act legal Germany – China Business



As one of the very few European law firms, Dr. Stephan Schwilden, MBA is registered with the Chongqing Judicial Bureau as “Foreign Legal Counsel” of ZHH | Zhonghao Law Firm, one of the leading business law firms in China with offices in Beijing, Chongqing, Shanghai, Chengdu, Guiyang and Hong Kong. Thus, we ensure our European clients in China the same high standard as in our home market, both in terms of advisory style and professional expertise. In addition, we have many years of know-how in advising Chinese companies, investors and law firms in Europe.

http://en.zhhlaw.com/teams/detail/87

act legal Germany advised HQIB on the acquisition of Ergosign-Group

Harald Quandt Industriebeteiligungen GmbH („HQIB“), the principal investment firm of the family Harald Quandt, acquired a majority stake in Ergosign-Group, the market leading digital agency with focus on user experience design in the German-speaking region.

The two founders, Dr. Marcus Plach and Prof. Dr. Dieter Wallach, remain co-shareholders and managing directors of the company. Together with HQIB, which has a long-term and sustainable investment approach, they aim to foster internationalization of Ergosign-Group and expand its service portfolio. 

Both parties have agreed not to disclose further details of the transaction.

Background:

HQIB invests in small and medium sized companies in the German speaking region that are leading in established and technologically sophisticated market niches with attractive growth potential.

act legal – with more than 390 corporate and commercial lawyers across central Europe – offers demanding corporate clientele high-level, cross-border, or regional legal advice being the attractive alternative to major international law firms.

act legal Germany advised HQIB comprehensively in all matters of this complex transaction.

Advisors HQIB:

act legal Germany: Dr. Fabian Brocke, LL.M. (Corporate/M&A, lead partner), Dr. Nina Bogenschütz (Employment); Dr. Nina Honstetter (Corporate, Employment); Sarah Landsberg (Corporate/M&A).

Common labour law issues and misconceptions in the state of emergency

If the company’s sales have fallen due to the crisis caused by the coronavirus, can employees’ salaries be reduced or even employed in other jobs?

The employer may not unilaterally reduce the wages of employees or change their jobs. According to the Labour Code, the parties to the employment contract must agree on the employee’s basic salary and position. That is why wages and positions can only be changed by mutual agreement of the parties. Thus, a salary reduction or a change of job can be made by amending the employment contract, which requires the consent of the parties.

If the salary cannot be reduced and the job cannot be changed unilaterally, then how can the employer get rid of the overstaffing situation?

The employment may be terminated by the employer by notice, which is a unilateral act, i.e. it does not require the agreement of the parties. If the parties can agree on the termination of the employment, they may settle the matter of parting ways by mutual agreement. Thus, the rules for termination of employment have not been changed with regard to the coronavirus, employment can still be terminated by mutual agreement or termination if the employee cannot be provided with work.

Could the coronavirus be the reason for the termination?

The employer is required to give the reasons for the termination and the Labour Code requires the reasons for the termination be clearly stated. This requirement is not met if the justification for the termination is merely that “the termination is due to the coronavirus”.

The reason for the termination in this case will be a reason related to the operation of the employer, i.e. the loss of income due to the coronavirus and the resulting redundancies and/or reorganisations. However, these must be apparent from the statement of reasons, which must be clear, real and reasonable.

Of course, in an eventual labour lawsuit, the employer has to prove the fact that the income has decreased and as a result the number of employees has actually been reduced and the work processes have been reorganized. Thus, termination will be unlawful if, after the termination, another employee is hired for the same job instead of the employee who was terminated with reference to redundancies.

If the rules for terminating employment have not changed, what has changed because of the coronavirus? Although the Labour Code has not changed since January 1, 2020, the government has allowed deviations from certain rules of the law for a period lasting until thirtieth day following the end of the state of emergency. Thus, for example, the employer may unilaterally order the employee to work from home and telework, but the government decree also gives the opportunity for the parties of the employment to deviate from the rules of the Labour Code in a separate agreement.

Employers will be able to gefer contributions to their social insurance at reduced penalties

On May 20, 2020, the Czech Senate passed a law allowing employers to defer payments for their social security insurance premiums for the months of May – July 2020 at reduced penalties. The law can be expected to become effective in the coming days.

The purpose of this law is to strengthen the liquidity of employers in the current difficult situation and to provide them with relief regarding their mandatory payments for the social security insurance premiums (hereinafter referred to as the “insurance premiums“). In order for employers to be able to defer payments for their insurance premiums for the above-mentioned months, they must continue to pay insurance premiums on behalf of their employees for the said months.

