2. 6. 2020
The Act Determining the Intervention Measures to Mitigate and Remedy the Consequences of the COVID-19 Epidemic (»ZIUOOPE«, »third corona Act« or “Act”) applies from 1 June 2020.
In the field of labour law, the key measures under the new law are (i) the possibility of ordering part-time work and the possibility of the employers to obtain a state reimbursement (subsidy) for the time when employees are (partially) furloughed (waiting for work from home) and (ii) extending the measure of subsidizing those employees for whom employers cannot provide even part-time work for business reasons.
Ordering Part-time Work and the Right to a State Reimbursement
The key measure introduced in the field of labour law by the third corona Act is certainly the right of employers to order part-time work (i.e. at least 20 hours weekly in the case of part-time work) to employees, to whom they cannot provide full-time work for business reasons, but only part-time work. Such employees will be required to work part-time, and for the remainder of the time they will be furloughed for business reasons.
Employers will be able to use this measure in the period from 1 June to 31 December 2020. Employers apply this measure unilaterally, i.e. by issuing an appropriate order or a written reference, which must contain all the information specified in paragraph 4 of Article 14 of ZIUOOPE.
It follows from the text of the Act that employers are meant to use this measure for employees for whom they are unable to provide work for at least 10% of their working time (or 5 hours per week). We do not see any obstacles in the fact that employers should not use this measure even in the case of employees for whom they can provide 36 hours of work per week, but for such employees employers will not be able to exercise the right to a partial reimbursement, as it follows from the Act that employers may apply for a reimbursement only for those employees, whose part-time work lasts a maximum of 35 hours per week. In no case, however, may employers order part-time work for employees during periods of notice (regardless of the reason for cancellation).
ZIUOOPE also sets out the conditions under which employers will be able to apply for a partial refund of the compensation paid for the time employees are furloughed (i.e. a reimbursement). The right to a reimbursement can thus be exercised by employers (legal or natural persons) who were entered in the Business Register of Slovenia (PIRS) before 13 March 2020 and who estimate that they cannot provide at least 90% of work per month to at least 10% of employees. Furthermore, part-time work can only be ordered for full-time employees. ZIUOOPE also excludes from the possible beneficiaries of the aid employers who are direct or indirect users of the budget of the Republic of Slovenia or budget of municipalities and which in 2019 generated more than 50% of all their revenues from public sources.
Before making a decision on ordering part-time work, employers must consult the trade unions with the employer on the planned measure, or, if there is no trade union, the works council and obtain their written opinion. If an employer does not have a trade union or a works council, they must inform the employees before making a decision (about the future decision) in the usual way for the employer (e.g. by posting on a bulletin board, intranet, at a joint meeting, e-mail, etc.). In the event that the (essential) circumstances of part-time work change, the Act requires employers to conduct a new consultation with the trade unions or employees' representatives.
During the period of ordered part-time work, employees have all the rights and obligations arising from the employment relationship, as if they were working full-time (except for those otherwise regulated by this Act). For the time when they actually work, employees will be entitled to (a proportional part of the) wage and reimbursement of (a proportional part of) work-related costs, and for the remaining time they will be entitled to compensation of their wage in the amount of 80% of the base from paragraph 7 of Article 137 of the Employment Relationships Act (ZDR-1). Furthermore, the right to a daily rest period is adjusted to the actual work obligation of the employee, and the employee also has the obligation to work full-time at the request of the employer.
For the time when employees are justifiably absent from work (e.g. sick leave or use of annual leave), they are entitled to compensation of wage based on the wage under their full-time employment contracts (i.e. no reimbursement can be claimed for this period or the reimbursement is proportionally reduced).
Employers must order employees to work part-time in the form of a written referral specifying the amount of part-time work (which may not be less than half of full-time work), the duration of the measure, the distribution of working time or the method of distribution of working time (pursuant to employment contracts), the duration of breaks during work, the amount of reimbursement of work-related expenses, the possibility and manner of inviting the employee to resume full-time work and the amount of wage compensation.
Employers will (be able to) exercise the right to a partial reimbursement of the paid compensation at the Employment Service of Slovenia (ESS) with an application, which will have to be accompanied by proof that they were entered in the PIRS before 13 March 2020 and their own statement that estimates they cannot provide at least 90% work to at least 10% of their employees on a monthly basis. To put it simply: an employer who has 10 full-time employees will have to prove that they cannot provide one of them with an average of more than 35 hours of work per week. The application for the reimbursement must be submitted by the employer no later than 15 days after the ordering of part-time work.
Employers will also have to attach to the application a statement undertaking that during the period of receiving the reimbursement and for one month thereafter, they will not violate the prohibition of dismissal of those employees for whom they received the reimbursement and will not cancel the employment contracts with a large number of employees (unless the dismissal programme for redundant employees was adopted before 13 March 2020). Employers will also have to give consent to the publication of data on the receipt of the reimbursement on the ESS website.
The ESS is supposed to decide on the application of employers within 15 days from the day of receipt of the complete application. If an employer's application is approved, they will conclude a reimbursement agreement with the ESS, which will regulate the subject, amount and method of reimbursement payment, conditions and method of reimbursement refund, time of reimbursement receipt, monitoring, reporting, sanctions for violations and supervision over the implementation of the measure.
The reimbursement is claimed and paid monthly, for the previous month, as long as employers meet the aforementioned conditions, which they must prove with a written statement (in any case no later than 31 December 2020).
The Act provides for reimbursements in the following amounts:
- EUR 448.00 per employee, to whom the employer provides from 20 to 24 hours of work per week;
- EUR 336.00 per employee, to whom the employer provides from 25 to 29 hours of work per week;
- EUR 224.00 per employee to whom the employer provides 30 to 34 hours of work per week,
- EUR 112.00 per employee, to whom the employer provides 35 hours of work per week.
