On 2 April 2020, the National Assembly adopted an Act on the intervention measures to mitigate the consequences of the communicable disease SARS-CoV-2 (COVID-19) epidemic for citizens and the economy (Act). The Act entered into force on 11 April 2020, the day after its publication in the Official Gazette of the Republic of Slovenia.
The Act provides for the rules regarding (1) deferral of borrower’s payment obligations, (2) employment relationship and payment of social security contributions (3) health and social security, (4) enforcement, insolvency and other financial obligations, and (5) other areas of law. This section is intended for the presentation of novelties regarding employment relationship and payment of social security contributions.
Reimbursement of wage compensation paid to employees who were temporarily laid-off and because of absence due to force majeure and exemption from the payment of contributions
With the intention of maintaining the workplaces and of temporary prevention of the termination of employment contracts for business reasons, the Act regulates two measures: (i) reimbursement of wage compensation paid to employees who work for the employers that cannot provide them with work due to the consequences of the epidemic, and (ii) partial reimbursement of wage to employees who cannot work due to force majeure (regardless of Article 137(6) ZDR-1).
Employer assigns employees to a temporary lay-off via written document, wherein it states the duration of a lay-off, possibility and the method of re-calling the employee to prematurely return to work and the amount of wage compensation the worker is entitled to.
Employee can be assigned to a temporary lay-off until 31 May 2020 at the latest. Employee has a duty to return to work for up to 7 consecutive days in the running month, upon the request by the employer. Employer is required to priorly notify the Employment Service of Slovenia (ESS) regarding that request.
Amount of compensation is equal to the amount envisioned for the instances of a temporary inability to provide work for business reason (i.e. 80% of the basis). Compensation must not be lower than the minimum wage in the Republic of Slovenia.
Contrary to the provisions of the Intervention Act, i.e. Act on Intervention Measures to Salaries and Contributions (Official Gazette of RS, no 36/2020, hereinafter: ZIUPPP), each employer in the Republic of Slovenia is entitled to exercise the right to this measure, with the exception of (i) direct and indirect budget users, whose part of income from the public sources in 2019 amounted to more than 70% and (ii) employers that conduct their economic activity in the field of finance or insurance, which fall under group K of the Statistical classification of economic activities. Entitled to aid are those employers, whose income will, by their estimation, in the first half of 2020 be reduced for more than 20% in comparison to the income in the same time of year in 2019, and will not reach more than 50% growth in the second half of 2020 in comparison to the same period in 2019. Provided that this condition for aid is not achieved when submitting the annual reports for 2020, the beneficiary will be required to subsequently return the whole aid. In the event that they have not operated throughout 2019, employers who have suffered (i) at least a 25% decrease in revenue in March 2020 compared to February 2020 or (ii) at least a 50% decrease in revenue in April or May 2020 compared to February 2020.
The right to reimbursement of wage compensation to employees, who cannot work due to force majeure, can be exercised by each employer in the Republic of Slovenia that satisfies the above conditions and states that employees do not work due to force majeure, which is a consequence of an obligation of child care due to the closing of kindergartens, schools or due to other objective reasons or inability to arrive to work due to the suspension of the public transport or closure of borders with neighbour countries and therefore receive wage compensation.
Right to reimbursement cannot be exercised by employers: (i) if they do not fulfil their tax and other non-tax monetary obligations or if on the day of submission of application they did not enclose all calculations of tax withdrawals for income from the employment relationship for the period of last five years, (ii) who in the last three months before the temporary lay-off did not regularly pay wages or contributions for social service and (iii) if they are subject to a bankruptcy procedure.
Please note that the Act envisages that ESS shall process every reimbursement application filed as of 28 March 2020 and until the entry into force of the Act according to the provisions of the Act and not ZIUPPP.
Reimbursement of compensation
Paid wage compensation is reimbursed in the amount of paid compensation, not exceeding the amount of the average salary for the year 2019 in the Republic of Slovenia calculated per month, reduced for the contributions of the insured person. Employers will be exempted from the payment of contributions for all social insurance which correspond to paid wage compensation, namely for the period from 13 March 2020 until 31 May 2020 but not more than a wage compensation up to the average salary for 2019 in the Republic of Slovenia, calculated per month. These contributions are in whole paid by the Republic of Slovenia. Employers will still be required to calculate contributions in line with existing regulations, however, they will not be required to pay them.
Employer who is a direct or indirect user of the budget of the Republic of Slovenia or that of a municipality and whose budget revenue from public funds was lower than 70% in 2019 can claim a wage compensation only in the amount equal to the share of his income from non-public sources.
Reimbursement of compensation is paid monthly in a proportional part or in whole, from the 10th day of the month that follows the month of the payment of wage compensation.
Reimbursement of compensation is intended for the actual monthly or weekly obligation, for holiday and other non-working day, if the employee would actually work on that day.
Procedure and method of claiming reimbursement
The employer shall file the application for claiming the right to reimbursement of the paid wage compensations in electronic form with ESS within eight days since temporarily laying-off an employee, but no later than 31 May 2020.
The right to reimbursement may be exercised by the employer who assigned the employees to a temporary lay-off or whose employees have been absent from work due to force majeure even before the entry into force of the Act, for the period from 13 March 2020, if they submit the application within eight days of the entry into force of the Act and fulfils all the conditions for the exercise of the said right.
An employer whose employment is directly or indirectly co-financed by the budget of the Republic of Slovenia, shall indicate in the application the share of financing from the state budget in 2019.
ESS shall issue a decision on the application within 8 days.
