G.E.O. 120/2020 –technical unemployment benefit for employees suspended during epidemiological investigations

G.E.O. 120-Technical unemployment benefit to be granted

G.E.O. no. 120/2020 was published in the Official Journal of Romania no. 658, on 24 July 2020. This G.E.O. establishes some support measures for employees and employers affected by investigations by the health authorities in relation to the Covid pandemic. These employees will be granted technical unemployment benefit, to be paid from the unemployment insurance budget.

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Mădălina Racovițan

Tax Partner, Taxation Services, Head of People Services

KPMG in Romania

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Support measures for employees

Thus, starting 24 July 2020, employees of companies whose activity has been suspended as a result of investigations carried out by the health authorities (at county level or in Bucharest), will benefit from allowances equal to 75% of the basic salary corresponding to the job held during the period when their employment contracts are temporarily suspended, (according to Art. 52 para.(1) c) of the Labour Code- Law 53/2003, as subsequently amended).

The benefit is paid from the unemployment insurance budget, but cannot be more than 75% of the average gross salary, as set out in the Law on the state social insurance budget for 2020 (Law no. 6/2020).

The tax treatment applied to the benefits thus granted is provided by G.E.O. 30/2020, i.e. these allowances are subject to social insurance contributions (25%), social health insurance contributions (10%) and to income tax (10%) without applying the provisions on personal deductions.

Also, the exemption from payment of the employer's employment insurance contribution (2.25%), is maintained for these benefits.

Employees on sick leave will not benefit from this allowance.
 

© 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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