COVID 19 Anti-crisis shield project – proposals regarding labor law

The draft Act on Special Measures Aimed at Prevention and Control of COVID-19, Other Infectious Diseases and the Resulting Crisis Situations (the “Crisis Shield Act”) provides for a range of job retention measures in the wake of the COVID-19 outbreak. The following two support mechanisms will be of special importance.

Economic downtown and reduced working time

Businesses who suffer a reduction of turnover as a result of the COVID-19 pandemic, may apply for funding under the job retention scheme and claim reimbursement for employers wage costs from the Guaranteed Employment Benefit Fund in respect of employees affected by the economic standstill or those working on a reduced working time basis.

To be eligible under the scheme, employers must not be in arrears in taxes and contributions to social security, health insurance, the Guaranteed Employment Benefit Fund, the Labour Fund or the Solidarity Fund for Persons with Disabilities (SFWON) until the end of the third quarter 2019. Plus, employers must not qualify for bankruptcy.

The support can be sought in periods of economic downtime or reduced working time. Economic downtime is a period of time in which the employee does not work for reasons not attributable to them, while remaining on standby to work. In turn, reduced working time means that the employer reduces the employee’s contractual working time, for reasons not attributable to the employee, by no more than a half. An employer can use both instruments jointly, or use them only with respect to a specific group of employees.

In the event of the economic downtime, the employer may pay to its employee a reduced salary (by no more than 50%), however no less than the national minimum wage specified under the provisions governing the national minimum wage. The salary is subsidized by the government in an amount being 50% of the national minimum wage. Nevertheless, the subsidy will not be available for salaries exceeding 300% of the forecast gross average monthly wage in the national economy in 2020.

An employer may also reduce working time by 20%, to not less than 0.5 FTE, providing that the salary for such reduced work cannot be less than the national minimum wage specified under the provisions governing the national minimum wage. The salary is subsidized by the Government in an amount being 50% of the reduced salary, but no more than 40% of the average monthly wage from the previous quarter announced by the President of the Central Statistical Office under the provisions on pensions from the Social Insurance Fund. Nevertheless, the subsidy will not be available for salaries exceeding 300% of the forecast gross average monthly wage in the national economy in 2020.

The terms and conditions of employment and work procedures during the economic downtime or under reduced working time arrangements must be agreed between the employer and trade unions or employee representatives.

The subsidy will be available for the joint period of three months from the application date, whereas the subsidised period may be extended by the Council of Ministers. Applications will be considered in the order that they are received until the funds are spent.

As mentioned by the Government officials, these instruments can be used by both a small business owner employing less than nine employees as well as a large business, without the limits applicable to the de minimis aid.

District governors to contribute a part of the wage costs

The second support mechanism available to employers is a subsidy from a district governor (starosta) for a part of wage costs and corresponding social insurance contributions in the event where the employers turnover decreases as a result of COVID-19.

This support is available to microbusinesses, small and medium-sized enterprises (SMEs) for a period up to three months, with the possibility of the Council of Ministers to extend this period.

The subsidised amount depends on the employer’s turnover decrease and may cover even 90% of the salaries payable to employees for whom the application is submitted, with the costs of the corresponding social insurance contributions, but no more than 90% of the national minimum wage – if the turnover decreases by at least 80%.

We will keep you informed on the progress of the legislative process and on possible changes to the drafted rules.