Deferral of insurance contributions for employers and the self-employed
Under the latest measures, employers as well as self-employed persons (for example tradespeople) may defer the payment of social insurance contributions, as well as the mandatory contributions to old-age pension savings and the advance payments for health insurance that were originally due for March 2020.
The measure does not, however, apply to all entrepreneurs. You may make use of the new measure only if you record a decline in net turnover or in income from business and other self-employment of 40% or more.
These entrepreneurs may pay the contributions as late as the end of July this year. If they meet the deadline of 31 July 2020, they will not be penalised in any way. If a benefit were paid out on that basis and the contributions were not subsequently paid by the end of July, that person would have to repay the benefits received.
The three-month extension of the deadline for paying the contributions for March may not be the only one. Under the new act, the government is authorised to extend the deadlines for paying contributions for further months by three months as well.
And what if you do not have sufficient funds to pay the contributions? Under the new act, the Social Insurance Agency may allow you to repay this amount in regular instalments, interest-free.
The deadlines for certain acts nevertheless remain unchanged – these include, for example, registering an employee in the register of insured persons and old-age pension savers, and the contribution statements. The same deadlines as before therefore apply to these cases.
In addition to the contributions, employers and the self-employed are entitled to pay the advance contributions that fell due in April 2020 within the same deadline, by 31 July 2020.
Please note! The contributions that an employer remits on behalf of its employees must still be remitted by the set deadlines!
The extension of the deadline also applies, however, to the payment of contributions by employers whose employees perform hazardous work, that is, work classified in the third or fourth category, as well as employees who are dancers or musicians playing a wind instrument. For these employees, the employer is ordinarily obliged to pay contributions of at least 2% of their gross wage, and the due date for these contributions is postponed, so the employer must pay them no later than 31 July 2020. A further condition for extending this deadline is that the employer must record a decline in income of at least 40%.
PRACTICAL TIP: Unlike the deferral of income-tax advance payments, the deferral of insurance contributions is automatic; no application is filed. It is enough to meet the new deadline at the end of July 2020.
How do you find out whether your decline in income is sufficient?
When calculating the percentage decline in income, you must take into account the income in the same month of the previous calendar year, for example by comparing income from March 2019 with March 2020.
If you did not carry on any activity in that month, you may calculate your average monthly income for 2019, which you can then compare with the income for the period for which you are requesting the deferral of advance payments.
If you record a decline in income of at least 40%, you are also entitled to a deferral of income-tax advance payments, on which we provided more detailed information in a previous article.
The coronavirus is not force majeure
An employer has had to close its premises even against its will, an employee is not working and receives only part of their average earnings. Both sides are harmed in some way and record losses. But who is responsible? One of the parties? The state, or the coronavirus as "force majeure"?
The new measure has addressed the questions raised above. For the purposes of employment relationships (that is, only within the relationship between employee and employer), the employer will be regarded as the "responsible" party.
If, on the basis of a decision of the Government of the Slovak Republic or another state authority, an employer has had to close its premises or adopt other measures that fully or partially prevent an employee from performing work, this will constitute an obstacle to work on the part of the employer.
No account is taken of whether the employer suspended the operation of its premises because of a decision of a state authority or did so as a result of the extraordinary situation. This means that there will be an obstacle on the part of the employer even in the case of a hairdressing salon that must be compulsorily closed under a state decision, or a fast-food outlet that has had to close temporarily because its suppliers are currently unable to deliver goods.
The fact that an employee is at home and not working will therefore not be regarded as a consequence of "force majeure", i.e. vis major, which is the coronavirus.
In cases where an obstacle to work on the part of the employer arises, the employer is obliged to pay the employee wage compensation in the amount of their average earnings. Since this measure placed the legal obligation to bear the burden of the difficult situation on the employer, the legislator, as part of the measure, also seeks to accommodate the employer.
With the adoption of the new measure, employers are not required by law to pay 100% of the employee's wage for such a period, as this threshold is lowered to a minimum of 80%. If an employer nevertheless wished to pay the employee wage compensation in the full amount of their average earnings, it may, but need not, do so.
However, if 80% of the employee's earnings amounted to a sum lower than the minimum wage, the employer must pay wage compensation at least in the amount of the minimum wage, the current level of which is EUR 580.00.
Employers who, by concluding an agreement before the pandemic period, adjusted this obligation to an even lower percentage need not worry – these agreements should remain in force.
Under the legislation in force to date, the law entitles employers to conclude an agreement with employee representatives setting out the situation for which, should an obstacle to work on the part of the employer arise, they will pay employees a certain percentage of their wage. The law prescribes a minimum of 60% of the wage.
This means that the adopted measure gives preference to a written agreement between the employer and the employees, and therefore these agreements will remain in force and the amount will not automatically be increased to 80% of the employee's wage.
IMPORTANT: Remember that if you record a decline in revenue of at least 20% or you have had to close or restrict your operations on the basis of a state decision and you retain your employees' jobs for at least two months, the state may pay your employees' wages for you! We set out all the rules on the wage subsidy for employees in a comprehensive article.
Authors: JUDr. Ondrej Steiniger and Magdaléna Karvaiová
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