Please note that deferring payments of insurance premiums does not release employers from the obligation to pay a penalty for not paying the insurance premiums on time. The adopted law only allows for deferral of insurance premiums payments for employers paid for the months of May – July 2020 until October 20, 2020 with a reduction of the late payment penalty by 80%. The amount of the penalty is now 0.01% of the amount owed for each day, instead of the usual 0.05%. Deferment of payments will be assumed automatically, i.e. it will suffice if the employer does not pay its insurance premiums for the month of May 2020 by June 20, 2020 (the procedure will be analogous for the months of June and July 2020). However, if the employer fails to pay the amount due by October 20, 2020, the Social Security Administration will impose regular penalty instead of the more favorable penalty of 0.01%, i.e. a penalty of 0.05% of the amount owed for each day.

Another benefit of this law is undoubtedly the fact that in the case of using the option to defer payments for insurance premiums in accordance with the above, the “debt” incurred will not be considered to equal unpaid insurance premiums for the purpose of confirming the employer’s lack of indebtedness.

Please note that the deferral of insurance premiums payments cannot be used at the same time as the state contribution from the Antivirus program for the wages compensations. A prerequisite for obtaining the contribution from the Antivirus program is the due payment of insurance premiums, both for the employer and on behalf of its employees. Currently, the Antivirus program is valid until the end of May, but its further extension can be expected. Employers will therefore have to choose whether they want to draw contributions from the Antivirus program or use the deferral option for their insurance premiums.

In case of any questions related to the state compensation measures taken in the field of employment which an employer can use in the current difficult situation, please contact attorney-at-law Mgr. Lenka Droscová, our labor law specialist.

Possibilities of holding general meetings and members’ meetings during the state of emergency II.

As from April 11, 2020, a lately issued Hungarian government decree regulates how members’ meetings and general meetings should be held during the state of emergency. The new government decree also overrides the relevant provisions of the Civil Code and the articles of association of companies and other legal entities.

What additional rights does the government decree give to the management?

In the first part of our summary of this newest government decree, we have already explained the increased „freedom” of the management regarding corporate decisions.

In many company’s case, the adoption of the annual financial report under the Hungarian Accounting Act is due in the near future. Pursuant to the interim regulation introduced by the government decree, the management is entitled to decide on the approval of the company’s financial report and the use of the after-tax profit. Moreover, the management can take emergency measures during the state of emergency, which would normally fall within the competence of the decision-making body.

These are very far-reaching decisions. Aren’t the hands of the management tied?

Yes: the decisions mentioned before can only be taken if a meeting of the decision-making body cannot be held, either by the participation of the members by electronic means or by voting in writing.

In addition, the legislature intends to set limits on the “emergency measures” of the management as a guarantee: accordingly, the management (i) may not, as a general rule, amend the articles of association, (ii) decide on the dissolution of the legal entity without a successor, (iii) nor may it decide on the transformation, merger or division of the company.

An additional restriction is that (iv) additional payments or other capital injections may be ordered by the operational management of the legal entity only with the prior written consent of the members/founders. In the case of company forms where company law imposes a minimum capital requirement (i.e. in the case of limited liability companies and public limited companies), (v) the management may not decide to reduce the subscribed capital.

Can members hinder management decisions?

Yes, this is possible before the measure in question is taken; the management may not take a decision if in their written opinion, the majority (at least 51%) of members holding more than 25% of the votes object to the proposed decision of the management. (If the legal person has a member having majority influence or a qualified majority, such member can block the measures of the management on its own.)

What happens if the tasks of the management are not performed by one person but by a body?

Like in the case of decision-making bodies, the government decree intends to enable the widest possible use of electronic means in decision-making processes in the case of management acting as a body. If there is no agreed procedure for the use of modern means of communication (or deviates from the government decree), the chairman of the board (deputy in case of impediment) and ultimately the member requested by the management are entitled to determine the rules of meeting and decision-making. It is important that written consultation and decision-making can also take place by electronic message exchange (i.e. by e-mail).

These facilitations should apply not only to the decision-making of the board of executive officers, but also to the decision-making of the supervisory board (or, if one exists, the audit committee).

What happens to mandates that expire during the state of emergency?

If the mandate of the executive officer of the company expires during the time of the state of emergency, his/her position shall last until the 90th day after the end of the state of emergency. The executive officer shall perform duties during this period. The cited rule applies ex lege, i.e. without a decision of the decision-making body.

If the executive officer resigns, he/she shall still perform his/her duties during the emergency or for 90 days after its termination. The same is true if the mandate is for a fixed term and the fixed term would expire during the state of emergency.

