On 04 May 2021, the Slovak parliament approved the Act on support in the times of short-time work, also referred to as the Act on “Kurzarbeit”. The changes described in this article will take effect as of 01 January 2022.
The aim of the Act is to provide support from the social security system to the employer in order to reimburse the costs of employment, in cases when the employer was forced to reduce working hours of certain employees due to an unfavourable situation caused by external influences, which resulted in the employer’s inability to assign work to the employee in the extent of at least 10% of the prescribed weekly working time. The Act seeks to maintain the employment in times of crisis, as the employers will not be pushed to employment termination.
The implementation of the support is linked to the introduction of a new social insurance contribution in the rate of 0.5% of the assessment base (under Act on Social Security). However, the adoption of the Act is also associated with a reduction in the rate of social insurance contribution for unemployment insurance from 1% of the assessment base to 0.5% of the assessment base. Thus, the employer’s contribution burden does not change in most cases. However, this does not apply if the employer does not pay unemployment insurance contribution for certain employees (for example, persons granted a retirement pension allowance or disability pension allowance due to a decrease in the ability to perform work activities by more than 70%).
Conditions for granting the support
Following conditions need be met in order to be entitled to the support:
- An obstacle on the side of the employer occurred, that results in inability to allocate work to at least 1/3 of its employees at the extent of at least 10% of the prescribed weekly working time.
- The obstacle on the side of the employer was caused by a temporary external factor, which the employer was not able to influence or prevent. In particular, an emergency situation, state of emergency, state of distress and a circumstance of force majeure, as defined by Slovak law, shall be considered as such external factor. On the contrary, war, state of war, the seasonality of the activity performed, restructuring, planned shutdown and reconstruction, will not be considered as such external factor.
- Support will be provided only for those employees, who are performing work (i) in an employment relationship (under Labour Code) and (ii) in a legal relationship based on a contract for the professional performance of sport (under Sports Act). Therefore, it will not be possible to request support for employees who are performing work for example under agreements on work performed outside employment relationship (agreement on the performance of work, agreement on work activity, agreement on temporary work of students) or for persons performing work in civil service.
- As of the date of submission of the application for the support, the employer paid all required social security contributions and compulsory old-age pension contributions and the obligation to pay these contributions lasted continuously at least for a period of 24 months preceding the month, for which the support is requested. This condition will be considered fulfilled even if the Social Insurance Agency allows the employer to repay the due amounts in instalments and the employer will pay the instalments within the specified period and in the specified amount.
- The employer did not violate the prohibition on illegal employment for a period of two years preceding the submission of the application for support.
- The employer concluded a written agreement with the employees’ representatives under which it will be agreed, that the employer will apply for the support. If employees’ representatives are not established, it is sufficient to conclude such an agreement with the employee, for whose work costs the support is requested. If these agreements cannot be concluded, the employer may replace them with the consent of an arbitrator, chosen by an agreement between the employer and the employees’ representatives; if such agreement is not reached, the arbitrator will be appointed by the Ministry of Labour, Social Affairs and Family of the Slovak Republic.
- The relevant employees must be employed by the employer at least for one month, he/she must not be on notice, he/she must not have unspent holiday entitlement from the previous year and his/her working time account cannot be positive (if working time account is established). Furthermore, transfer of such employee to another position within the agreed type of work under the employment contract is not possible.
- The employer must not be receiving contributions provided under other legal acts (for example, under the Employment Services Act or the European Structural and Investment Funds Contribution Act) to reimburse work costs of the relevant employee.
- In order to be granted support for a specific month, it is necessary to submit the application (in electronic form) for this specific month by the end of the following month.
At the same time, the employer is obliged to maintain the position, for which the support was received, for at least 2 months following the calendar month for which the support was provided. As a violation of this condition is not considered if the employment was terminated by the employee for reasons on his/her part.
Time of provision of the support and its amount
The period, during which the support is being provided, is time-limited. The support may be granted in total for a maximum of 6 months in a period of 24 consecutive months. This period may be extended by a government regulation if the support is provided based on the influence of an external factor, which constitutes an emergency situation, state of emergency and state of distress (as defined in Slovak law). At the same time such regulation can also establish that the support may be provided for a period of two months after the end of such external factor.
The support will partially cover only a part of the employer’s costs, specifically the costs of compensation of the employee’s salary for each hour of the obstacle on the side of the employer, in the amount of 60% of the employee’s average hourly earnings.
The maximum amount of support is set as 60% of 1/174 of the double of the average wage of an employee in the economy of the Slovak Republic for the calendar year that is preceding the calendar year in which the support is provided by two years. As an example, for the year 2021 – it would be based on the average wage of an employee in 2019, which according to the Statistical Office of the Slovak Republic is € 1,092. The maximum amount of support would therefore be calculated as 60% of 1/174 of € 2184, which represents maximum support in the amount of € 7.5310 per hour.
This legal information was prepared in May 2021 exclusively for the purpose of providing general information and should not be viewed as legal advice. The aforementioned overview is not comprehensive, but only provides a brief summary of the relevant legal regulation. If you have any questions regarding this topic, please do not hesitate to contact your contact person in our office or any other lawyer.