On Monday, 30 March 2020, Emergency Ordinance no. 32/2020 on the amendment and completion of the Emergency Ordinance no. 30/2020, establishing some measures in the field of social protection in the context of the epidemiological situation caused by the spread of SARS-CoV-2 virus and for the establishment of additional social protection measures (hereinafter “GEO”), came into force. This new emergency ordinance brings important clarifications and changes on technical unemployment, and also clarifies, among others, aspects regarding the granting of days off to parents for the supervision of children and the situation of child-raising leave that would cease during the state of emergency.
- Changes and clarifications on technical unemployment
Eliminating conditions for accessing funds for technical unemployment
The conditions stipulated in the initial version of Emergency Ordinance no. 30/2020, namely (i) the decrease of the incomes from March 2020 by at least 25% from the average of the incomes from January to February 2020, and (ii) the lack of financial capacity to pay all the employees have been removed. However, these would have generated long and possibly costly debates for employers, especially in the case of endless controls and processes with tax authorities.
Thus, the only condition that must be met is that the employer temporarily suspend its activity, in whole or in part, as a result of the SARS-CoV-2 coronavirus epidemic, during the period of emergency, according to a declaration on the employer’s own responsibility.
In order to access the funds from the unemployment insurance budget, employers will submit, via e-mail, to the county employment agencies, respectively of the Bucharest municipality (within the area of which they have their registered office), the following documents:
- an application signed and dated by the legal representative;
- a declaration on one’s own responsibility, a sample of which will be approved by order of the Minister of Labour and Social Protection and subsequently published in the Official Gazette of Romania, Part I;
- the list of persons to benefit from this indemnity, assumed by the employer’s legal representative.
Employers shall be responsible for the accuracy and veracity of the data entered in these documents.
Exemption from the Labour Code. The amount of the indemnity is capped
Although the legislative technique chosen by the Government is not the most appropriate, it appears from the provisions of the GEO that the state intended to cap the indemnity paid by way of technical unemployment to, at most, 75% of the gross average salary stipulated by Law of the state social insurance budget for 2020 (i.e., Law no. 6/2020). Thus, since this is supported by the unemployment insurance budget, the state will pay the equivalent of 75% of the basic salary corresponding to the job occupied, but not more than 4,072 lei per month.
The interpretation is based on the corroboration of para. (1) in art. XI with para. (11) newly introduced. It establishes a discretionary right of the employer, that of supplementing the state-supported technical unemployment benefit, if the budget for the payment of personnel expenses allows it, with amounts representing the difference of up to at least 75% of the basic salary corresponding to the job occupied, according to art. 53 of the Labour Code. Supplementing the amount of the indemnity will take place by negotiation between the employer and the unions/ employees’ representatives.
Who makes the payment: the employer or the state?
The GEO introduces new provisions that reduce the deadline for payments by the county employment agencies (amounts to be paid in the accounts opened by employers to commercial banks).
Thus, unlike the initial provision that referred to 30 days, the term is reduced to 15 days from the date of submission of the documentation. Subsequently, within 3 working days from the receipt by the employer of the amounts related to the indemnities, the employer will make the payment to the employees.
Therefore, the issue regarding the maturity of the technical unemployment indemnity is clarified: after the entry into force of these changes, the employer will no longer have to advance the amounts as technical unemployment benefit to the employees, and subsequently recover their amounts from the state budget through settlement, but will submit the necessary documents at the beginning of the month following the one in which the technical unemployment was arranged, and will pay the employees as soon as they receive the respective funds from the unemployment insurance budget.
Basically, given that the documents are submitted in the current month for payment of the previous month’s indemnity, it turns out that, for the indemnities related to the March fractions, if the employer submits the documents at the beginning of April, the employees can benefit from the payment of the indemnity in the second part of April.
Situation of employees who have more than one employment contract
The employee who has concluded several individual employment contracts, of which at least one full-time contract is active during the state of emergency, will not be able to benefit from the technical unemployment indemnity supported by the state. It seems that if the employee actively maintains only a part-time contract, then he could still benefit from this aid.
If all individual employment contracts of this employee are suspended due to the state of emergency, he/ she will benefit from the indemnity corresponding to the most advantageous individual employment contract.
Other categories of beneficiaries of technical unemployment benefit
Will be able to benefit from the state budget of a monthly indemnity of 75% of the gross average salary used to fund the state social insurance budget for 2020 (approx. 4072 lei), the following categories of persons who interrupt the activity as a result of the effects of the coronavirus:
- other categories of professionals (according to the Civil Code, all those who operate a business are considered professionals; e.g. liberal professions);
- persons who have concluded contract for sport activity (higher indemnities may be negotiated);
- natural persons who obtain income exclusively from copyright and related rights.
Further, the GEO specifies that the personnel employed by other modalities provided by law than by individual employment contract, will be able to benefit from the technical unemployment indemnity according to the provisions applicable to one of the three categories above. Although the text of the GEO is not clear, it is likely that this provision refers to the personnel assigned by mandate/ management contracts (e.g. directors to whom the company management has been delegated, in the case of a joint stock company). However, the issue should be clarified by the authorities.
Indemnities granted to these categories of beneficiaries will be subject to taxation and payment of social security and health insurance contributions, under the conditions of the Fiscal Code (the tax obligations regarding the calculation, declaration and payment of these taxes and contributions will be established by common order of the Minister of Labour and Social Protection and the Minister of Public Finance).
In order to benefit from these indemnities, the persons mentioned above will submit to the county agencies for payments and social inspection, respectively of the municipality of Bucharest, the following documents:
- an application accompanied by a copy of the identity document; and
- a declaration on own responsibility.
A sample of the application and the declaration on own responsibility for these categories will be approved by common order of the Minister of Labour and Social Protection and of the relevant ministries, as appropriate.
The application and documents specified above will be submitted to the agencies by the 10th of the current month for the payment of the previous month’s indemnity, and the payment of the indemnity will be made no later than 10 days from the submission of the documents, directly by the payment and social inspection county agencies, respectively of the municipality of Bucharest.
- Amendments to Law no. 19/2020 on the granting of certain days off to parents for the supervision of children, in case education establishments are temporarily closed
The scope of beneficiaries of Law no. 19/2020 is extended to parents whose children are enrolled in the pre-school education units (nurseries). Thus, if the other conditions stipulated by law are fulfilled (e.g. the activity cannot be performed on a telework regime/ work-from-home, and the conditions for the other parent), these parents will also be able to benefit from the days off under Law no. 19/2020, during the state of emergency (until the beginning of the school holiday, i.e. end of this week).
Also, it is clarified that the indemnity granted during the days off is subject to taxation and payment of social insurance contributions, social health insurance, as well as the payment of the insurance contribution for work, which will be borne by the employer under the conditions of the Fiscal Code. This confirms that the state will settle only the net amount of the indemnity related to these days off.
- Reforms to child-raising leave
Persons receiving the child raising indemnity who are in the child-raising leave at the time of the establishment of the state of emergency will benefit from the payment of this indemnity throughout the period of the state of emergency, including if during this period the child has reached/ will reach 2 years of age, respectively 3 years in the case of disabled child.
Persons who are to return to work, with the grant of the return-to-work benefit, may choose between granting this benefit or returning to child-raising leave and continuing benefit from the indemnity.