Corona Measures #4: Contributions for Employers and the Self-Employed (SZČO)

When the state reimburses an employee’s wage

From Monday 6 April 2020, applications for the payment of a contribution towards employees’ wages are being submitted. The new resolution imposes an obligation on the state to reimburse 80% of the salary of employees whose employers had to close or restrict their operations, or who record a drop in revenue, including the self-employed (SZČO).

The state contribution is provided in two cases:

1. if you are an employer who, on the basis of a Measure of the Public Health Authority of the Slovak Republic, had to close its operation (for example, retail clothing stores) or restrict the running of its operation (for example, stores in which only the order-collection area may be open) and you retain the employee’s job, or
2. if you are an employer or a self-employed person (SZČO) recording a drop in revenue of at least 20%.

For the purposes of obtaining the contribution, an employer may be:

• a legal person with its seat in the Slovak Republic (besides the popular s.r.o., this also includes civic associations or foundations; not public administration bodies),
• a natural person who has employees,
• an organisational unit of a foreign legal or natural person authorised to do business in the territory of the Slovak Republic,
• a legal person or natural person carrying out activities under the Act on Employment Services, in particular the intermediation of employment for a fee, temporary agency employment, supported employment, the provision of expert advisory services, and the education and training of jobseekers for the labour market, or for those interested in employment and for employees in the territory of the Slovak Republic.

The contribution as a self-employed person (SZČO) may be obtained by persons who:

• operate a trade,
• are a self-farming private farmer,
• carry out their business activity on the basis of a special act, such as lawyers, notaries, tax advisers, actors, musicians and the like,

and, at the same time, are not an employee in an employment or similar working relationship.

Whether an employer or a self-employed person, such a person may apply for the contribution only if they came into existence and began carrying out their activity no later than 1 February 2020.

1. I am an employer and I closed my operation

In the first case, if you are an employer who had to close its operation or restrict its running, then in order to obtain the contribution it is necessary to meet the condition of retaining the job for at least 2 months. This means that if you were to receive a contribution towards your employee’s wage for March 2020, you cannot, for two months after the month for which you applied for the contribution (i.e. until the end of May), terminate the employment relationship, or take a legal act that would end the employment relationship with the employee by notice or by agreement. In this way, as part of assistance to employers, the state also extends a helping hand to employees, for whom it “secures” the continuation of the employment relationship for at least two months.

In order to obtain the contribution you must submit an application. The application will include:

• a list of the employees in respect of whom you are claiming the contribution,
• a sworn statement that you meet the conditions necessary for the contribution to be granted.

Within the list of employees, in addition to the employee’s personal data (name, surname, birth number), it is necessary to state their average wage, as well as what % of the average salary you are paying them during the obstacles to work.

CAUTION! For the purposes of the state contribution, “agreement workers” (dohodári), managing directors without an employment contract, volunteers, and persons performing certain work under a contract governed by the Civil Code (e.g. a contract for work) are not regarded as employees.

On the one hand, you may pay the employee the basic statutory amount of such remuneration, which is at least 80% of the average salary. In that case, employers may pay employees 80% – 100% of their average salary. In this case the state will reimburse the employee 80% of their average salary, up to a maximum of EUR 1,100. An exception is March 2020, for which employees will have only 60% of the average salary reimbursed, since, according to the state’s decision, the obstacles to work arose only on 16 March.

At the same time, the legislation allows an employer to agree in writing with the employees’ representatives that, in the event of a certain occurrence (for example, in the event of a declaration of an extraordinary situation), it will pay employees who cannot perform work because of obstacles on the employer’s side 60% of their average salary. If an employer has concluded such an agreement, the state will reimburse the employee 60% of the average salary, up to a maximum of EUR 880.

You are entitled to the contribution for every employee to whom you cannot assign work.

2. My revenue has dropped

The second group comprises both employers and the self-employed (SZČO). In this case, the key factor for obtaining the contribution is a drop in revenue of at least 20%.

In order to obtain the contribution, you must meet one of the following definitions:

• be an employer whose revenue has dropped and who retains jobs, or
• be a self-employed person (SZČO) who has employees, records a drop in revenue and retains jobs, or
• be a self-employed person (SZČO) recording a drop in revenue.

