The Act on Intervention Measures to Curb the CoVID-19 Epidemic and Mitigate its Effects for Citizens and the Economy (ZIUZEOP) was adopted by urgent procedure on 2 April 2020. The act regulates, among other things, the reimbursement of salary compensation due to waiting for work for business reasons or the inability to perform work due to force majeure, the exemption from payment of (some) social security contributions, the payment of sickness benefits at the expense of the HIIS, exceptional assistance for the self-employed and farmers, and more. The act also explicitly defines the CoVID-19 epidemic as a case of force majeure. The act shall come into force the next day after it is published in the Official Gazzette.
Measures under the ZIUZEOP will be applicable from 13 March 2020 to 31 May 2020
(unless differently stated under a specific provision). If the Covid-19 epidemic does not end by 15 May 2020, the application of the measures will be automatically extended by 30 days, i.e. until 30 June 2020. During the time of the effect of the “Mega Law”, ZIUPPP will not apply in the part that regulates the partial reimbursement of wage compensation. We wrote about the changes brought by ZIUPPP in the article “What does the Wage and Contribution Measures Intervention Act bring?
Temporary waiting for work for business reasons and inability to work due to force majeure
The act stipulates that the state will reimburse employers (who will be eligible) for the full amount of compensation (the reimbursement amount is limited to the average monthly wage in the Republic of Slovenia in 2019, minus contributions of the insured), which they will pay between 13 March 2020 until 31 May 2020 (or 30 June, if the measures are extended) in payments to workers who, as a result of the COVID-19 epidemic (i.e. force majeure), are or will either be on temporary waiting for work for business reasons or are not or will not be able to perform work due to force majeure. In these cases, the employers will also be exempted from payment of social security contributions for the period from 13 March 2020 to 31 May 2020, but no higher than from the average monthly wage in the Republic of Slovenia in 2019, which amounts to EUR 1,753.84 gross, minus contributions of the insured). This means that the state will only reimburse the employer for contributions up to the amount of benefits not exceeding EUR 1,753.84 gross, and the remainder of the contributions will continue to be borne by the employer. However, during the duration of the measures, employers will have to bear the burden of paying the personal income tax advance from the salary or the compensation for the salary of workers.
In accordance with ZIUZEOP, a worker will be entitled to the same compensation at the time when he / she will not be able to perform work due to force majeure, as in the case of temporary waiting for work for business reasons, i.e. up to 80% of the base referred to in paragraph 7 of Article 137 of the ZDR-1 (i.e. 80% of the average monthly salary received in the last three months), while the amount of compensation is limited downward (the upward limitation foreseen by the first draft was cut from the final act). The compensation that the employee should receive should therefore not be lower than the minimum wage in the Republic of Slovenia (940.58 EUR gross). ESS, however, will, as mentioned, reimburse the employer for a maximum amount of EUR 1,753.84 gross i.e. in the amount of the average salary for 2019 in the Republic of Slovenia, minus the contributions of the insured, while the rest of the contribution amount will have to be paid by the employer himself.
Workers who will, while waiting for work or force majeure, take annual leave or gain the right to be absent from work on another basis (e.g. sick leave, parental rights) will not be entitled to compensation from ZIUZEOP for the duration of receiving such compensation and the employer will also not be able to claim the right to reimbursement of such benefits (the exception will be compensation for the time of sick leave, which will be fully charged to the state or the HIIS at the time of the effect of the act).
Not all employers will be eligible for claiming reimbursement of pay for time waiting for work or force majeure (as well as for reimbursement of social security contributions).
Employers who are direct or indirect budget users of state or local budget and who accounted for more than 70% of public revenue in 2019, as well as employers performing insurance or financial activities, will not be eligible for reimbursement. Furthermore, employers who have a status of tax non-payer at the time of filing and those employers who did not regularly pay workers and employers who have been subject to bankruptcy proceedings, are not eligible for these reimbursements.
The above described salary reimbursement will only be available for those employers who are entitled, meaning employers who by their estimation will have in the first half of 2020 at least 20% lower incomes than in the same period in 2019 and who at the same time in the second half of 2020 will not have 50% or more higher incomes than they had in the second half of 2019. Employers, who have not been in business throughout whole 2019 will be considered eligible for assistance if they shall by their estimation suffer at least a 25% reduction in revenue in March 2020 compared to February 2020 or at least a 50% reduction revenue in April or May 2020 compared to February 2020. If, upon submission of the 2020 reports, these conditions prove not to be met, the reimbursement received will have to be recovered, together with statutory default interest.
In addition, employers who exercise the right to benefits will not be allowed in 2020 (from the enactment of the act) to distribute profits to their partners, to pay part of their salaries for business performance or awards to management. If these restrictions are violated, the employer will be required to repay the full amount of reimbursement received, together with statutory default interest.
