Slovakia: Subsidy for shortened work paid by the state
Slovakia: Subsidy for shortened work paid by the state
June 2021 – On 4 May 2021 the Slovak parliament adopted Act No. 215/2021 on compensation for shortened work, widely known as Kurzarbeit (the “Act”). The Act aims to ensure that the state will partially compensate employer costs for employee wage compensation during periods of shortened work caused by external factors (the “Subsidy”). The Act will become effective as of 1 January 2022, as employers may currently still apply for Covid-19 pandemic aid under the current temporary aid scheme until the end of 2021. Further details of the Act are specified below.
The employer's activities are limited due to an external factor, such that the employer cannot assign work (known under the Slovak Labour Code as an obstacle to work on the side of the employer) to at least one-third of its employees for at least 10% of the regular weekly working time (“Shortened Work”).
The external factor is of a temporary character, cannot be influenced or prevented by the employer and has a negative impact on the performance of work by employees (typically e.g., extraordinary or emergency state or force majeure; however, it does not include war, seasonal work, restructuring, planned shutdown or reconstruction of the employer).
The Employer must sign an agreement with employee representatives or directly with affected employees (if there are no representatives in place) stipulating that due to obstacles to work on the side of the employer caused by an external factor, the employees will be paid a wage compensation of at least 80% of their average wage (not 100%, which would be the case during “standard” obstacles to work) (the “Agreement”).
The Subsidy may be paid for those employees, if at the time of submitting the application:
the employee has been employed for at least one calendar month;
their employment is not concurrent with a notice period;
they have used their annual leave entitlement for the previous calendar year and have also used up their positive working time account balance and the employer cannot assign them to another job position;
based on the Agreement, the employer pays them compensation of at least 80% of their average wage due to obstacles to work on the side of the employer;
the employer does not receive other subsidies from the state for the same purpose.
The employer must maintain the affected job positions for at least two calendar months following the receipt of a Subsidy, save for cases where employment was terminated due to a reason on the side of the employee.
The employer must apply for the Subsidy:
via an electronic application form using a qualified electronic signature;
by the end of the calendar month following the month for which the application is prepared.
The following criteria must be met to apply for the Subsidy:
Shortened Work status affects the employer;
the employer has duly paid (or agreed on an instalments schedule to pay) all social security contributions for the past two years;
the employer did not breach illegal employment rules for the past two years;
the employer: (a) signed an Agreement, or (b) obtained an adjudicator’s consent in the absence of an Agreement.
If there is no Agreement or consent specified in point 2.2 (iv) (b), the employer:
must not submit the application; and
must not pay employees reduced compensation due to obstacles to work (80%), but rather the full amount (100%).
The Subsidy is granted upon the decision of the Labour Office within ten days from the commencement of proceedings.
The Subsidy is provided:
during the period of Shortened Work; however, for a maximum period of six months within any 24 consecutive months (this threshold may be extended by a government decree);
for each hour of obstacle to work (specified in point 1.1 above) totalling 60% of the employee's average hourly wage; the amount is capped at 60% of 1/174 of twice the average wage of an employee in the Slovak economy valid for the previous two years; for the year 2022 this will be capped at EUR 7.81 per hour.
The Subsidy is paid on monthly basis to the employer´s bank account.
The government has said that overall social security contributions paid by employers should not increase as a result of this new measure. The Subsidy will be financed from the existing unemployment insurance fund, while the contributions to this fund will be divided by the ratio of 0.5% (currently 1%) for unemployment insurance and 0.5% (currently 0%) for the Subsidy payment.
In 2022 and 2023, the overall Subsidy paid by the state should amount to a maximum of EUR 20 million in a calendar year (this may however be increased based on a decision of the government).
For more information please contact Matúš Kočíšek, Junior Associate, at .
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