The Kurzarbeit Concept

18 Nov The Kurzarbeit Concept

The concept of Kurzarbeit refers to a set of measures approved at government level aimed at supporting and incentivising the active retention of the workforce by employers in situations of economic crisis. This model has been successfully implemented in several European countries and has proven that its flexibility has allowed businesses to navigate difficult periods more easily while maintaining a qualified active workforce.

Accordingly, Government Emergency Ordinance no. 132/2020 was adopted, establishing the framework within which this concept is implemented in Romania. Below we present the conditions that employers must meet in order to be eligible for the application of this concept and to benefit from the support measures, along with the essential aspects of the programme:

1. The Kurzarbeit Concept

• reduction of employees’ working hours by up to 50% of the duration provided for in the individual employment contract, with prior information and consultation of the trade union, employee representatives or employees, as the case may be, before communicating the decision to the employee;
• for a period of at least 5 consecutive working days, with the employer being obliged to establish the work schedule for the entire month;
• employees affected by the measure are entitled to an allowance 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 in working hours, in addition to the salary entitlements due, calculated based on the hours actually worked.

2. CUMULATIVE Eligibility Conditions for Employers

• the measure affects at least 10% of the company’s employees;
• a reduction in turnover from the month prior to the application of the measure, or at most from the month preceding that prior month, of at least 10% compared to the same month of the previous year.

3. Restrictions for Those Applying the Measure

• during the period of application of the measure, employees affected by it may not perform overtime for the same employer;
• during the period of application of the measure, the working schedule of affected employees may not be reduced pursuant to Article 52(3) of the Labour Code, i.e. a reduction of the working week from 5 to 4 days;
• the granting of bonuses and other salary supplements to the employer’s management structure shall take place after the end of the period of application of the measure;
• during the months in which the reduction of working hours is applied, the employer may not initiate collective dismissals;
• during the period of application of the measure, it is prohibited to hire personnel to perform activities identical or similar to those performed by employees whose working hours have been reduced, and to subcontract activities carried out by employees whose working hours have been reduced;
• the allowance shall not be combined for the same employee with the measure provided for in Article 5, or with the active support measures granted pursuant to Articles I and III of Government Emergency Ordinance no. 92/2020, meaning this allowance cannot be combined with the 41.5% of gross salary allowance provided to be granted for a period of 3 months to those employees who were in technical unemployment for at least 15 days during the state of emergency;
• admitting to work or performing any other type of work, including in telework or home-working mode for the employer’s benefit, by one or more employees, outside the reduced working schedule established, constitutes a contravention and the employer shall be sanctioned with a fine of RON 20,000 for each person so identified, without exceeding a cumulative value of RON 200,000.

4. Implementation

The allowance is borne by the employer and paid on the date of payment of the salary for the relevant month, and will subsequently be reimbursed from the unemployment insurance budget after the employer fulfils its declaratory and payment obligations related to salary income.

The allowance constitutes salary income and is subject to taxation and payment of social contributions.

The allowance is taken into account in calculating the minimum contribution period of 12 months in the last 24 months preceding the date of registration of the application for unemployment benefit.

Employers owe the labour insurance contribution for the period of implementation of the measure both for the salary entitlements relating to the hours actually worked and for the allowance, this period constituting an assimilated period in the unemployment insurance system.

5. Other Measures

Fixed-term contracts

Until 31 December 2020, but for no more than a period of 3 months, at the employer’s discretion, for employees who conclude individual employment contracts for a fixed term of up to 3 months, a portion of the salary granted to them shall be reimbursed from the unemployment insurance budget, representing 41.5% of the salary corresponding to the days worked in these positions, for an 8-hour working day, but not exceeding 41.5% of the gross average wage.

Day labourers

For a period of three months, at the discretion of the work beneficiary, but no later than 31 December 2020, a sum representing 35% of the remuneration due for a working day shall be granted from the state budget.

The measure applies to work beneficiaries in the categories affected by the COVID-19 pandemic, affected by the interruption or restriction of activities as a result of the effects of the SARS-CoV-2 coronavirus.

The amount is paid by the work beneficiary from their own budget, at the time of payment of the value of the daily work, and is subsequently reimbursed in full, at their request, for the persons for whom it was paid, from the state budget allocated to the Ministry of Labour and Social Protection, through the National Agency for Payments and Social Inspection and the county agencies for payments and social inspection, respectively of Bucharest Municipality. Reimbursement shall be carried out within no more than 10 days from the date of submission of the request, pursuant to a procedure to be approved by Government Decision.

The request, accompanied by the lists of day labourers who benefited from the amount, shall be submitted by the work beneficiaries for reimbursement and collection to the county agencies for payments and social inspection, respectively of Bucharest Municipality, in whose territorial area they carry out their activity or have their registered office, monthly, for the previous month, by the 5th of each month, in electronic format.

The amount constitutes salary income for which income tax and social insurance contributions are due.

Telework

• a one-time financial support of RON 2,500 per teleworking employee shall be granted to employers for the purpose of purchasing technology packages and services necessary for carrying out activities in telework mode;
• the amount shall be granted, in order of submission of requests, until 31 December 2020, from the unemployment insurance budget, through ANOFM, within the limits of funds allocated for this purpose, to employers for employees who worked in telework mode during the state of emergency for at least 15 working days;
• the method of granting and the categories of goods that may be purchased shall be established by order of the Minister of Labour and Social Protection, to be published in the Official Gazette of Romania, Part I, within 10 days of the publication of this emergency ordinance;
• within 30 days of the granting of the amount, the employer shall be obliged to transmit to ANOFM supporting documents relating to the purchase of the categories of goods established by the order of the Minister of Labour and Social Protection;
• in the event of failure to comply with the obligation to transmit supporting documents, the employer shall repay the full amount granted within 30 days of the expiry of the deadline.

6. Exemptions from Application

The provisions of this Emergency Ordinance do not apply to public institutions, to employers in bankruptcy, dissolution or liquidation, or whose activities are suspended in accordance with the law, and to employers registered in non-cooperative jurisdictions for tax purposes.

For any questions or clarifications regarding the above, we are at your disposal.