COVID-19: Amendments to Government measures for employers and employees
The Romanian Government has recently approved amendments to measures for the support of employers and businesses by means of Emergency Ordinance no. 32/2020 ("GEO 32/2020") which amends and supplements GEO 30/2020 ("GEO 30/2020"), which itself amends existing legislation as well as establishing measures for social protection in the context of the spread of COVID-19.
1. Who benefits from the technical unemployment indemnity?
By virtue of GEO 32/2020, the employees of all employers who temporarily reduce or interrupt their activity because of the effects of the COVID-19 pandemic, can benefit from the indemnity, for the duration of the state of emergency, based on an affidavit regarding the employer’s responsibility.
It is important to note that the technical unemployment indemnity is 75% of the base salary corresponding to the employee’s position and is settled from the unemployment insurance budget, but will not exceed 75% of the gross average salary provided for by the law regarding the social insurance budget for 2020 (i.e. a maximum of RON 4,071.75).
So, GEO 32/2020 removes the limitations set in Art. XI, para. (2) of GEO 30/2020, which restricted the employers who could benefit from this indemnity to either companies directly affected by measures taken by the competent authorities or companies which registered a decrease in revenue of at least 25% compared to corresponding revenues from January and February 2020.
Provisions concerning the taxation of the indemnity were not amended.
2. Modification of the documents that must be submitted
The standard forms which had to the submitted to the employment agencies by employers in order to obtain the technical unemployment indemnity, and which were annexed to GEO 30/2020, have been repealed.
To obtain the indemnity sums, employers shall submit to the county employment agency where the employer has its headquarters (or the Bucharest employment agency, as the case may be), via e-mail, a request dated and signed by the legal representative of the employer, together with an affidavit and a list of the individuals that will benefit from the indemnity, said list being endorsed by the legal representative, according to a template that will be approved via an Order of the Minister of Labour and Social Protection and subsequently published in the Official Gazette of Romania, Part I.
It follows that, we must now wait for the Order to be published before submission of any documents to obtain the indemnity can be made by employers, as the Order will stipulate the template for the required list of individuals that must be submitted with any request.
Pursuant to GEO 32/2020, employers are liable for the validity and truthfulness of the information contained in the documents.
3. Clarification regarding the amount of the indemnity
GEO 32/2020 clarifies several aspects regarding the amount of the indemnity.
For the duration of the state of emergency, employers who have to interrupt or temporarily decrease their activity can pay the difference between the amount of the indemnity paid by the State and 75% of the base salary corresponding to the professional position occupied, but only if the personnel expenditure budget of the employer allows this. Therefore, paying the difference up to 75% of an individual’s salary is not mandatory for employers.
4. Who will the indemnity be paid to and when?
Payment of the indemnity will be made into bank accounts opened by employers with commercial banks.
Payment will be made from the State budget for unemployment insurance within 15 days of submission of the above mentioned documents, while the payment of the indemnity to the employee will be made within 3 business days of the employer receiving the relevant sums.
5. Amendments regarding other categories of individuals
a) With regard to other professionals
Pursuant to GEO 32/2020, other professionals (individuals who exploit an undertaking, as defined by the Romanian Civil Code, are considered professionals) as well as individuals who have concluded individual employment agreements, pursuant to Law no. 1/2005 on the organising and functioning of cooperations, who interrupt their activity as a result of the COVID-19 pandemic, can benefit (based on an affidavit and for the duration of the state of emergency) from a monthly indemnity covered by the State budget, amounting to 75% of the average gross salary provided for by the law regarding the social insurance budget for 2020 (i.e. RON 4,071.75, being 75% of RON 5,429.00).
So GEO 32/2020 removes the condition that professionals must be employers and increases the indemnity provided for these individuals, previously stipulated in GEO 30/2020 as an indemnity equal to the minimum gross base wage guaranteed countrywide for 2020.
GEO 32/2020 also extends the scope of the indemnity provisions to include persons who have concluded individual employment agreements.
Submission of documents:
For professionals, payment is made to the beneficiaries of the indemnity by the National Agency for Payments and Social Inspection, via county agencies, directly into the bank accounts of said beneficiaries.
In order to receive the indemnity, professionals must submit, via e-mail, a request together with a copy of their identification and an affidavit, said documents being addressed to the territorial Agencies for Payments and Social Inspection.
b) With regard to athletes, trainers, medical professionals etc.
As regards athletes, trainers, medical professionals, medical nurses, masseurs, kinetic therapists and researchers (as per Law no. 69/2000), the indemnity remains the same as the one initially provided for by GEO 30/2020, namely: an indemnity amounting to 75% of their monetary payment rights for their activity, but not more than 75% of the average gross salary provided for by the law regarding the social insurance budget for 2020 (i.e. RON 4,071.75). Pursuant to GEO 32/2020, this indemnity shall be payed from the State budget.
In addition to this indemnity, GEO 32/2020 also establishes that the sports structure and the aforementioned persons are at liberty to negotiate and establish payment of other compensatory indemnities granted by the sports structure, so as to compensate for the above reduced financial payment.
Submission of documents:
For payment of the indemnities in these cases, the sports structures with which the aforementioned individuals concluded their sports activity agreements must submit, via e-mail, to the territorial agencies where they have their headquarters, a request dated and signed by their legal representative, together with an affidavit and a list of the individuals whose sports activity have been suspended.
