Update following the publication of Government Emergency Ordinance 32/2020
The Government Emergency Ordinance No. 32/2020 brought a few new amendments to the previous package of social protection measures in relation to employment matters. Some of the most relevant changes for employers and employees include:
- Companies that temporarily reduce or interrupt their activity as a result of the epidemic during the state of emergency can benefit from the State incentives for the technical unemployment of the affected employees based on an affidavit (so the certificates of emergency are not required anymore).
- The facility for other companies that suffered a reduction of the revenues has been repealed (so only the reduction or interruption of activity seems to qualify for the incentives).
- Any employee having more employment agreements does not benefit from the incentives if at least one of such employment agreements remains active during the emergency state. If all his/her employment agreements are suspended, the benefits will be calculated for the most advantageous one.
- Employers must submit the request for the technical unemployment incentives in the current month for the previous month. The payment is to be received by the employer within 15 days (instead of 30 days as it was previously regulated) from the submission of the request.
- If the employers can afford it, they can top up the incentive received from the State.
26 March 2020
Update following the publication of Government Emergency Ordinance 30/2020
The Government Emergency Ordinance No. 30/2020 (the Emergency Ordinance) introduced a set of social protection measures in the context of the Covid-19 epidemic. A few additional details to our article dated 20 March 2020, as revealed by the Emergency Ordinance:
- How can employers affected by a reduction of activity because of the Covid-19 outbreak and which are unable to pay the technical unemployment financial compensation due to the financial difficulties arising from such circumstances benefit from the State incentives? Such employers may benefit from the payment of the technical unemployment compensation by the State based on an affidavit that (i) their income in the previous month has decreased with at least 25% compared to their average income for January-February 2020 and (ii) they cannot support the payment of the salaries for all their employees. The template of the affidavit is to be issued by the Ministry of Labour and Social Protection together with the Ministry of European Funds. The incentive can cover maximum 75% of the employees with an active individual employment agreement for each affected company as on 21 March 2020 (the date of the Emergency Government entering into force).
- The compensation received by any category of beneficiaries from the State for the technical unemployment (i.e. both those referred to under paragraphs 2.a and 2.b of our initial article on this topic) is subject to taxation and payment of the mandatory social contributions (except for the work insurance contribution (in Romanian, contribuția asigurătorie pentru muncă)).
- How should any employer wishing to benefit from the incentive for the technical unemployment file the request? By e-mail to the county work occupation agency corresponding to the registered office of the employer, following the templates attached to the Emergency Ordinance and together with a list of the employees benefiting from the compensation.
20 March 2020
Following the presidential decree of 16 March 2020 declaring the state of emergency in Romania for the next 30 days and further emergency measures which led to the suspension or reduction of the activity for many businesses, more and more companies have sent their employees home in the so-called technical unemployment. But what does this mean and how does the State help the affected businesses?
1. What is technical unemployment?
It is the temporary interruption/ reduction of activity due to economic, structural, technological or similar reasons leading to the suspension of the individual employment agreements based on the unilateral decision of the employer. Under normal circumstances, a compensation of 75% of the base salary for each affected employee is paid by the employer from the salaries fund during the technical unemployment.
Under the current state of emergency circumstances, the Romanian State has recently adopted some exceptional measures meant to support the technical unemployment compensation for certain categories of affected businesses. The official documents are still to be published in the Official Gazette, but let’s see some highlights based on the information available on the website of the Ministry of Labour and Social Protection.
2. Which companies can apply for the public funds to pay the unemployment compensation?
a. Businesses subject to total or partial interruption of activity imposed by the competent authorities (e.g. hotels, restaurants, entertainment businesses totally or partially closed down by law as a result of the epidemic). A pre-requisite for benefiting from the unemployment compensation from public funds is the so-called emergency certificate to be issued by the Ministry of Economy, Energy and Business Environment upon request of the interested companies and based on justifying documents.
b. Businesses affected by a reduction of activity because of the Covid-19 outbreak and which are unable to pay the financial compensation to the employees due to the financial difficulties arising from such circumstances (based on justifying documents). Let’s see if the actual legislative package to be published includes any specific criteria to ensure that this principle is fairly applied or whether it leaves room for abuses.
3. How much can a company get from the State for technical unemployment?
The monthly compensation promised by the Romanian State as part of the emergency financial package is 75% of the monthly base salary for each affected employee but capped at 75% of the medium gross salary referred to in Law 6/2020 on the social insurances budget for 2020 (75% of RON 5,429, i.e. RON 4,071.75 for each affected employee).
4. Other pre-requisites to access the funds?
a. The payment is to be made within 30 days from the application of each eligible company and submission of the complete documentation.
b. In case of a reduction of activity, the State emergency compensation for the technical unemployment can cover maximum 75% of the employees with an active individual employment agreement for each affected company.
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