Retaining jobs for two months is therefore logically required only in cases where you have some employees.

The amount of the contribution towards your employees’ wages will vary depending on how much your revenue has dropped. For the reason already mentioned — that the obstacles to work began on 16 March 2020 — the contribution for March is lower than the contribution for April. The contribution is 80% of your employee’s average salary, up to a maximum of:

• with a drop in revenue of more than 20%, you receive 80% of the employee’s salary, but no more than EUR 180 (for March EUR 90)
• with a drop in revenue of more than 40%, you receive 80% of the employee’s salary, but no more than EUR 300 (for March EUR 150)
• with a drop in revenue of more than 60%, you receive 80% of the employee’s salary, but no more than EUR 420 (for March EUR 210)
• with a drop in revenue of more than 80%, you receive 80% of the employee’s salary, but no more than EUR 540 (for March EUR 270).

In this case you also submit a list of employees as part of the application.

If you are a self-employed person (SZČO) who has no employees and your revenue has dropped by at least 20%, the state will contribute to you as compensation for loss of income, according to the size of the drop in your revenue, as follows:

• with a drop in revenue of more than 20%, you receive a contribution of EUR 180 (for March EUR 90),
• with a drop in revenue of more than 40%, you receive a contribution of EUR 300 (for March EUR 150),
• with a drop in revenue of more than 60%, you receive a contribution of EUR 420 (for March EUR 210),
• with a drop in revenue of more than 80%, you receive a contribution of EUR 540 (for March EUR 270).

How do I determine the drop in revenue

Revenue is considered to be:

1. the amount of revenues (what was invoiced), for an entrepreneur who keeps double-entry accounts,
2. the amount of actual income received into the account or the cash register, for an entrepreneur who keeps single-entry accounts or maintains records of income and claims lump-sum expenses.

If, in the same month for which you are applying for the contribution, you were also in business in 2019, you compare the revenue for the given month of 2019 with the revenue for the same month of this year, for example March 2019 and April 2019.

There are, however, entrepreneurs whose revenue for individual months is not the same. In February, tax advisers may have high revenue given the approaching filing of tax returns, and in April their revenue drops. In summer some entrepreneurs, for example, do not provide services at all, and it is therefore also possible to use the second option, in which you calculate the average monthly revenue for 2019 and compare it with the revenue for the month for which you are applying for the contribution.

What if you were not yet in business during 2019? The revenue for the month for which you are applying for the contribution will be compared with the revenue for February 2020, or you can choose the option of comparing the current revenue with the average monthly revenue for 2019.

The sworn statement

The sworn statement plays an important role in granting entitlement to the contribution. In this statement you are obliged to state facts to the following extent:

1. the payment of wage compensation amounting to 80% of the employee’s average earnings,
2. the fulfilment of tax obligations, of the obligation to remit advance contributions for public health insurance, of social insurance contributions, and of mandatory contributions for old-age pension saving,
3. no breach of the ban on illegal employment in the two years before the application for the contribution was submitted,
4. no financial obligations due towards the office,
5. that the applicant is not in bankruptcy, liquidation or forced administration and does not have a repayment schedule set under a special regulation,
6. that it has no recorded unsatisfied claims of its employees arising from the employment relationship,
7. that it has not been finally sentenced to a ban on receiving grants or subsidies, or to a ban on receiving aid and support provided from European Union funds, where it is a legal person,
8. that it was not, as at 31 December 2019, an undertaking in difficulty (the definition of an undertaking in difficulty is provided by the Ministry of Labour, Social Affairs and Family of the Slovak Republic here),
9. the fact of a drop in revenue as well as the size of the drop,
10. a commitment that, for two months after the month for which the contribution is applied for, it will not terminate the employment relationship, or take a legal act that would end the employment relationship with the employee by notice or by agreement.

The information stated in the sworn statements will gradually undergo a verification process, and those entrepreneurs who obtained the contribution without being entitled to it will be obliged to return it.

Applications will begin to be submitted as early as 6 April, and the state plans to pay the contributions from 15 April. If you are interested in submitting an application, as well as in an assessment of whether you are entitled to the contribution, contact us.

Authors: JUDr. Ondrej Steiniger and Magdaléna Karvaiová

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