The 60/40 Measure Shall Be Continued Until the End of September 2020

Decree of the Council of Ministers No. 151 dated 3 July 2020 Defining the Requirements and Procedure for Payment of Funds for Preservation of Employment after the Period of the State of Emergency and the Extraordinary Epidemic Situation (hereinafter referred to as the Decree) was promulgated in State Gazette issue 60 dated 7 July 2020. By means of it, the application of the so-called 60/40 measure is continued and it shall replace Decree No. 55 dated 30 March 2020, which was effective until the end of June 2020. The present article shall review the new regime for application for payment of funds to employers for preservation of employment as per the Decree.

I. Which Employers Shall Be Entitled to Receive Funds for Preservation of Employment and at What Amounts

As per the provisions of the Decree, funds for preservation of employment shall be paid for the whole period between 1 July 2020 and 30 September 2020 or parts thereof. The funds shall be for the expense of the Unemployment social security fund and shall be transferred to the respective employer via bank transfer by the National Social Security Institute.

The criteria for employers do not differ in essence from the criteria under Decree 55 dated 30 March 2020. The employers shall be entitled to receive funds for preservation of employment under the Decree in case that they correspond to the following criteria:

• They are local natural persons or legal entities or their departments, other organizational and economically separate entities, as well as foreign legal entities carrying out economic activity in Bulgaria;
• They have declared decrease in the income from sales as follows:

a) for the entities incorporated before 1 June 2019 – no less than 20 percent during the month preceding the month of submission of the application for payment of funds, as compared to the corresponding month of the previous calendar year;

b) for the entities incorporated after 1 June 2020 – no less than 20 percent during the month preceding the month of submission of the application for payment of funds, as compared to the average income for January and February 2020;

• The employer has no obligations for taxes and statutory social security contributions;
• The employer has not been declared insolvent and is not in insolvency or liquidation proceedings;
• There must be no effective penal decrees or court decisions for violations of the Labour Code or of the Labour Migration and Labour Mobility Act as regards the employer for a period of 6 months preceding the submission of the application for payment of funds under the Decree.

In addition to the above, the following obligations for employers concerning preservation of employment remain applicable:

• To preserve the employment of the persons for whom they have received funds for an additional period of not less than the period for which the funds are paid. There is an exception from this rule provided for the Hotel and Restaurant Sector.
• Not to terminate the employment contracts of employees by means of termination notice on the grounds of closure of part of the undertaking, staff cut, reduction of the work load or upon suspension of the work for more than 15 working days during the period for which funds are paid.

The funds for preservation of employment shall be at the amount of 60 percent of the social security income for May 2020 and of the social security contributions payable for the expense of the employer for the same months for each employee.

The Decree provides that in the cases in which the employer receives funding for the same expenses under European structural and investment funds or from the state budget, as compensation for services assigned by the state, the total amount of the provided funds must not exceed 80 percent of the social security income for May 2020 and of the social security contributions payable for the expense of the employer.

II. For Which Employees Will It Be Possible to Receive Funds for Preservation of Employment?

The employers shall be entitled to receive funds for preservation of employment for the following categories of employees:

• Employees whose work has been suspended during the period of the state of emergency or the declared extraordinary epidemic situation with an order under Art. 120c of the Labour Code. Those are the two possible suspensions of work – upon order by public authority or upon order by the employer;
• Employees who have worked under part-time working hours during the period of the state of emergency or the declared extraordinary epidemic situation on the grounds of Art. 138a, Para. 2 of the Labour Code;
• Employees who have used their annual paid leave on the grounds of Art. 173a of the Labour Code (due to suspension of the work) during the period of the state of emergency or the declared extraordinary epidemic situation
• Employees for whom the employment has been preserved after a notice to the Employment Agency for collective redundancies under 130a of the Labour code and Art. 24 of the Employment Promotion Act for the period between 13 March and 30 June 2020;
• Employees other than the listed above, who are insured in sector I – Hotels and Restaurants from the Classifier for Economic Activities (KID-2008).

The employees must have been in employment relationship with the employer before 13 March 2020.

The Decree also provides that funds for preservation of employment shall not be paid for some categories of employees, such as employees who have been on unpaid leave, sick leave, maternity leave, employees from explicitly listed sectors, employees for whom funding has been received under other measures, etc.

III. Obligations for Employers Who Receive Funds for Preservation of Employment under the Decree

The employers who have been approved to receive funds for preservation of employment shall have the following obligations:

• To pay to the employees for whom funds for preservation of employment are received an employment remuneration at amount not less than the amount of the social security income for May 2020 and to pay the due social security contributions for the respective month.
• To pay to the employees in sector Hotels and Restaurants employed after 1 June 2020 an employment remuneration at an amount not less than the amount of the minimum social security income for the position and to pay the due social security contributions for the respective month.

IV. How to Apply for the Payment of Funds for Preservation of Employment?

1. Initial Application for Payment of Funds for Preservation of Employment

The employers shall submit an application as per template (online submission will be possible) to the "Labour Office" Directorate operating on the territory of the place of work of the employees. The final term for submission of the applications shall be defined by means of an order of the Executive Director of the Employment Agency. The term for review of the application is 10 business days counted as of the date of submission. After the application is reviewed, the respective "Labour Office" Directorate shall inform the applicant employer within 2 (two) working days for the compliance or non-compliance with the requirements of the Decree.

The following documents must be attached to the application:

• Certified copy of the order of the employer for suspension of the work under Art. 120c of the Labour Code or for establishment of part-time working hours under Art. 138a, Para. 2 of the Labour Code.
• Declarations for compliance with the requirements of the Decree;
• Declarations by the Employer and documents certifying the decrease in the income from sales;
• List of the employees for whom the application for payment of funds under the Decree is submitted;
• Certified copy of the annual tax return for 2019 under the Corporate Income Taxation Act or under the Personal Income Taxation Act for the entities incorporated before 1 January 2020;
• Declaration containing information about a bank account of the employer with designated IBAN.

2. Subsequent Applications for Payment of Funds for Preservation of the Employment (Monthly Reporting of Approved Employers)

The approved employers shall submit monthly to the "Labour Office" Directorate reporting documentation for the employees for whom funds shall be paid for the preceding month. After the information from the monthly report is reviewed by the Employment Agency, it shall be sent to the National Social Security Institute, which shall pay the funds within 10 (ten) business days as of the reception of the information.

3. Other Questions Related to the Submission and Review of Applications

Additional information regarding the requirements and procedure for application shall be published on the website of the Employment Agency and on the information boards in the "Labour Office" Directorates.

Employers who receive funds for preservation of employment under the Decree but do not perform their obligations arising thereof, shall be obliged to return in full the amounts received to the budget of Public Social Security.

The National Social Security Institute shall create and maintain database for the employers to whom funds have been paid under the Decree. The database shall contain information on the employer, the total amount of the funds paid for the respective month and for the total amount of employees for whom funds have been aid. The database shall be publicly accessible with the exception of the data representing personal data within the meaning of the Personal Data Protection Act.

The National Revenue Agency and the Executive Agency "General Labour Inspectorate" shall have the powers to monitor and control the application of the Decree.

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.