New state support for employers facing COVID-19 challenges - What does your business qualify for?

After PHASE 1 – state support for technical unemployment, under Government Emergency Ordinance No. 30/2020, followed by a PHASE 2 – state support for resuming activity and hiring certain categories of individuals, under Government Emergency Ordinance No. 92/2020, the Romanian Government recently released and enforced a long-waited PHASE 3 – several active measures, intended as further support to businesses.

Without intending an exhaustive overview, this note aims to provide a brief outline of the key active measures available under PHASE 3 and related main points employers should consider, under the context above and the ever-changing and dynamic legislative environment triggered by these unprecedented complex pandemic times.

Romanian Kurzarbeit

In brief, employers are now allowed to unilaterally reduce employees’ working time by a maximum of 50% - to adjust the work need in case of a reduced workload, the state covering a part of the difference between the employees’ gross base salary as per the employment contract and their gross base salary as per the new working time.

Eligibility:

• employer’s activity experiences a temporary slowdown due to the state of emergency/ alert/ siege – by at least 10% decrease in turnover for the month prior to implementation of this measure, or the month before the month preceding it, compared to the same month of the previous year;
• the working time reduction impacts at least 10% of the total headcount.

Indemnity:

• 75% of the difference between the employee’ gross base salary as per the employment contract and the gross base salary corresponding to the new working time;
• is paid - in first instance - by the employer, which will further recover it from the state declaring and paying all taxes related to salaries incomes;
• is subject to income tax and social security contributions, as well as to labour insurance contribution due by the employer (currently of 2.25%);
• cannot cumulate for the same employee with several other types of state support, including PHASE 2 state support.

Implementation:

• the working time reduction is (i) subject to prior information and consultation with employees’ representative body/ employees - as the case may, (ii) be implemented for at 5 five consecutive working days and under an employer decision, (iii) communicated to the impacted employee with at least 5 days before becoming effective, and (iv) registered in the general registry of employees at least 1 day before entering into force;
• during the working time reduction, employees benefit of all the other rights/ benefits under the employment contract and collective labour bargaining agreement pro-rata with the working duration.

Restrictions:

• while implementing such working time reduction, employers cannot:
  • hire or contract with individuals to perform identical/ similar activities as the impacted employees;
  • implement a reduced working schedule from 5 to 4 days;
  • (during the months where this measure is enforced) initiate collective dismissals;
  • grant bonuses and increases to base salaries of management positions;
• while benefiting from such indemnity, employees cannot perform overtime at the same employer.

Financial support for purchasing it equipment for teleworkers

Employers may benefit of an allowance of RON2,500 (approx. EUR520) for each employee having worked – during the state of emergency – under the teleworking regime for at least 15 business days – allowance to be mandatorily used to purchase necessary IT equipment.

This support is planned to be granted until 31 December 2020, on a first-come-first served basis and only within the limits of funds made available for this purpose. Actual categories of goods that can be purchased and effective procedure to be followed are pending approval by the Romanian Ministry of Labour, being expected to be released around 20 August 2020.

Technical unemployment support for employees of companies whose activity is suspended due to COVID-19 confirmed cases

Employees of companies whose activity is suspended by the competent Public Health Authority due to COVID-19 confirmed cases will benefit from the special (COVID-19 related and available ever since PHASE 1) technical unemployment (furlough) indemnity of 75% of the monthly base gross salary, but no more than 75% of the nationwide average monthly gross salary (currently, up to RON 4,072/ approx. EUR840 gross) – entirely covered from the state budget. Of course, this is not applicable to employees benefitting from COVID-19 medical/ quarantine leave.

This support is granted for the entire period the company’s activity is suspended, but not later than 31 December 2020, subject to observing the conditions and procedure established by law.