Obligations of the employer
In the period of receiving reimbursement, the employer is required to pay the employees a net wage compensation. Employer is not allowed to order overtime work, if that work could be conducted the employees who are on a temporary lay-off.
Exemption from the payment of pension and disability insurance contributions for working employees
Partial exemption from the payment of contributions for private sector employees and crisis allowance
Employers are exempted from paying pension and disability insurance contributions for employees from the first to fourth paragraphs and from the sixth paragraph of Article 14 of the Pension and Disability Insurance Act (Official Gazette of the Republic of Slovenia, No. 96/12 et seq.; hereinafter: ZPIZ-2) for the months of April and May 2020.
Pension and disability insurance contribution (of the employer and the insured) is fully paid by the Republic of Slovenia.
The exemption applies to those employees (the insured) who continue to work and receive a salary during the application of emergency measures under the Act. For the period when an employee is on leave and is thus entitled to a full wage compensation, the employer shall also be granted exemption from the payment of pension and disability insurance contributions.
Exemption from the payment of contributions does not apply to those insured whose employers are direct or indirect users of the budget of the Republic of Slovenia or that of a municipality (it is, therefore, only applicable to employees employed by private sector companies) and financial and insurance activities that fall under Group K according to the standard classification of activities.
Employers pay a monthly crisis allowance of EUR 200, which is exempt from all taxes and contributions, to each employee who works and whose last paid monthly salary did not exceed three times the minimum wage.
Emergency assistance in the form of a basic monthly income
The beneficiary of emergency assistance in the form of a basic monthly income is a beneficiary who, due to the epidemic, is unable to carry out its activity or who performs a substantially reduced activity, namely:
- a self-employed person who, on the day the Act enters into force, carries on an activity and is included in the obligatory insurance on the basis of the pursuit of this activity and does not qualify for obligatory inclusion on any other legal basis (including company members who are management persons and are insured pursuant to Article 16 of ZPIZ-2);
- a religious official of a registered church or other religious community who is entitled to earmarked state assistance from the state budget to cover social security contributions;
- a farmer who is included in compulsory pension and disability insurance pursuant to Article 17 or the fifth paragraph of Article 25 of ZPIZ-2 and does not fulfil the conditions for obligatory inclusion in obligatory insurance on any other legal basis.
If the beneficiary has been carrying out its activity since at least 13 March 2020 until the day of entry into force of the Act, such beneficiary is entitled to the emergency assistance in the form of basic income in the amount of:
- EUR 350 for the month of March 2020;
- EUR 700 for the month of April 2020;
- EUR 700 for the month of May 2020.
When is a subject not entitled to basic monthly income?
- in case they do not pay compulsory duties and fail to meet other monetary non-tax obligations;
- if they have outstanding tax liabilities on the day the Act enters into force.
What are the conditions for the beneficiary to be entitled to the basic monthly income?
A beneficiary is carrying out a substantially reduced activity. A substantially reduced activity means:
- at least a 25% reduction in the beneficiary’s revenue in March 2020 compared to that in February 2020, or
- at least a 50% reduction in the beneficiary’s revenue in the month of April or May 2020 compared to that in February 2020.
The Act imposes additional conditions that must be fulfilled cumulatively, in order for a beneficiary to be entitled to monthly basic income:
- self-employed persons, whose revenue will decline by more than 20% in the first half of 2020 compared to the same period in 2019, and
- which did not achieve more than 20% revenue growth in the second half of 2020 compared to the same period in 2019.
Exemption from the payment of contributions for self-employed persons, religious officials, shareholders and farmers
For the months of April and May 2020, the following persons are fully exempt from the payment of contributions for all compulsory social insurance:
- self-employed persons who are, on the day the Act enters into force, included in compulsory pension and disability insurance pursuant to the first paragraph of Article 15 and the first paragraph of Article 16 of ZPIZ-2;
- farmers who are included in compulsory pension and disability insurance pursuant to Article 17 or the fifth paragraph of Article 25 of ZPIZ-2 and who do not fulfil the conditions for compulsory inclusion in compulsory insurance on any other legal basis;
- religious officials of registered churches and other religious communities.
The following persons are not entitled to exemption from the payment of contributions:
- person who is not insured by the date of entry into force of the Act pursuant to the first paragraph of Article 15 and the first paragraph of Article 16 of the ZPIZ-2, or pursuant to Article 17 or the fifth paragraph of Article 25 of the ZPIZ-2;
- person who does not fulfil their compulsory duties and other non-tax liabilities;
- person who has outstanding tax liabilities on the date of the filing a statement.
The Republic of Slovenia fully provides exempt social security contributions on the basis of FURS data.
Repayment of the received funds
Entities that have implemented:
- reimbursement of wage compensation of temporarily laid-off employees;
- reimbursement of wage compensation of employees who cannot work because of force majeure;
- exemption from the payment of contributions;
- emergency assistance in the form of a basic monthly income;
pursuant to the Act have to, in the event that there has been (since the entry into force of the Act) a distribution of profits, payment of part of wages for business performance or rewards to the management in 2020, repay the received funds, together with the statutory default interest.
An entity that has exercised entitlements under the Act and subsequently determines that it has not fulfilled the conditions for their acquisition has to notify FURS and on the basis of a declaratory decision return the amount of assistance received within 30 days.
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Law Firm Kavčič, Bračun & Partners, o.p., d.o.o
Ljubljana, 3 April 2020
All information contained herein is based on applicable law or obtained from publicly available data or other sources believed to be reliable. This document is for general information purposes only, may be subject to change and may not be used instead of a legal opinion/advice. KBP does not guarantee the accuracy of the information and shall not be liable for any damages or costs in connection with the use of, or reliance on, the information contained herein.