Compensation for employers through the "60/40 scheme"

On 30 March 2020, a decree was passed to pay compensation to employers under a mechanism better known in the public domain as the "60/40 scheme". The decree entered into force retroactively from 13 March 2020.

The idea of the support is to pay 60% of the social security income of their employees to employers whose activities have been suspended due to the state of emergency.. In turn, employers should pay their employees the remaining 40% of their wages. In this way employment will be maintained, the government believes. Below, we will look at compensation in its legal aspect. The main points of the conditions and procedures for receiving them will be described. If you have a specific question, be sure to contact us.

Employers whose businesses fall into one of the following categories will be eligible for compensation:

1. Establishments whose activities are suspended on the basis of an act of a state authority, for example an order of the Minister of Health , an order of the employer is again necessary for the suspension of the activities of the establishment, but the specificity is that the basis for its issuance is the specific act of the state authority that ordered the suspension of certain activities. This includes non-food shops, bus companies, hotels, restaurants, pubs, cinemas, private kindergartens, theatres, fitness centres, travel agencies and other establishments*.

Employers whose businesses fall into this group do not have to prove a reduction in revenue , unlike the next two categories.

*Note that the list is not exhaustive and exemptions are provided for certain types of enterprises. To make sure that you do not belong to them, you can refer to the annexto the decree in which the activities are listed, or contact us to obtain information adapted to your case;

2. Enterprises whose activities are suspended on the basis of Article 120c of the Labour Code - This provision was introduced into the Labour Code by the Law on Measures and Actions during the State of Emergency. It states that the employer is entitled to issue an order suspending the work of the whole enterprise, part of it or individual employees for the whole or part of the period of the state of emergency;

3. Enterprises whose employees work part-time on the basis of Article 138a(2) of the Labour Code - This is another provision introduced by the Law on Measures and Actions during the State of Emergency. It stipulates that the employer may establish part-time working hours for employees in the enterprise who previously worked full-time. This is also done by issuing an order. The important point here is that compensation in this case will be paid in пропорционално на неотработеното време, but for no more than 4 hours per day.

• Requirements for employers in the second and third categories:

Employers referred to in points 2 and 3 above must demonstrate that there has been an economic downturn in their enterprises in the month preceding the month of application for aid. Which past period the downturn is to be proved against depends on when the enterprise was set up. Since it is usual practice to compare the same period with the previous year, but some enterprises did not exist then, the following distinction is made:

• Businesses incorporated before March 1, 2019 must demonstrate a decline in revenue in the month preceding the month of application for compensation payments compared to the same month of the previous calendar year. That is, if the application is filed on April 1, 2020 for March 2020, the business must demonstrate a decline from March 2019. Businesses formed after March 1, 2019 must demonstrate a decline in the month prior to the month of application from the average revenue for the months of January and February of 2020.
• Businesses formed after March 1, 2019must demonstrate a decline in the month prior to the month of application from the average revenue for the months of January and February of 2020.

• General requirements for employers in the three categories::

1. be local natural or legal persons, or foreign legal persons carrying out business activities in Bulgaria;
2. have no obligations for taxes and compulsory social security contributions to the state or the municipality, established by a valid act of a competent authority, in respect of which no action for rescheduling, deferral or security has been taken;
3. they are not bankrupt and are not in insolvency or liquidation proceedings;
4. maintain the employment of the workers for whom they have received compensation for 4. a period at least as long as that for which they have been paid ;
5. not to terminate the contracts of employment of their employees on the basis of Article 328(1)(b). (1)(2), (3) and (4) of the Labour Code during the period for which they are paid compensation; That is, employment contracts must not be terminated on the grounds that part of the enterprise has been closed down, staff has been made redundant, the volume of work has decreased or work has stopped for more than 15 days;
6. have not been established by a criminal ruling or a court decision, violation of Art. 61, par. 1, Art. 62, par. 1 or 3, Art. 63 par. 1 or 2, Art. 118, Art. 128, Art. 228 par. 3, Art. 245 and Art. 301 - 305 of the Labour Code or Art. 13, par. The offences mentioned herein are in relation to the conclusion, form and amendment of the employment contract, the determination and payment of remuneration, the minimum age of employees and the prohibition on employing illegally staying persons;

• General requirements for employers in the three categories of employees for whom compensation will be claimed:

1. their ore contracts to be concluded no later than 13 March 2020.
2. Employees NOT to take leave for temporary incapacity for work, pregnancy and childbirth, adoption of a child up to the age of 5 or raising a child up to the age of 2.
3. The employer shall not receive funding for wages and social security contributions for the employees concerned from the state budget, EU funds or other public funds.

• Companies that will not be eligible for - The Government has identified certain sectors for which the compensation mechanism will not apply. These are: agriculture, forestry and fisheries, financial and insurance activities, public administration, education, human health and social work, activities of households as employers and others.

Application procedure:

Employers must submit an application; a certified copy of the order suspending the establishment or reducing the hours of work; a declaration of continued employment; a declaration certifying the reduced earnings (for categories 2. and 3.), a list of employees containing their personal data and NRA service numbers; a declaration with the IBAN of the employer's payment account. Samples of the required documents and information on how to complete them can be found on the Employment Agency's website.

If you have an electronic signature, you can apply onlineIf you do not have one, you can send the necessary documents by registered letter or, in the last resort, you can submit them to the relevant Labour Office. The application deadline is now open and will run until 21 April 2020 If you have any questions about filling in the documents or any stage of the procedure, please contact us so that we can assist you.

The decision to grant the benefits is taken by special committees of the respective labour offices. They examine the applications and attached documents within 7 days of submission. Employers are notified no later than 2 days after the committee's decision.