Government approved framework of financial compensation to support employment

The proposed measures introduce the possibility of financial compensation through subsidies to employers and self-employed persons in order relief the labour market and sustain employment.  The measures are aimed to relief the imapcts of the State of Emergency for those employers and self-employed persons who will maintain jobs despite: 

• the duty to interrupt or restrict their business operations by virtue of the decision of the Public Health Authority of the Slovak Republic („PHA“);
• interruption or restriction of their business operations on the ground of protection of the health of their employees;
• decrease of  sales or outage of subcontractors.

Once the general and special conditions are met,  the compensation will be provided as subsidies in the form of:

• a direct financial contribution to employers to cover part of the wage costs of employees who, because of interruption or restriction of their business, are unable to allocate work to those employees, and
• a direct financial contribution to self-employed persons to cover the levy on insurance funds and partial compensation of the loss of income from their business activities. 

1. Eligible period

Entitlement to subsidies arises between 12 March 2020 until he end of the calendar month in which the decision of the PHA to close or restricit business operations will be revoked. 

2.  Eligible applicants 

Employers and self-employed persons who were established and started their business no later than 1 February 2020 and at the same time as of 31 December 2019 were not considered as an undetaking in difficulties.

For the purpose of granting the contribution the following entities are considered as employers:

• a legal entity that has its registered seat or registered seat of its branch in the Slovak Republic; 
• a natural person that resides in the territory of the Slovak Republic and employs a natural person in an employment relationship or in a similar employment relationship;
• an organizational unit of a foreign legal person or a foreign natural person with a labor-law personality, who is authorized to conduct business in the territory of the Slovak Republic pursuant to the special regulation;
• a legal person or natural person carrying out certain activities under the Employment Services Act.

For the purpose of granting the contribution the following natural persons are considered as self-employed persons, which:

• operate a trade under the Trade Licensing Act;
• operate an activity pursuant to special regulation (e.g. a tax advisor, an attorney-at-law, a notary public, an auditor etc.) 
• operate an agricultural production pursuant to special regulation, including forestry and water management.

3.  Special conditions for granting of the contribution

In order to obtain the financial contribution, an employer or a self-employed person must meet also the following conditions:

• pay the employee the wage compensation corresponding to 80% of his average earnings (60% in case of agreement with the employees’ representatives),
• obligation not to terminate the employment relationship in the period of  2 months following the month for which the contribution is requested; more precisely to refrain from a legal act which would terminate the employment relationship with the employee by notice or by agreement for reasons specified under Section 63 para. 1, par. a) and b) of the Labor Code (organization changes), 
• submit the number of employees as at 31 March 2020.

4. Contribution mechanism 

The proposed financial compensation will be provided by the respective Office of Labor, Social Affairs and Family where the employer or the self-employed person maintains jobs or in which the self-employed person operates or performs its busines activity.

Applicants of the contribution will be obliged to submit an affidavit, in which they shall declare: 

• the fulfilment of special conditions for granting of the contribution (please refer to point 3. above);
• the fulfilment of additional conditions under Section 70 para. 7 of the Act on Employment Services; 
• decrease in sales in the case of employers and self-employed persons, whose sales declined at the time of the declaration of the State of Emergency.

5. Amount of contribution

According to the proposed measures the maximum amount of total contribution per applicant is EUR 800,000 for the entire period of implementation of the framework.

a) Subsidies for employers who closed or restricted their business operations due to the decision of the PHA

These subsidies are aimed at compensation of wage costs of employees, to whom the employer may not allocate work due to an obstacle on the part of the employer (Section 142 of the Labor Code).

Eligible applicants are employers, who retain jobs in the State of Emergency notwithstanding the duty to interrupt or restrict their operational activity by decision of the PHA. The subsidy will be provided to the employer in the form of payment of an employee's wage compensation amounting to 80% (60%) of his / her average earnings, up to a maximum of EUR 1,100 (EUR 880). 

b) Subsidies for employers and self-employed persons, whose sales declined during the State of Emergency

These subsidies are aimed at compensation of the part of an employee's wage for the employer or the or a lump-sum allowance to compensate the loss of earnings for the self-employed in relation to the decrease of sales compared to the same period in 2019. According to the proposed measures, the following entities are eligible to apply for this type of subsidy:

• employer who retains jobs in spite of the decline in sales and is not subject to the duty to interrupt or restrict his operating activities by decision of the PHA during the declared State of Emergency, 
• self-employed person who interrupted or restricted the pursuit or operation of self-employment based on the decision of the PHA or self-employed persons and whose sales declined during the State of Emergency, 
• self-employed person (considered as an employer) who during the State of Emergency, interrupted or restricted the pursuit or operation of its business activities by decision of the PHA or a self-employed person whose sales had declined but retained jobs.

The allowance to cover part of the employee's wage compensation or the lump-sum allowance for loss of income shall be provided in the following amounts:

The maximum total amount of contribution per eligible applicant under this point is EUR 200,000 per month. For the sake of completeness, we note that the proposed framework does not include a mechanism for calculation of the decrease in sales of individual employers and self-employed persons.