
It is important to note that as a result of this measure the allowance of 60% of the insurance income of the employees concerned (as well as the relevant amount of the social security contributions due by the Employer) is covered by NSSI and the Employer is obliged to pay the remaining 40% to the full amount of the insurance income received. The business will have to prove the actual payment of the remaining 40%, which will be a subject to control, with the Labor Inspectorate and the NRA exercising it.
The Murgova and Partners’ team is closely monitoring the Procedure for implementation of Decree No. 55 of March 30, 2020. We are available for any further clarification on the issues raised in this alert, as well as for any assistance, necessary for employers in the application procedure for financial assistance.