Coronavirus update no. 8/2020 – Suspension of the employment contract – amendments

In the Official Gazette no. 260 of March 30, 2020 was published the Government Emergency Ordinance no. 32/2020 regarding the amendment and completion of the Government Emergency Ordinance no. 30/2020, which fundamentally modifies a major part of the legal provisions and discussions that took place so far, concerning the requirements regarding the funding from public resources of the allowance related to the technical unemployment during the state of emergency.

As we mentioned in the “Coronavirus Update no. 4/2020”, the Labor Code – article 52, paragraph (1), lit. c), allows the employer, in case of temporary interruption or reduction of the activity determined by economic, technological, structural or similar causes, to decide unilaterally the suspension of the employment contracts of the employees. During the reduction and/or partially interruption of the activity, the employees benefit from an allowance that cannot be less than 75% of the basic salary corresponding with the job occupied.

Such allowance for “technical unemployment” shall be borne from the unemployment insurance budget, in accordance with the ordinance, under the following conditions:

- the employer temporarily reduces or interrupts the activity – in whole or in part – as a result of the effect of the coronavirus epidemic;

- only during the decreed state of emergency;

- in a maximum amount of 75% of the gross salary, but no more than 75% of the average gross wage provided by the Law of the state social security budget for 2020 (maximum 4.071 lei gross);

- submission of a self-declaration regarding the reduction or interruption of the activity.

The content of such declaration shall be established later, by a subsequent order issued by the Ministry of Labor and Social Protection.

As a consequence of the latest legal provisions, until the publication of the above mentioned declaration draft, which may bring unexpected turns, in order to obtain the payment of the allowances from the unemployment budget, the following conditions are NO longer required:

- providing the Emergency Situation Certificate;

- demonstrating the financial incapacity;

- demonstrating a 25% reduction in revenues.

Furthermore, the allowances shall be paid for 100% of the employees whose employment contracts will be suspended: the limitation to 75% of the number of active contract was REMOVED.

Although the Labor Code provides a percentage of minimum 75% for the allowance for “technical unemployment” relative to the gross salary of the employee, it appears that GEO 32/2020 limits such allowance to 75% of the gross average wage per economy (4.071 lei), representing a derogation from the more favorable provisions for the employee contained in the Labor Code (for employees whose gross salaries are higher than the average gross wage per economy).

Regrettably, the manner in which the legislator found it appropriate to regulate such provisions is a deficient one:

- The benefits that the employees benefit from are set at 75% of the basic salary corresponding to the job occupied and are borne by the unemployment insurance budget, but no more than 75% of the gross average stipulated by the Law of the state social security budget on the year 2020 no 6/2020 – art. XI of GEO 30/2020, unmodified by GEO 32/2020;

- In the situation where the budget of the employer intended for the payment of personnel expenses allows, the allowance provided in paragraph (1) may be supplemented by the employer with amounts representing the difference of up to 75% of the basic salary corresponding to the job occupied, in accordance with the provisions of art. 53, paragraph (1) of the Law no. 53/2003, republished, with the subsequent modifications – paragraph (11) of art. XI, as introduced by GEO 32/2020. Thereby, if the budget of the employer allows, the allowance capped at 4.071 lei gross may be supplemented in order to reach the minimum value of 75% of the gross salary of the employee whose salary exceeds 5.400 lei gross, thus without any obligation for the employer to proceed as such.

It remains a matter of opinion on how this derogation from the Labor Code shall be addressed by the courts of justice. 

The referred to declaration is subject to taxation and payment of compulsory social contributions, according to the provisions of the Fiscal Code. For this allowance, there is NO work insurance contribution.

The application for granting the allowance is submitted by e-mail to the employment agencies of the counties or of Bucharest, together with the list of beneficiaries and the self-declaration signed and undertaken by the legal representative.

The payment from the unemployment security budget shall be made based on the submitted application, within 15 days from its submission.

The employer shall pay the allowance to the employee within maximum 3 working days from its receipt.

The employee who has several individual employment contracts of which at least a full-time one is active, during the state of emergency will NOT benefit from the allowance. The employee who has several CIMs and all of them are suspended may benefit from the allowance related to the most advantageous one for him.

We emphasize that the Ministry of Labor and Social Protection has already informed that, once the state of emergency is ended, it will proceed with verifying the companies that have requested the payment of unemployment benefits in order to establish if, indeed, the requirements to be entitled to such right have been observed. Such measure is to be adopted mostly since the financial requirement of the state social security budget will be, at least in part, supplied from resources made available by the European Commission. 

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