Payment of the indemnity shall be made by the sports structures and shall be payed directly to the beneficiaries of the sports activity agreements.
c) With regard to persons obtaining revenue from copyright and related rights
Pursuant to GEO 32/2020, natural persons who obtain revenue exclusively from copyrights and related rights, as governed by Law no. 08/1996, and who interrupt their activity as a result of the COVID-19 pandemic, can benefit for the duration of the state of emergency, from an indemnity supported from the State budget and paid by the territorial Agencies for Payment and Social Inspection, amounting to 75% of the average gross salary provided for by the law regarding the social insurance budget for 2020 (i.e. RON 4,071.75), and supported by any documents requested by the National Agency for Payments and Social Inspection.
The indemnity provided for is subject to the payment of taxes, contributions for social insurance and for social health insurance, pursuant to the Tax Code. As an exception to the provisions of Law no. 227/2015 on the Tax Code, tax obligations regarding the amount, declaration and payment of these taxes and contributions shall be stipulated by a common Order of the Minister of Labour and Social Protection and the Minister of Public Finance.
Submission of documents:
The request and documents for professionals obtaining revenue exclusively from copyrights, related rights and sports structures must be sent to the territorial agencies prior to the 10th day of the current month for payment of the indemnity corresponding to the previous month.
The model request and affidavit for professionals, persons obtaining revenue exclusively from copyrights and related rights, as well as for sports structures, shall be stipulated by a common Order of the Minister of Labour and Social Protection and the responsible ministries for each area, as the case may be.
6. Other amendments
6.1. Employees who hold more than one position
Employees who have concluded several individual employment agreements ("IEA"), of which at least one IEA is active during the state of emergency, will not benefit from the indemnity provided for by GEO 30/2020.
If an employee has several IEAs and all are suspended as a result of the state of emergency, said employee will benefit from the indemnity corresponding to the IEA with the most advantageous rights for the employee. If the employer’s budget for personnel spending allows, the indemnity can be supplemented by the difference up to a minimum of 75% of the base salary.
6.2. Medical leave
For the duration of the state of emergency, employees whose IEAs are suspended, and the employers of said employees, do not owe payment of the insurance labour contribution, as the period in which the indemnity is paid constitutes part of the contributory stage without payment under the system for social health insurance for leave periods and social insurance indemnities provided for by GEO 158/2005 on leave and indemnities for social health insurance.
With regard to medical certificates, the provisions whereby medical certificates issued for the 91st day, or exceeding the 183 day, of medical leave within a calendar year issuable during the state of emergency without the need for the authorisation of an expert physician in social insurance were repealed.
6.3. Law no. 19/2020
For indemnities granted to parents for the supervision of their children in the event of the temporary closure of schools, two new contributions were added, namely a contribution for social health insurance as well as a labour insurance contribution. It was also clarified that these contributions are to be borne by the employer under the conditions provided for by the Romanian Tax Code.
Additionally, the activity of nurseries (educational facilities that precede preschools) is suspended for the duration of the state of emergency. Parents whose children are enrolled at nurseries can benefit from the provisions of Law no. 19/2020 granting leave for parents for the supervision of children in the event of the temporary closure of schools and other educational facilities.
6.4. Suspension of judicial enforcement proceedings
For the duration of the state of emergency, by law all proceedings for debt collection and enforcement of social assistance rights are suspended. Suspension measures will cease within 60 days of the cessation of the state of emergency.
Enforcement proceedings by way of garnishment applied to monthly payments issued by territorial pension houses for budgetary, tax and commercial receivables are also suspended. Suspension measures will again cease within 60 days of the cessation of the state of emergency.
7. Amendments to the law on the Social House of Constructors
The Social House of Constructors ("SHC") is an autonomous non-profit organisation, benefiting from legal status and its own assets, having its headquarters in Bucharest, its members being business associations from the construction and construction materials production sectors.
The law governing the SHC provides that employees with an concluded IEA in construction and construction materials production will benefit, while such activity is interrupted, from an indemnity representing a taxable sum in a monthly amount equal to 75% of the average gross salary for the past 3 months.
GEO 30/2020 also amended provisions regarding the SHC and increased the duration for which the aforementioned indemnity is paid, increasing it from 90 days to 120 days in the period between 1 November in the year the activity is interrupted and 31 March of the following year. It was also stated that the period for granting the social protection indemnity is extended for the duration of the measures taken by way of Decree no. 195/2020 establishing the state of emergency in Romania.
Therefore, construction sector companies that are members of the SHC can request the payment of indemnities for their employees whose activity is interrupted due to the COVID-19 pandemic from the SHC.
8. In summary
The provisions of GEO 32/2020 are designed to clarify certain measures approved initially by GEO 30/2020 with regard to the technical unemployment indemnity and the expansion of the type of individuals that can benefit from such support, namely professional employees (e.g. phisicians, etc) or employees that perform several duties simultaneously. GEO 32/2020 also brings more clarity for employers, especially regarding the mandatory amount of the indemnity to be paid during the state of emergency to employees whose IEAs are suspended as a result of the COVID-19 pandemic.
As we mentioned previously, employers have the right to pay the difference between the total amount reimbursed by the State, being RON 4,071.75, and 75% of the base salary corresponding to the professional position, but this is not an obligation and therefore is not mandatory. So this legislation appears to derogate from the provisions of the Labour Code, as the Labour Code states that employees are entitled to 75% of their base salary in the event of a suspension of their IEA due to economic, technological, structural or similar reasons. This exception, however, is justified by the state of emergency; it being a period in which certain rights can be limited and/or restricted.