Effective March 30, 2020, employers can apply for compensation under the ‘60:40’ compensation scheme.
The Council of Ministers Decree No. 55/30.03.2020 creates a mechanism whereby employers who have chosen to keep their employees/workers in spite of the current crisis are eligible to benefit from a State-funded aid (the ‘compensation scheme’).
📍Amount and period covered by the compensation scheme
The amount of complensation is determined based on 60 % of the income of reference for the month of January 2020 for any given employee/worker, as accounted for with the social security services.
The period covered by the compensation scheme corresponds to the period during which the Act on the Measures and Actions during the State of Emergncy of 13.03.2020 will remain in effect, without exceeding three months. In order to benefit from the compensation scheme for a given month, the employer must pay the salaries of employees/workers in their full amount for that month, along with the respective social security contributions.
📍Scope of the compensation scheme
The initial scope of the compensation scheme has been extended to include two groups of employers:
1. Employers whose businesses have been directly impacted by the state of emergency, to the extent that orders from the Minister of Health have resulted in the suspension of their business activities. Such employers can benefit from the compensation scheme without needing to justify for any decrease in their revenue of sales.
Covered under this provision are the following entreprises:
• Retail commerce, excluding commerce with automotive vehicles, motorbicycles, and with the exception of enterprises whose business consists in the sale of food, drinks, tobacco products, medicine and medical devices, as well as any retail commerce on stands, open markets and other points of sale located outside of commercial centres and closed premises;
• Restaurants, coffee shops, bars and other places serving food and/or beverages;
• Air transport of passengers;
• Hotel and tourism services;
• Sports and wellness centres;
• Private pre-schooling services;
• Organization of congresses and commercial exhibitions and fairs;
• Artistic and cultural activities, etc.
2. Employers of secotrs which are not considered as directly impacted by the measures related to the state of emergency can also benefit from the compensation scheme, provided that they have ordered the suspension of activities of the whole enterprise, of a part of it, or the suspension of activities of only certain employees/workers for the duration of the entire period of the state of emergency, or for a part of it, or who have established a part-time working day in the whole enterprise, or in a part of it, and who have, consequently to these measures, sustained a decrease in sales revenue of sales of no less than 20 %.
The period of reference for establishing the decrease in revenue from sales corresponds to the respective month of the previous business year. For companies registerered after May 1, 2020, the period of reference is that of the month preceding the month in which the claim for compensation was filed, and comparison is made based on the average revenue of sales for the months of January and February 2020.
Certains sectors are expressly excluded from the compensation scheme:
• Financial and insurance sectors;
• Public administration;
• Human health and social services;
• Home and family services;
• Agriculture, forestry and fishing;
• Decentralized bodies and agencies.
📍Limits of the compensation scheme
In addition to the exclusions from the scheme which are based on the type of activity carried out by the employer, the ministerial order also provides for some exclusions applicable to certain categories of employees/workers. Thus, employers cannot benefit from compensation under the scheme for the following categories of employees/workers:
• Employees/workers hired after the declaration of the state of emergency;
• Employees/workers who are on temporary leave with relation to temporary incapacity, pregnancy and birth, child adoption (for a child aged under 5 years) or childcare (for a child aged under 2 years);
• Employees/workers for which the employeer has already benefitted from public funding, whether under a national or European funding programme.
🔎 Additional requirements
Along with the requirements pertaining to the sector of activity of the employer – and provided that the conditions related to the business’ revenue of sales are met, if applicable – there are some additional requirements which the employer must satisfy in order to benefit from compensation under the scheme. Those include:
• The employer must be a legal person, established and registered pursuant to the laws of the Republic of Bulgaria or a foreign legal person, which carries out its activity in Bulgaria;
• The employer must not have any debts towards the State (taxes, social security contributions, as well as interests carried by any of these), unless their payment is extended, deferred or they are covered by a guarantee;
• The employer must not have been previously, or currently be, subject to any type insolvency and/or winding-up proceedings;
• The employer must not have been the subject of sanctions imposed by a final act or decision by any administrative body or court of justice in relation to a violation of the provisions of the Labour Code or the Labour Migration and Mobility Act, including those regarding the obligation of the employer to conclude the employment contract in writing prior to the employee/worker taking up its functions, the obligation to send a notice to the tax authorities, as well as the prohibition of unilateral amendments to the employment relationship.
• The employer must preserve the jobs of employees/workers for which he has received financial aid under the compensation scheme, for a period at least equal to the one for which compensation is paid.
The procedure is conducted before the competent Еmployment office based on the place of employment of the employees/workers for the salaries of which compensation is claimed by the employer under the scheme. The application can be made online through electronic signature, by registered letter with acknowledgement of receipt (in which case the list of employees/workers is still delivered on an electronic storage medium) or, if neither one of these methods is practicable for the employer, by filing the application and accompanying documents directly with the competent Employment office.
The accompanying documentation includes a certified copy of the employer’s order whereby business activities have been suspended or working time has been reduced to a part-time working day; a claim form containing the employer’s declaration regarding the preservation of the employment; a form containing the employer’s bank account details, a written declaration regarding the decrease in the revenue of sales, as well as supporting documentation to that effect; a list of the employees/workers for the salaries of which compensation is claimed by the employer.
The application is examined by a special commission within 7 days of its filing with the Employment office. The commission conducts all necessary verifications and assessment of the provided documentation and the circumstances declared therein, and may request that the employer provide further information.
The commission notifies its decision to the claimant within two days following the expiration of the 7-day deadline for verifications and assesment. Employment offices daily transmit the infomation regarding the approved applications of employers to the National Insurance Institute (NOI), which then proceeds to distribute the compensations to the approved employers.
However, if a fraud under the compensation scheme is established, the employer will be requested to return all unduly perceived sums.