FINANCIAL SUPPORT FOR EMPLOYERS FROM THE STATE /THE NEW MEASURE "60/40"/

06 Jul 2020

On 03.07.2020, the Council of Ministers published the official text of the previously adopted Decree № 151/03.07.2020, determining the terms and conditions for payment of funds to employers in order to maintain the employment of workers and employees after the state of emergency and the emergency epidemic situation.

As it became clear earlier, employers will receive funds from the State to maintain employment after June 30, 2020. Still, the State administration is processing the final reports of the employers who applied under Decree № 55/2020 or the so-called first version of the measure "60/40", as well as it prepares the new sets of application documents for the renewed measure / applications and declarations, etc./. Following the promulgation in the State Gazette of the Decree № 151/03.07.2020, the Employment Agency, on its official website, will publish the set of application documents. As of now, the starting date of the period that could be requested by employers remains 01.07.2020.

 

However, what are the preconditions for granting the compensations, according to the new provision in the above-cited act?

  • Again there is an opportunity for employers to apply for their workers and employees in respect of order issued under Art. 120c of the Labor Code for termination of work or there is an order for establishment of part-time work on the grounds of Art. 138a, para. 2 of the Labor Code. The requirement for the above is that the effect of the orders extends only for the period of the state of emergency or the declared emergency epidemic situation. That is, after the end of the state of emergency or the declared emergency epidemic situation, employers can return to their usual work pace and, if they meet the other requirements of the Decree, to continue to benefit from financial support from the State until 30.09.2020.
  • The group of workers and employees for whom there is a possibility to receive compensations has been expanded. Namely those who have been added during the period of the state of emergency or the emergency epidemic situation have used leave on the grounds of Art. 173a of the Labor Code, as well as those whose employment has been preserved after a notification for mass dismissals has been submitted under Art. 130a of the Labor Code and Art. 24 of the Employment Promotion Act during the period from March 13 to June 30, 2020.

An important moment for the employers in sector I - "Hotels and restaurants", from the Classification of Economic Activities (CEA-2008). is that they do not have to apply any of the above requirements for employees for whom they would participate for financial support.

  • The group of employers having the rights to apply under this Decree has also been expanded, namely for payment of funds under Art. 1 regarding certain organizations established by the municipalities as being separate structures:

- units, municipal activities or specialized units, municipal enterprises, established under Art. 52 of the Municipal Property Act, financed as a local activity, which meet the criteria under para. 1, items 1 and 3-7 and have declared a reduction of the revenues from the respective activity, as follows:

1. for municipal activities, opened before June 1, 2019 - by not less than 20 percent during the month preceding the month of submission of the application for payment of funds, compared to the same month of the previous calendar year;

2. for municipal activities, opened after June 1, 2019 - by not less than 20 percent during the month preceding the month of submission of the application for payment of funds, compared to the average revenues for January and February 2020.

  • Another group of employers who could apply for funds to maintain the employment of their employees are employers from the Education sector, with CEA 85.5 "Other educational activities" and from the Human Health and Social Work sector, with CEA 85.10 "Preschool education" (private sector), 88.91 "Day care for young children" (private sector), 86.23 "Activities of dentists" and 86.90 "Other human health activities".
  • However, employers in the following economic sectors will not be entitled to compensation for maintaining employment: Agriculture, forestry and fisheries, Financial and insurance activities, General government, Education, Human health and social work, Activities of households as employers, Undifferentiated household activities on manufacturing of goods and services for own consumption, Activities of extraterritorial organizations and services.

 

For each worker or employee that was employed before 13.03.2020, the companies will be able to receive funds in the amount of 60 percent of the insurance income (the month of May 2020 will be leading in the calculations), and 60 percent of the insurance contributions due by the employer. The funds will be paid for no more than three months, in the period from July 1 to September 30, 2020. The difference with the first version of the measure, which ended on 30.06.2020, is that no assistance will be provided where funding is received for remuneration and social security contributions from the State budget from standards which were adopted in implementation of the Public Finance Act. The aim is to avoid double funding of remuneration in municipal enterprises.

