G.E.O. no. 132/2020 – new support measures for employees and employers due to Covid 19

New support measures for employees and employers

Under this new legislation, settled indemnities are introduced from the unemployment insurance budget to compensate for the loss of salary income due to a reduction of the work schedule (the measure also applies to apprentices or day laborers, under certain conditions) or loss of income from activity, in the case of professionals. Furthermore, employers whose staff have been teleworking will be granted a one-off payment of 2,500 RON for each teleworker to support the purchase of technological goods and services needed to carry out their activity, if the employee teleworked during the state of emergency for at least 15 working days.

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Mădălina Racovițan

Tax Partner, Taxation Services, Head of People Services

KPMG in Romania

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Adopted support measures 

In the Official Journal of Romania no. 720, 10 August 2020, Emergency Ordinance 132/2020 was published to adopt a series of measures to stimulate the employment of people who have lost their jobs, and also to amend legislation already published such as Law no. 53/2003 (the Labor Code) as well as Government Ordinance no. 2/2001 on the legal regime for administrative offences, as well as Law 180/2002.

One of the amendments made by GEO no. 132/2020 supports employers whose activity has been temporarily reduced as a result of the establishment of the states of emergency and alert, allowing them the possibility to reduce the working time of employees by a maximum of 50% of that set out in the individual employment contract. The relevant trade union or representative of the employees should first be informed and consulted before the decision to reduce the work time is communicated to the employee. The decision must be communicated to the employee at least 5 days before the effective application of the measure, and the change must be sent to the general register of employees at least one day before its occurrence.

The reduction of the work schedule should be decided by the employer and should be for at least 5 consecutive working days. The employer should also establish the work schedule for the entire month. The reduction of the work schedule can also be applied in the case of shift work, and for an unequal work schedule.

During the period of reduction of the working hours, employees affected by this measure will receive an indemnity of 75% of the difference between the gross basic salary provided for in the individual employment contract and the gross basic salary corresponding to the hours actually worked as a result of the reduction of the working hours. This indemnity comes in addition to the salary rights calculated for the actual time worked.

This indemnity will be paid initially by the employer and is paid to the employee on the date of the payment of the salary for the relevant month. The employer will then have the indemnity reimbursed from the unemployment insurance budget, after declaring and paying the fiscal obligations for the period.

The settlement procedure of the amounts, as well as the period of application of this measure, will be established by a Government Decision.

The indemnity is considered salary income, and, consequently, employee social contributions and income tax should be calculated and withheld. The labor insurance contribution is also payable by the employer.

This indemnity should also be taken into account when setting the contribution period of at least 12 months for unemployment benefits.

However, in order to apply the reduced working hours and to be able to claim the reinbursement of the indemnity, the employer must cumulatively meet the following conditions:

  • The reduction in the work schedule should apply to at least 10% of the employees from the organization.
  • The reduction in activity should be justified by a decrease in turnover in the month prior to the application of the reduction, or in the month before that, of at least 10% compared to the same month in the previous year. In the case of non-governmental organizations or employers in the category regulated by GEO no. 44/2008 on the development of economic activities by authorized individuals, individual enterprises and family enterprises, the decrease should be calculated in relation to the realized income.

During the period in which the reduction in the working schedule applies, the employer may not hire staff to carry out activities identical or similar to those of employees who have been placed on a reduced work schedule, whether in the employer’s main office or in any branch, subsidiary or other secondary offices, as defined by the Companies Law (no. 31/1990). Moreover, the employer cannot initiate collective redundancies in the months in which it applies the work schedule reduction.

The employer does not have the right to recover from employees any indemnities paid as a result of the introduction of the reduced work schedule which have not been recovered from the state.

The indemnity may not be cumulated for the same employee with support measures set out in Government Emergency Ordinance no. 92/2020 (which set out steps to support employers and employees in the context of the pandemic) nor with the measures to stimulate employers financed from the unemployment insurance budget, as set out in Law no. 76/2002 (as amended).

The provisions of GEO no. 132/2020 may also be applied to apprentices, provided that the employer gives them access to theoretical and practical training to the necessary standard for them to acquire the professional skills they need.

If an employer introduces reduced working time for employees under the provisions of GEO 132/2020, and these employees nevertheless work addional hours by telework or outside the normal working hours, this constitutes an administrative offense and is penalised by a fine of 20,000 RON for each employee identified in this situation, without exceeding the cumulative value of 200,000 RON.

Professionals, as regulated by the Civil Code (Law no. 287/2009), as well as persons who have concluded individual labor agreements, can benefit from a monthly allowance of 41.5% of the average gross salary as established for 2020, based on an application. Income tax and social contributions are due, and are declared through the single declaration, except for persons who have concluded individual labor agreements, for whom the employer must deduct and pay the social contributions and income tax related to this allowance.

Persons who carry out unskilled activities on an occasional basis (day laborers) will be granted an amount from the state budget representing 35% of the remuneration due for a working day for a period of 3 months. The period will be determined by the beneficiary of their work, but must end not later than 31 December 2020. It can only apply to laborers working for agricultural enterprises, as regulated by art. 13 of Law no. 52/2011, and whose activity has been interrupted or restricted due to Covid 19.

The beneficiary of the work will pay this amount from its own budget (at the time of payment for daily work), and then make an application for reimbursement from the state budget, including a list of the persons who benefited from the granting of these amounts. The application must be made in electronic format no later than the 5th of the month for the previous month.

Emergency Ordinance no. 132/2020 also states that up to 31 December 2020, but not for more than a period of 3 months, employers who have employees with individual employment contracts for a fixed period of no more than 3 months benefit from the payment by the state of 41.5% of the salary of these employees, but not more than 41.5% of the average gross salary for 2020. As in the other situations, the employer will pay these amounts and then make an application for reimbursement from the state budget, including the list of people in this situation, as well as an affidavit from the employer's legal representative.

Furthermore, employers are granted one-off financial support of 2,500 RON for each teleworker, to support the purchase of technological goods and services needed to carry out their activity. These amounts are granted to employers for each employee who teleworked during the state of emergency for at least 15 working days. Applications by employers for this funding should be made no later than 31 December 2020, and the amounts will be paid from the unemployment insurance budget, through ANOFM, within the limits of the funds allocated for this purpose. Following the granting of these payments, the employer is required to send the supporting documents demonstrating the purchase of goods necessary for the telework activity within 30 days of the grant. Otherwise the employer must return the amounts received in full, within 30 days of the expiration of the term in which the supporting documents had to be submitted.
 

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