Employers who, in the period between receiving the reimbursement or within a certain period after the termination of reimbursement (which is equal to the period of receiving the funds), start the liquidation procedure according to the provisions of the Companies Act (Official Gazette of the Republic of Slovenia, No. 65/09, as amended, ZGD-1) will have to fully repay the received reimbursement as well.
a) Additionally, regarding the measure of temporary waiting for work for business reasons
Pursuant to the provisions of ZIUZEOP, the employer will be able to post workers to temporary waiting for work until 31 May 2020. It can be concluded that in the event of the extension of the application of the Act, the employer may also extend the duration of this measure (under this Act). It is worth noting that, in addition to ordering waiting for work according to this Act, it will also be possible to order waiting in accordance with Article 138 of the ZDR-1 (for a maximum of 6 months in a year) - substantially the same measure, the difference being only in the employer's right to claim reimbursement of the compensation and to the additional terms and conditions governed by ZIUZEOP in this regard.
The employer will also be able to temporarily call the worker who is waiting for work back to work for a maximum of seven (7) consecutive days in each month, about which the employer will have to notify the ESS beforehand. For now, it is not yet clear if this is intended as workdays of an individual worker or calendar days - but logically, these would be the days on which the employee would otherwise have to work (and not the ones, when the employee would be free in accordance with the work schedule, especially since it is not allowed to work for seven consecutive days without a weekly rest period).
As mentioned in the introduction to the article, during the effect of ZIUZEOP, ZIUPPP will not be used in the part concerning the partial reimbursement of wages paid to workers who have been ordered to wait for work (which was a key measure of ZIUPPP). The Employment Service of Slovenia (ESS) will process all applications submitted by employers at ESS from 28 March 2020 in which they claim partial reimbursement for waiting for work, according to ZIUZEOP and not ZIUPPP.
With regard to ZIUZEOP and waiting for work, employers should also pay attention to the new provision on the termination or refusal to take paternity leave. A provision was introduced in ZIUZEOP because many fathers who are able to use all or half (15 days) of paternity leave are carrying out occupations that are necessary in the current situation to ensure the safety and health of the entire population (e.g. workers in health care, police officers, etc.). If the worker already benefits from paternity leave (any part of it), such leave may be terminated if he is called back to work by the employer due to the epidemic. If an employee has not yet taken such leave, he may be denied the benefit of this leave because of the epidemic. As a result, the employee will not miss the leave and will be able to use it later.
ZIUZEOP, unlike ZIUPPP, does not contain conditions relating to the minimum share of employees (30%) that the measure must cover, the prohibition of dismissal of workers (those included in the measure and others) during a certain period, the provisions on the replacement of workers on waiting and also does not contain the requirement to describe the business situation of the employer.
Although it maintains e.g. the stipulation that an employer may not give overtime work to workers who are still at work, if the employer would be able to carry out the work with workers posted to work at home. If he acts contrary to this provision, the employer is obliged to reimburse the compensation received in triple of the amount received.
b) Additionally, about the inability to perform work due to force majeure
The act explicitly lists circumstances that are considered to be reasons why a worker cannot work because of force majeure and for which the employer may claim a full wage compensation. The employer is therefore entitled to reimbursement of the full salary remuneration of a worker who is unable to perform work because of (i) the obligation to take care of children due to the closure of kindergartens and schools, (ii) other objective reasons, or (iii) the inability to come to work due to the interruption of public transport or the closure of borders with neighbouring countries.
As mentioned above, the act equates the amount of compensation for this case with the amount of compensation for temporary waiting for work for business reasons.
c) The right to reimbursement of wages paid
As the first step, the employer will have to arrange for the lawful posting of workers on temporary waiting for work. In written instructions ordering a worker to temporarily wait for work for business reasons, the employer should specify (i) the waiting time for work (which may not exceed 31 of May 2020), (ii) the manner and cases in which the worker may be (prematurely) called to return to work and (iii) the amount of wage compensation to which the worker is entitled during the course of the measure.
Written instructions to the employee and the statement of the employer are key attachments to the application that the employer will submit to the ESS in order to claim reimbursement. In the statement, the employer will have to describe why he or she was forced to send workers to wait for work or why workers cannot perform work due to force majeure, and what the statutory force majeure is in their case.
The employer shall claim reimbursement of the compensation by applying electronically through the ESS portal (still in preparation) within 8 days of posting workers to temporary waiting for work, and no later than 31 May 2020. The ESS shall decide on the application within 8 days of receipt with a decision.