The reimbursement is paid to employers on a monthly basis (in proportion or in full), for the previous month.
During the period of receiving the reimbursement, employers will have to pay the part-time employee regular wage and wage compensation. In addition to the prohibition of dismissal mentioned above, employers will not be allowed to order overtime during the period of receiving the reimbursement or distribute or temporarily redistribute working hours unevenly if he is able to do this work with part-time employees.
Employers will further be obliged to keep records of the use of the employees' (who have been ordered to work part-time) working time in such a way as to show the actual arrival and departure of the employees from work and notify the ESS in no later than three working days that they have ordered the employees to work part-time.
If an employer acts in breach of the obligations under the previous two paragraphs, they will have to repay the funds received in full, together with legal default penalty interest. The obligation to return the employer's funds also arises if the employer (which is receiving or has received the reimbursement) initiates liquidation proceedings (of the employer's company) under ZGD-1 during the period of receiving the funds or within a certain period after the end of receiving the reimbursement (if they received reimbursements for six months, for example, they will not be allowed to initiate liquidation proceedings for a further six months).
Prohibitions of the payment of profits, purchases of own shares or own business shares, payment of bonuses to management or part of wages for business performance paid to management in 2020 or 2020 (in this case, the employer must also inform the Financial Administration of the Republic of Slovenia) also apply for this measure. Even in the event of a breach of any of these prohibitions, the employer will be required to return all funds received along with statutory default interest.
Extension of the Measure of Reimbursement of Wage Compensation to Furloughed Employees
Notwithstanding the initial announcements of the Government of the Republic of Slovenia that this measure – i.e. the reimbursement of wage compensation to employees for whom the employer is temporarily unable to provide work due to the epidemic - applied only to employers working in the field of tourism and hospitality, ZIUOOPE "extended" the validity of this (in some places slightly modified) measure for all employers until 30 June 2020. Employers may furlough employees under this Act only for the month of June 2020 (in the period from 13 March to 31 May 2020 the provisions of ZIUZEOP applied), which means that - at least in our understanding – they will have to make new decisions to furlough employees for this period of time.
Employers are entitled to state aid if, according to their own estimates, their revenues (i.e. net sales revenues determined according to accounting rules and benefits from parental care insurance) will fall by more than 10% in 2020 compared to 2019, due to the epidemic. The Act also regulates more detailed criteria for employers who were not (yet) operating in 2019 or who only operated in part of 2019. If the submission of annual reports for 2020 shows that the conditions are not met, the recipient will have to return the received funds. The Act also excludes some other employers from being beneficiaries of reimbursements (mostly following the restrictions already set by the ZIUZEOP or the so-called second corona Act).
During the duration of this measure, employees have all the rights and obligations arising from the employment relationship (except those otherwise regulated by this Act), as well as the obligation (and not the disputed right mentioned by ZIUZEOP) to return to work for up to seven working days in the current month (of which employers must notify the ESS in advance), if invited to do so by employers.
Employers must furlough employees in writing. They must specify in the order or the written referral the duration of the furlough, the possibilities and the manner of inviting the employee to return to work early and the amount of wage compensation. The amount of wage compensation is 80% of the base referred to in paragraph 7 of Article 137 of ZDR-1, whereby the compensation may not be lower than the minimum wage (EUR 940.28) in the Republic of Slovenia.
For such paid wage compensation, the employers will be able to apply for a reimbursement or partial reimbursement of wages, which may in no case exceed the maximum amount of unemployment benefit set out in the Labour Market Regulation Act (i.e. EUR 892.50), which includes wage compensation and all social security contributions. Furthermore, the ESS will in any case reimburse the employer a maximum of 80% of the compensation paid. It should also be mentioned that the recipients of funds from public sources are subject to certain additional restrictions on the amount of the reimbursement.
Employers exercise the right to reimbursement of paid wage compensations under this Act to the ESS with an application in electronic form, which must be submitted within eight days of the employee being furloughed, and in any case no later than 30 June 2020. Employers must attach their own statement of declining income and evidence of the posting of employees on temporary waiting for work due to temporary inability to provide work for business reasons. Employers who are in default with the payment of compulsory benefits and other monetary non-tax liabilities or employers who are in the process of bankruptcy are not entitled to a refund of paid wage compensations. The ESS decides on the application within 15 days, with a decision, and the reimbursement is paid to the employer after they have already paid the wage compensations to the employees.
During the period of receiving reimbursement of paid wage compensations, employers must pay the employees compensation (on time and in full), and during this time they must not order overtime work if they could do this work with employees on temporary waiting for work. If the employer decides to call the employee back (for up to 7 days a month), they must inform the ESS in advance.
If the employer acts in contravention of the obligations referred to in the preceding paragraph, he must return the funds received in a lump sum. At the time of receiving the wage compensation, the employer may not dismiss the employee (for whom he received the reimbursement) and is obliged to return the received funds in full if he initiates liquidation proceedings under ZGD-1, during the period of receiving funds and within one month after receiving the funds (or for a period equal to the period in which he received the reimbursement).
The Act also contains penal provisions that provide for high penalties for certain breaches of obligations, which is why we advise employers to pay extra attention to the possible implementation of the described measures.
Last but not least, we add that the Act also regulates the termination of the provisions / articles of the Act on the Interim Measure of Partial Reimbursement of Wage Compensation (ZIUPPP - “first corona Act”), which regulate the partial reimbursement of wage compensation and which were previously envisaged to come into force after 31 May 2020.
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Law Office Fabiani, Petrovič, Jeraj, Rejc d.o.o.