On the other hand, the mandate of the executive officer shall terminate if he/she is removed from office by the supreme body or if a reason for exclusion or conflict of interest arises. It goes without saying that in the event of the death of executive officer, the mandate cannot be maintained either, the just implemented interim rules do not bring change in this, of course.

It is important to emphasize that in the above time interval – similarly to the rules described for the executive officer – the mandate of the permanent auditor does not expire, and the permanent auditor is also obliged to perform duties during this time.

Beware of Significant Provision in the Agreement on Providing Contribution from the Antivirus Programme

We would like to draw your attention to the relatively significant, albeit hidden, provision contained in the agreement (“the Agreement“) concluded between the Labor Office of the Czech Republic and an employer that applies for provision of a state contribution as compensation of wages paid to its employees under the Antivirus Programme (see our newsletter “Compensation Package for Employers Adopted by the Government of the Czech Republic”).

In Article IX. of the Agreement entitled “Settlement”, it is set out that by concluding the Agreement, all claims of the employer against the state for damages caused by the relevant emergency measures of the government are settled when it comes to damages arising from the employer’s statutory obligation to pay wage compensation to employees due to obstacles to work incurred during the period for which the employer is entitled to the contribution.

For employers, this is to exclude the possibility of simultaneously drawing money for wage compensation from the Antivirus Programme and to claim damages from the state in the future caused by adopted emergency measures regarding wage compensation paid by the employer using its own money.

If employers receive a state contribution of 80% of wage compensation paid to employees under regime A, then by entering into the Agreement, they undertake to waive the claim towards the state for reimbursement of the remaining 20% of the wage compensation. This applies equally to regime B employees, i.e. their employers receive a contribution of 60% of the wage compensation paid out and for the remaining 40%, the state requests a waiver of the right to reimbursement to which the employer might otherwise be entitled from the state.

The aforementioned approach by the state and the ‘settlement’ appear logical in relation to the amount of the state contribution granted. On the other hand, we consider the waiver of any compensation from the state in relation to the part of the compensation paid by the employer using its own money to be really pushed here by the state.

In addition, the application for the contribution itself is silent as to any exclusion of future claims for damages in connection with the Agreement entered into and the payment of the contribution to wage compensation. Employers fill out this application through a web application that automatically generates the application after filling in, together with the Agreement to be concluded with the Labor Office of the Czech Republic. Thus, in an automatically generated Agreement, employers may not even notice a provision limiting their right to compensation from the state. Also, employers do not have a real opportunity to change the wording of the Agreement in any way and must accept the agreement if they wish to draw money from the Anvitirus Programme.

It is also important to note that the state has not yet informed employers of this restrictive provision. This requirement is also neither reflected in any way in the conditions for receiving contributions in the announced Antivirus Programme, nor in the Employer Manual that was published afterwards.

The Agreement concluded by the employer with the Labor Office of the Czech Republic is a so-called adhesion contract as the draft Agreement is unchangeable and the employer has no possibility to change its content in any way if they want to receive the state contribution. In addition, employers can be considered to be the weaker party in relation to the state, among other things because the employer usually applies for a state contribution in an acutely critical economic situation.

The Civil Code stipulates that a provision of an adhesion contract which is particularly disadvantageous for the weaker party (without a reasonable reason) is invalid. We believe that the conclusion regarding invalidity should also apply to the aforementioned ‘settlement’ clause in the Agreements. In this respect, however, the courts will have the final say in the event of a dispute with the state.

Perhaps a positive factor is that the state acknowledges its liability for the damage caused by the measures adopted, otherwise the authorities would not insert the provision on ‘settlement’ and ‘waiver’ into the draft Agreements.

Please do not hesitate to contact us if you have any questions regarding the right to compensation from the state arising from the adopted measures in crisis or otherwise.

How to Employ Foreigners During the State of Emergency?

In connection with the COVID-19 pandemic, the government adopted a series of crisis measures which have an immediate impact on the employment of foreigners and their work in the Czech Republic.

These include:
(i) a ban on entry for foreigners to the Czech Republic and a ban on leaving the Czech Republic; and
(ii) suspension of the reception of new visa applications and applications for temporary and permanent stays in the Czech Republic, as well as the suspension or discontinuation of proceedings regarding previously submitted visa applications or applications for stays in the country.

