The newly adopted Law on Measures and Actions during the State of Emergency (published in SG No 28 of March 24, 2020, in force since March 13, 2020), hereinafter referred to as "the law", established the possibility for the country, through the National Social Security Institute (NSSI), to compensate employers affected by the state of emergency by transferring compensation of 60% of their employees' insurance income (the so-called 60/40 compensation). In other words - the employer pays 40% of the salaries to its employees, the NSSI pays the remaining 60%.
Which employers will be able to benefit from the relief?
The legislators have identified 2 groups of employers that can benefit from the 60/40 compensation.
A) Employers whose income has dropped by with at least 20%
The first category includes employers, whose income have dropped by with at least 20% compared to the same period in 2019. In case a company has been incorporated after 01.03.2019, the decrease of 20% is calculated compared to the average income for January and February 2020.
B) Employers who do not have to prove a 20% decrease in the income
The second category includes employers who do not have to prove a 20% decrease in their income under the previous letter "A". These are employers operating in specific economic spheres - engaged in retail trade (with certain exceptions), transport (land transport and air transport), hotel, restaurant, film projection, tourist activity, artistic and creative activity, etc. The full list of areas of activity of employers in this category is set out in Annex No. 1 to Order No. 55 of the Council of Ministers of March 30, 2020.
What additional criteria do the two employers groups have to meet?
In order to benefit from the compensation, both categories of employers must simultaneously meet the following requirements:
- The employer must have ceased the activity of the company or part of it by an order in accordance to the procedure provided by the law or must have established a part-time work in the company or its unit;
- The employer must be a local natural or legal entity or a foreign legal entity, operating its business on the territory of the Republic of Bulgaria;
- The employer must not have unpaid taxes and/or social security contributions to the state and/or the municipality, under the Tax-Insurance Procedure Code (TIPC);
- The employer must not be a legal person declared bankruptcy or being in a bankruptcy or liquidation proceedings;
- The employer must retain the jobs of all employees for whom he has been compensated for a period not less than the period for which the compensations have been paid;
- The employer must not terminate the contracts with employees on the grounds of Art. 328, paragraph 1, items 2, 3 and 4 of the Labor Code during the period for which the compensation is paid;
- The employer must not have any penalty provisions entered into force or violations of the Labor Code or the Law on Labor Migration and Labor Mobility for the last 6 months;
Are there certain categories of employees for whom the employer cannot use the “60/40” compensation?
The law identified several categories of employees in respect of which the employer cannot use the "60/40" compensation. These are:
- Employees who were not employed by the employer before the date of the declared state of emergency;
- Employees on temporary disability, pregnancy or childbirth, when adopting a child under the age of 5 or raising a child under the age of 2;
- Employees for whom the employer receives financing for salaries and social security from the state budget, with funds from the European Structural and Investment Funds or other public funds.
On what basis the 60/40 compensation is calculated?
The compensations are calculated on the basis of the insurance income of the respective employee for January 2020. It is important to note that when the employer has established a part-time work, the amount of the compensation is calculated in proportion to the off-hours, but not more than 4 hours per day.
For what period can employers benefit from the 60/40 compensation?
According to the revision of the law, effective as of April 7, 2020, the compensation will be paid for a maximum period of 3 (three) months.
What documents should be submitted and where?
Employers meeting the above criteria should submit an application to the National Employment Agency Office servicing the workplace territory. The application can be submitted on paper, electronically or by registered letter with a receipt. The application is accompanied by a set of documents:
- A notarized copy of the order terminating the activity of the company or part of it or establishing a part-time work;
- Declarations of the circumstance that the employer has not terminated contracts with employees on the grounds of Art. 328, paragraph 1, items 2, 3 and 4 of the Labor Code and that he has retained employment in the company;
- A declaration that the employer's income has dropped by more than 20% (only for the first category of employers mentioned in letter "A" above);
- A list of the employees for whom the application is submitted, containing personal information (names, unique citizenship numbers) and for the part-time working employees the duration for the established the part-time work;
- A declaration containing the bank account details of the employer.
What action should be taken if the employer who uses compensations resumes the normal activity and the full-time work in the company?
In case of resuming the work in the company or cancelling the order establishing part-time work during the period when the employer receives compensation, the National Employment Agency must be notified by the employer, on paper or electronically, within 3 working days from the date of issuing the respective order.
