Amendments to the Regime of Payment of Compensations to Employers for Preservation of Employment (Decree No. 55 dated 30 March 2020)

Decree No. 106 dated 28 May 2020 for Amendment and Supplementation of Decree No. 55 of the Council of Ministers Dated 30 March 2020 Defining the Requirements and Procedure for Payment of Compensations to Employers in Order to Preserve the Employment in State of Emergency (hereinafter referred to as Decree No. 55 or the Decree) was promulgated in State Gazette Issue No. 50, dated 2 June 2020.

The amendments shall be described below.

1. Name of the Decree

Pursuant to the latest legislative changes, Decree No. 55 will remain in effect after the end of the state of emergency in the Republic of Bulgaria, during the extraordinary epidemic situation, hence the name of the Decree has been supplemented correspondingly.

2. Extension of the Scope

Decree No. 55 now provides a possibility to apply for compensations for employers who have suspended work of their undertaking or parts thereto or of particular employees or have established part-time working regime in the undertaking or a department thereto during the extraordinary epidemic situation declared by Decision of the Council of Ministers No. 325 dated 14 May 2020.

3. Term

As per the latest amendments, compensations under Decree No. 55 shall be paid for the whole period or parts thereto between 13 March 2020 until 30 June 2020, but for a maximum term of three months. Employers who have applied at the beginning of the period shall be able to apply for compensations for remunerations due until 13 June 2020, including.

4. Payment of the remuneration

The most essential amendment in Decree No. 55 is the obligation for employers to pay to their employees, for whom compensations are received, remuneration at an amount not less than the amount of the social security income for January 2020, for the period for which compensations are received.

In practice, this amendment creates a retroactive obligation for employers, who have paid to their employees additional remunerations in January 2020 (bonuses), which are not a permanent part of their monthly remuneration, to pay to the said employees for the whole period for which compensations under Decree No. 55/ 30.03.2020 are received, not only the full amount of their remuneration as calculated for full working time, but also the additional remunerations at the amounts paid for January 2020, limited to the amount of the social security income.

This amendment has been introduced due to the circumstance that the calculation of the amount of the compensation is based on the social security income for January 2020, whose amount may be larger than the amount of the remuneration of the employees (when bonuses, additional remunerations for performance, etc. have been paid to them). Before the amendments of Decree No. 55, representatives of the business had repeatedly raised the question concerning the basis for calculation of the compensations and namely the social security income for January 2020. The absence of a clear solution to this question practically meant that the employers receive compensation for the remuneration and the bonus paid in January 2020, but are obliged to only pay the remuneration to the employees.

5. Entry Into Force

The above-described amendments shall enter into force retroactively as of 14 May 2020 and shall be applicable towards employers who have applied for compensations before the promulgation of the amendments. Due to this, employers who receive compensations under Decree No. 55 and have paid additional amounts to the employees in January 2020 shall have to additionally pay to their employees the same amounts, limited to the social security income for January 2020, for the whole period for which compensations are received.

This material is not exhaustive, is only of general nature and does not represent a specific advice or consultation. Should any additional questions arise, please do not hesitate to contact us at tel.: 02/943 37 00, fax: 02/943 37 07, е-mail: office@afa.bg or at: 38, Oborishte Str., Sofia 1504.