The above crisis measures have a major impact on employers who employ foreigners from third countries (i.e. countries outside the EU/EEA and Switzerland). However, the projects and supplies of entrepreneurs who do not directly employ any foreigners but who use the services or supplies from foreign subcontractors can be also significantly influenced by these measures. In order to minimize the negative consequences of the above-mentioned prohibitions, we have prepared a brief overview for you of selected specifics related to the employment of foreigners at the time of the state of emergency.

Specifics of Entry of Foreign Workers into the Czech Republic During the State of Emergency

There are several exceptions to the general ban on entering the Czech Republic and the ban on traveling out of the country during the state of emergency which can be applied in the case of arrival of foreign workers. One of them is an exception for workers who regularly cross the borders of the Czech Republic for the purpose of work (so-called cross-border workers). This exception is most often mentioned in relation to Czech employees commuting to work to Germany and Austria, but it can also be used the other way round (i.e. in relation to foreign workers coming from neighboring countries to work in the Czech Republic).

Although this exception applies in particular to workers who normally commute to work in a neighboring state daily or at regular intervals, it can also be used for the arrival of employees of foreign suppliers or subcontractors for the implementation of an international project (e.g. in the construction industry). However, it should be mentioned that these workers must be workers from neighboring countries of the Czech Republic. Moreover, these cross-border workers (commuters) must meet several prerequisites which differ according to the state from which they enter the Czech Republic. Therefore, it is always necessary to consider carefully whether this exemption is applicable in a particular case, all the more so since the rules for applying this exemption have changed several times in the state of emergency.

Another exception to the ban on entry for foreigners in the Czech Republic is the exception for employees of critical infrastructure services. This is an exception for foreigners who are to carry out urgent or emergency servicing of critical Czech infrastructure – i.e. infrastructure that is so important that any disruption of its functioning would have a serious impact on the security of the state, security of basic living needs of the population, human health or state economy. It follows from the above that only a limited group of entities will be able to benefit from this exemption (in addition to critical infrastructure operators, also certain major suppliers to such operators). The advantage of this exemption is that, unlike some of the exceptions for cross-border workers, it neither provides for a minimum period of stay nor for a maximum distance of the place of work from the borders.

In this context, it should be emphasized that the possibility of using any exemption from the ban of entry at the time of the state of emergency must always be assessed individually. For the application of individual exceptions, it may be decisive e.g. the worker’s domicile, the content of the employment contract or the activity to be performed by the worker in the Czech Republic.

Specifics of Employment of Foreigners from Third Countries During the State of Emergency

Currently, receipt of applications for residence permits is suspended at embassies of the Czech Republic. As a result of this measure, foreigners from third countries wishing to work in the Czech Republic can obtain a work permit, but they cannot receive a residence permit that is absolutely necessary for employment in the Czech Republic.

If foreigners are already working in the Czech Republic, then they can continue to work here during the state of emergency. This applies even if their work permit expires before the state of emergency ends. The validity of a work permit is automatically extended after certain conditions have been met, up to a period of 60 days from the date of expiry of the state of emergency. Also, foreigners whose residence permit expires during the state of emergency are entitled to remain in the Czech Republic for the duration of the state of emergency.

Foreigners working in the Czech Republic can change their employer during the state of emergency at any time. However, the change can only be made if (i) the new job is registered in one of the relevant central records of vacancies for foreigners maintained by the Labor Office of the Czech Republic or (ii) a new work permit is obtained. In view of the above, it is recommended to employers who are currently interested in employing foreigners to focus primarily on recruiting foreigners already residing in the Czech Republic.

If an employer is forced to terminate or not prolong their employment relationship with a foreigner due to the economic impact of the pandemic, they are asked by the Ministry of Labor and Social Affairs to assist such employees with registration of the status of a job seeker on the website of the Ministry of Labor and Social Affairs, or to provide them with assistance in dealing with the situation (e.g. assistance to return to their country of origin). If the employer fails to comply with this obligation, the employer is at risk of limiting participation in or exclusion from government migration programs.

We have extensive experience with the issue of employment of foreigners (including the application of individual exceptions to the ban on foreigners entering the Czech Republic during the state of emergency). We regularly monitor all restrictions and obligations arising from the crisis measures issued in connection with the state of emergency. We will be happy to provide you with legal assistance in this matter.

If you have any questions regarding the employment of foreigners, not necessarily only during the state of emergency, please contact Lenka Droscová lenka.droscova@randalegal.com or Jakub Adámek jakub.adamek@randalegal.com.

