New legislation to support employees and employers in the context of Covid 19

New legislation to support employees and employers

The new measures involve the reimbursement by the state of part of the salary for a period of 3 months from the unemployment insurance budget to employers whose employees had their employment contracts suspended, as well as payments to employers who, between 1 June 2020 and 31 December 2020, employ persons over 50 years of age, on a permanent contract and full-time.

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Mădălina Racovițan

Tax Partner, Taxation Services, Head of People Services

KPMG in Romania

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Payments will also be made to employers who employ persons aged between 16 and 29 years, on a permanent contract and full-time up to 31 December 2020.
The measures aim to help employees and employers to resume economic activity, as well as to encourage employers to retain and hire staff, including in areas for which activity will remain restricted.

Support measures for employees and employers

Government Emergency Ordinance (GEO) no. 92/2020 was published in the Official Journal of Romania no.459 of 29 May 2020. The Ordinance states that from 1 June 2020, employers whose employees benefited from the provisions of Art. XI line (1) of GEO no. 30/2020 (i.e. technical unemployment benefit paid from the unemployment insurance budget) as well as those employers whose employees had their individual employment contracts suspended in accordance with the provisions of art. 52 para. (1) c) of the Labor Code (Law no. 53/2003, as subsequently amended), and did not benefit from the provisions of Art. XI of GEO no. 30/2020 (i.e. the technical unemployment benefit was paid by the employer) will benefit, for a period of three months, from the payment from the unemployment insurance budget of 41.5% of the gross basic salary corresponding to the job held, but not more than 41.5% of the average gross salary, as provided in Law no. 6/2020.

These provisions apply only to persons who have had a period of suspension of the individual employment contract of at least 15 days during the state of emergency or state of alert.

Employers who will benefit from this provision will be required to maintain employment of the employees concerned until 31 December 2020, except for seasonal workers. The requirement does not apply if the termination of the employment contract occurs for reasons not attributable to the employer.

To be able to access these payments, employers should first pay the salaries in full, and then, between 1st and 25th of the month following the reporting period to which the income is related, they should submit, by electronic means, an application signed and dated by the legal representative, accompanied by an affidavit and the list of employees for whom this payment may be made. The application and affidavit must be submitted to the employment agency of the county in which they have registered their office (or to the municipality of Bucharest employment agency, as appropriate).

The payment to employers will be made within a maximum of 10 days from the date when the employer has declared and paid all taxes related to the incomes from salaries from the reporting period for which the request has been submitted.

GEO no. 92/2020 also modifies Art. 1 of GEO no. 70/2020 to extend beyond 31 May 2020 the possibility to grant allowances as provided in Art. XI and Art. XV of Government Emergency Ordinance no. 30/2020 for all fields of activity in which restrictions are maintained under the conditions of Law no. 55/2020 on measures to prevent and combat the effects of the COVID-19 pandemic. These allowances may now be granted until the restrictions are lifted.

Employers who have several objects of activity, at least one of which is subject to the restrictions established by Covid related legislation, may choose either to apply the provisions of this Ordinance relating to the payment of part of the salary from the unemployment insurance budget or to suspend employment contracts of employees under the conditions provided by GEO no. 30/2020 (as amended).

KPMG Comments

We consider that, taking into account these provisions, employers can request the reimbursement of 41.5% of the basic salary of employees including in situations in which the employees are on annual holiday leave, paid days off or have had their employment contract suspended according to the provisions of Art. 52, para. (3) of the Labor Code, (under which working hours are reduced from 5 days to 4 days per week).

Measures to encourage employers to hire staff

GEO 92/2020 also gives support to employers who, between 1 June 2020 and 31 December 2020, hire, on full time, permanent contracts, people aged over 50, whose employment has ceased for reasons not attributable to them, during the period of the state of emergency. Support is also offered for the hiring on full time, permanant contracts up to 31 December 2020 of young people aged between 16 and 29, who are registered as unemployed in the records of the county employment agencies, or of the municipality of Bucharest.

For each person employed in the categories mentioned above, the employer will receive 50% of the employee's salary, for 12 months, but not more than 2,500 lei per month.
Employers must keep the relevant employees hired for at least 12 months after the end of the 12-month period for which these payments have been received.

The amounts are granted for the payment of the salary, proportional to the actual time worked by the employee and are not cumulated, for the same employee, with the subsidies granted to employers who have concluded with the county employment agencies, or the municipality of Bucharest, contracts or agreements under Articles 80, 85 and 934 of Law no. 76/2002 on the unemployment insurance system and employment stimulation (as amended).

These payments may also be made to employers who hire Romanian citizens who have been made redundant (for reasons not attributable to them) by employers outside Romania.
Employers who terminate individual employment contracts of employees before the deadlines set out in GEO 92/2020 must reimburse, in full, to the employment agencies, the amounts received for each person for whom the employment relationship ended before that deadline, plus interest at the reference rate of the National Bank of Romania in force at the date of termination of the individual employment contracts, if the termination of the contracts took place under Art. 55 b), Art. 56 para. (1) d) and e) or Art. 65 of Law no. 53/2003 (as amended).
 

© 2021 KPMG Tax SRL, a Romanian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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