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In view of the growing global pandemic of the COVID-19 virus and as part of the socio-economic measures taken to counteraction, on 30 March 2020, in an extraordinary meeting, the Council of Ministers adopted a Decree on determining the terms and conditions for payment of compensation in support of employers in order to preserve the employment of employees during the state of emergency declared on March 13, 2020 by decision of the National Assembly. As of 31 March 2020, the Employment Agency shall open an application procedure for compensation of employers in accordance with the procedure referred to in Article 1 (1) of Decree No 55 / 30.03.2020. The employer will be able to to benefit from state aid of 60% of the gross wage per employee and the social insurances on it, in accordance with the adopted plan. The employer has to carry out some in-house actions, in order to benefit from this financial support. 

The financial compensation as per above will be paid for the whole or part of the period of validity of the Law on Measures and Actions during the State of Emergency, but for not more than three months. It was determined also, that the amount of the compensation will be60 percent of the insurance income for January 2020 for each employee. The compensation shall be paid in proportion to the time worked, but for no more than 4 hours a day, in the cases of part-time work. The decree defines the manner in which the insurance income for January 2020 is calculated. 

The criteria which should be met by the employers were also established: 

1) the employer has terminated the work of the enterprise on the basis of an order of a state body – for the whole enterprise, for part of it, for the whole or part of the period of emergency; 

2) the employer has terminated the work of the enterprise or established part-time work on the basis of an order of the latter, and

3) in both hypothesis  he must certify a 20% reduction in income:

– for the entities incorporated before 1 of March 2019 – for the month preceding the month in which the application for compensation is submitted, compared to the same month of 2019;

– for the entities incorporated after 1 of March 2019 2019 – for the month preceding the month in which the application for compensation is submitted, compared to the average income for January and February 2020.

Reduction in income does not have to be proved by entities which activity is mentioned in the list of economic activities – Appendix to art.2, para.1, item 2 of the Decree (such as road and air transport, hotel services etc.).

The employment contracts should be concluded before 13 March 2020, and compensation will not be paid for employees who use sick leave, maternity or leave when adopting a child up to 5 years of age or raising a child up to 2 years of age, as well as those assigned to programs and projects funded by the European Union and investment funds. 

There are also some additional requirements for the employers, such as the requirement that the employer has no tax obligations and has made the obligatory insurance contributions within the meaning of the Tax and Social Insurance Procedure Code to the state or municipality, and the company has not been declared bankrupt or is not in bankruptcy or liquidation proceedings. 

During the period in which they will benefit from state support, the employers are obliged not to terminate the employment contracts of the employees on the grounds of art. 328 (1), point 1,2,3 or 4 of the Employment Code. The employer, also must not have a penal decree or court decision for violation of provisions of the Labor Code or the Law on Labor Migration and Labor Mobility. 

Employers executing activity in all sectors of the Classification of Economic Activities (NACE.BG-2008) may apply, with the exception of Sectors A, K, O, P, Q, T and U.

If the conditions as per above are met, the corresponding application should be completed, depending on the hypothesis – reduction of the working time or suspension of work. It is possible to submit both types of applications simultaneously if there are both part-time employees and such whose activity has been suspended. 

To the application should be enclosed:

1. The order for suspension of work / reduction of working time, certified by “True with the original”;

2. List of the employees for whom compensation is claimed, i.e. those whose working time is reduced or whose work is suspended. A form of such list is available on the website of the Employment Agency.

3. Documents proving decrease in sales revenue. A decrease of not less than 20% in the month preceding the month in which the application for payment of compensation is submitted must be proved, as explained in details above (excluding for the entities engaged in the economic activities listed in the Appendix to art.2, para.1, item 2 of the Decree). I.e. for example, if the company is incorporated before March 2019 and application is submitted in May 2020, documents must be submitted showing the turnover for April 2019 and April 2020 and there should be a drop of over 20%. 

The application can be submitted electronically by electronic signature or by mail with a return receipt, and only if these two options are impossible – as a hard copy in the Labor Directorate. A committee appointed by an order of the Director of the Labor Directorate shall review in the order of receipt the documents submitted from the employers within 7 working days of their submission. Within 2 days of the decision on the application, the applicant must be notified of the decision on the application by the way it was submitted (electronically or by mail). If the application is accepted, the Employment Agency sends information to the National Social Security Institute for payment of the compensation.

If an employee is reinstated during the period of payment of the compensation, the employer shall notify the Employment Agency, in writing (electronically, signed with electronic signature, by post or hard copy), through the Directorate, within 3 working days from the date on which the order for reinstating is issued.

According to the latest change in the Law on Measures and Actions during the State of Emergency, “the National Social Security Institute transfers 60 percent of the amount of the insurance income for January 2020 and the insurance contributions due at the expense of the insurer“ (before this change the insurance income was paid, but not the social security contributions).

An employer who has received financing under this decree, who fails to fulfill his obligations or declares incorrect data, has to recover the amounts paid to the state social security budget. 

The National Social Security Institute will create and maintain a database of employers who are compensated.

It should be noted that the Decree enters into force retroactively as of 13 March 2020. 

For more information and assistance in completing the documents related to applying for funding from the state to the employers in the context of the emergency measures adopted or clarifying the measures taken, do not hesitate to contact us or email us: sofia@mcgregorlegal.eu.