An employer who has already posted workers to temporary waiting for work or whose workers are already not working due to force majeure will be entitled to claim reimbursement for the period prior to the application, for the period from 13 March 2020 onwards. In these cases, the employer will have to file the application within 8 days of the entry into force of the act. The same goes for social security contributions, for which the act also provides that the employer will be able to claim reimbursement (for workers temporarily waiting for work and those who do not work due to force majeure) for the period from 13 March 2020 onwards.
In all cases where the employer wishes to (temporarily) call the worker back to work during the waiting period or when the reasons of force majeure due to which the employee is unable to perform the work cease, the employer must notify the ESS beforehand (or in case of force majeure with the date of the cease of force majeure). If the employer acts in breach of this obligation, the employer is obliged to reimburse the compensation received in triple of the amount received.
Exemption from pension and disability insurance contributions, sick leave or injury compensation and crisis allowance
ZIUZEOP stipulates that employers are entitled to reimbursement of (paid) pension and disability insurance (PIZ) contributions for those workers who are working during the effect of the act, for April and May 2020. The act does not affect other social security contributions as well as the advance payment of personal income tax. The employer is also entitled to reimbursement of PIZ contributions for workers who are taking annual leave during this period. The employer will only have to calculate and deduct the contributions of the insured in the amount of 15.5%, and only calculate (but not pay) the employer contributions of 8.85%.
This measure will not be able to benefit employers who are direct or indirect budget users and accounted for more than 70% of public revenue in 2019, as well as employers engaged in insurance and financial activities.
This measure also stipulates that in 2020 (from the enactment of the act), eligible employers will not be allowed to distribute profits to their partners, pay part of their salaries for business performance or awards to management. In the event of breach of these restrictions, the employer will have to pay the full amount of PIZ contributions, plus statutory default interest.
The ZIUZEOP further provides that from the entry into force of this Act, the compensation for temporary absence from work due to illness or injury, whatever the cause, will be covered by the HIIS from the first day of absence. This means that sick leave after the act comes into force will be fully borne by the state or the compulsory health insurance. These benefits will also have to be paid first by the employer and then applied to the HIIS for reimbursement within 60 days of the request being submitted (in e-form).
An additional benefit for workers who are currently working is foreseen by the introduction of the crisis allowance. Each employer will have to pay a monthly crisis allowance of 200.00 EUR, which is exempt from all taxes and contributions (or a proportionate portion of this allowance if the worker does not work for a full month), to all those workers who are working during the force majeure (CoVID-19 epidemic) and whose last paid wage did not exceed three times the minimum wage (approx. 2,821 EUR).
Measures for self-employed workers and farmers
ZIUZEOP also provides certain benefits for self-employed workers and farmers, namely the payment of monthly basic income for March, April and May 2020 and the deferral or exemption from payment of compulsory social security contributions.
A self-employed worker is any person who, on the effective date of ZIUZEOP, will pursue an activity and will be included in compulsory insurance on the basis of pursuing that activity and at the same time will not qualify for inclusion in compulsory insurance on another insurance basis. This will also include members / shareholders / founders who are both management entities and are insured under Article 16 of the Pension and Disability Insurance Act (ZPIZ-2).
Any farmer who is a holder or member of an agricultural holding carrying out basic agricultural or forestry activity, supplementary activity on the farm or other agricultural activity will also be eligible for assistance if he/she is covered by compulsory insurance on that basis and does not have the conditions for inclusion in compulsory insurance on another insurance basis.
Self-employed workers and farmers are eligible to receive exceptional assistance in the form of basic income, in the same way as self-employed workers, but only if they prove to have a substantially reduced scope of activity (i) by at least 25% in March 2020 compared to February 2020 or (ii) by at least 50% in April and May 2020, relative to February 2020.
In accordance with ZIUZEOP, self-employed workers’ contributions will be deferred for April and May 2020 for all compulsory insurance in their entirety - in this part, ZIUZEOP again "replaces" the provisions of ZIUPPP. However, the provisions of the ZIUPPP are supplemented by ZIUZEOP the part concerning farmers. Thus, for farmers, payments due in April, May and June 2020 (same as for self-employed workers) under ZIUPPP are also deferred. The deferred contributions for the above three months will have to be paid by the beneficiaries by 31 March 2022 at the latest, and they may also be paid in instalments.
In this part, the Financial Administration of the Republic of Slovenia (FURS) is entitled to decide on eligibility, measures and more, both for the self-employed and for farmers. An application will need to be submitted to FURS through the eDavki portal, which will have to be accompanied by a statement of reduction of the scope of activities. This statement will be considered as public information and will be published on the FURS portal.
Self-employed workers and farmers are also said to be required to repay the aid received, together with interest on late payments, if they share in profit, pay a portion of their business performance wages or a management remuneration for 2020.