Employers who have received funds to maintain employment will pay employees an amount not less than the insurance income for May 2020. As the new version of the measure provides for the option for employers in the “Hotel and Restaurant” sector to apply for persons employed after 1 June 2020, they should be paid a salary that is not less than the minimum the insurance income for the respective position.

 

Next, the requirement for employers applying for funds not to be declared bankrupt or to be in bankruptcy or liquidation proceedings remains. The other condition –to have no liabilities for taxes and compulsory social security contributions to the State or municipality - has been amended to indicate a new period for the absence of these liabilities, namely before January 1, 2020 /even if there are declared for the current year/. The obligation to the employers to keep the employment of the workers and employees under Art. 1, para. 1, items 1-4 of the Decree, for which they have received funds, for an additional period equal to the period for which these funds have been paid remains. As well as the obligation not to terminate employment contracts of their employees on the grounds of Art. 328, para. 1, items 2, 3 and 4 of the Labor Code, during the period for which they are paid funds for maintaining employment also remains.

Applications for payment of funds, according to a new form, will be submitted online or to the "Labor Office" directorate, which serves the territory at the place of work. The application will be accompanied by the documents needed to determine the amount of aid, and the application will be possible immediately after the official publication of the set of documents.

A commission appointed by an order of the director of the Labor Office Directorate will review the submitted documents and within 10 working days of their submission will decide whether the employer meets the criteria for receiving the funds. The information, as before, will be sent by the Employment Agency electronically to the National Social Security Institute, which will pay the funds. The necessary funds for employers will be provided by the Unemployment Fund of the state social insurance.

 

From July 1, 2020, the new Measure "60/40" will operate together with two more schemes under the operational program "Human Resources Development":

  • Employers in the tourism and passenger transport sector will be able to apply except under the new Decree № 151 / 2020. of the Council of Ministers, and also for compensations of additional BGN 290. The aim of the project is to provide support to enterprises and self-insured persons whose economic activity is directly affected by the adverse impact of the state of emergency imposed in the country, declared by a Resolution of the National Assembly on March 13, 2020 caused by the coronavirus pandemic. COVID-19. In order to maintain the employment of workers and employees in the enterprises carrying out economic activities in the relevant sectors - hotels and restaurants, transport and tourism, specifically specified in the annex of Resolution of the Council of Ministers № 429 of 26.06.2020, the project will support employers, self-employed and municipal enterprises established by the order of Art. 52 of the Municipal Property Act by providing compensation for part of the salary and the due tax and social security contributions at the expense of the insurer and the insured person in the amount of BGN 290. The employment of supported employees, as well as the activities of self-employed persons, should be maintained for the entire period of payment of the compensation, as well as for an additional period equal to half of the period for which the compensation was paid. The financial resource under this program amounts to BGN 40,000,000. It expects to include at least 22,000 employees, and its duration is until December 31, 2021.

 

  • Also, from July 1, 2020, employers will be able to apply for the measure "Employment for you", which can hire unemployed for a period of 3 months, for which they will receive BGN 610 and insurance. The aim of the project is to provide support for the reintegration into employment of unemployed people who have lost their jobs as a result of the pandemic and the spread of the coronavirus COVID - 19. In response to the challenges associated with the observed rapid rate of rising unemployment in the country, the project aims to provide timely support to employers for hiring the unemployed by providing an employment subsidy. In this way, the implementation of the project will help to speed up the recovery of economic and production processes in enterprises, and on the other hand will provide prevention of long-term unemployment of persons registered in employment offices. The project will provide support for hiring unemployed people full-time or part-time (at least 4 hours) for a period of up to 3 months. In order to ensure sustainability, the employer is obliged to maintain the employment of 75% of the supported persons for the period equal to the period of subsidized employment. The financial resource amounts to BGN 160,000,000, distributed on a quota basis by municipalities and consolidated by districts, of which BGN 50,000,000 national quota has been set for priority support of employers in the fields of “Hotel and Restaurant Management” and “Travel Agency and Operator Activity”; other travel and reservation activities'. It is expected that at least 70,000 unemployed people will be included, and the duration of the project is until 31.12.2021.
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