Temporary Emergency Bridging Measure to Preserve Employment: the conditions

The coronavirus has the Netherlands and the rest of the world in its grip and is seriously impacting the economy, among other things. Bars and restaurants have closed, shopping streets are empty and businesses are seeing an enormous drop in their sales. The Dutch government has announced several measures to alleviate these economic consequences. One of those measures is the Tijdelijke Noodmaatregel Overbrugging(NOW)(Temporary Emergency Bridging Measure to Preserve Employment). This scheme had been announced earlier, but the conditions for reliance on the scheme were made public on Tuesday, 31 March. We will address the main aspects of the scheme in this blog.

1. What are the conditions and how high is the contribution?
Employers may rely on the NOW in the event of a drop in turnover of at least 20% in a consecutive period of three calendar months between 1 March and 31 May 2020. The other condition is that an employer may not file a redundancy application on economic grounds with the UWV (Employee Insurance Agency) between 18 March and 31 May 2020. The contribution amounts to 90% of the payroll total in the event of a 100% drop in turnover. The actual contribution depends on the exact scope of the drop in turnover.

The application for the contribution first consists of an application for an advance of 80% of the expected contribution. That amount is then paid in three instalments. It is not yet necessary to submit an accountant’s statement when applying for the advance. When the final contribution is applied for, which must be done within 24 weeks after the compensation period, that accountant’s statement must be enclosed, however. An exception applies if the contribution does not exceed a threshold yet to be determined.

2. How is the loss of turnover calculated?
The turnover is determined on the basis of a three-month period. The employer may at its option have the reference period for the turnover comparison commence on 1 March, 1 April or 1 May 2020. The turnover generated in the selected three-month period must then be compared with the average turnover in 2019 (divided by four). An employer must apply for the contribution per withholding tax number.

The turnover is determined at group level. A group of companies may therefore not state the expected drop in turnover per entity. The turnover of the group or of the affiliated legal entities is therefore decisive in determining whether the NOW may be relied on.

3. Is the entire salary taken into account in calculating the compensation?
The contribution amounts to a maximum of 90% of the payroll total for the three-month period from March to May 2020. The payroll total is based on the wage for social insurance purposes from current employment. Additional charges and costs, such as employer’s social security contributions and employee contributions to pension and the accrual of holiday allowance are compensated. To accelerate the application procedure, a 30% surcharge for employer’s social security contributions has been opted for in all cases. No more than twice the maximum daily wage per month per individual employee is classified as wages. Wages in excess of €9538 per month are therefore not eligible for compensation.

4. What are the consequences if I nevertheless dismiss employees on economic grounds?
As described above, one of the conditions for relying on the NOW is that an employer may not file a redundancy application with the UWV between 18 March and 31 May 2020 on economic grounds. If an employer does so nevertheless, the UWV will handle that application in the regular manner. Depending on the outcome of the application, that will, however, have consequences for the amount of the contribution. The salaries of the employees for whom the redundancy application is filed are increased by 50% and are deducted from the payroll total on the basis of which the amount of the contribution is determined.

5. Will the scheme be extended and what conditions will then apply?
The possibility of extending the bridging measure has been kept open. That question will be decided on before 1 June 2020; the extension period will therefore immediately follow the first application period, which ends on 31 May 2020.

6. As from what date may NOW applications be filed?
The government aims to open the service desk for the applications on Monday, 6 April 2020. It will be determined on Friday, 3 April, whether that is feasible. The service desk will in any event be open by Tuesday, 14 April 2020 at the latest. Once the service desk has been opened, applications may be filed via the UWV’s website. That may be done without the use of eHerkenning or any other form of authentication or authorisation. The application must have been filed by 31 May 2020 at the latest. The UWV has announced that it aims to pay the first advances within three or four weeks after an application is filed.

7. Are variations possible for specific sectors or companies?
No. The scheme does not allow for sectoral or company-specific variations. Seasonal influences on the turnover are also not taken into account. The scheme is therefore not a solution for all companies.

If you have any further questions about the Temporary Emergency Bridging Measure to Preserve Employment, please contact one of our employment lawyers at tel. no. 020-664 5111. We will be pleased to help you.

Compensation Package for Employers adopted by the Government of the Czech Republic

Government of the Czech Republic yesterday (i.e. on 31 March 2020) adopted the new modified Compensation package for employers (“Antivirus Programme”) which we have previously reported. For the sake of clarity, the Government has combined the previously published compensatory measures into two (2) compensatory measures, i.e. regimes A and B listed below.


Under the A regime the state will provide employers with a contribution in the amount of 80% of the wage compensation provided to an employee, including social and health insurance contributions, if the reason for the obstacle to work is

• on the employee’s side “Quarantine ordered to an employee” (an obstacle under Section 191 of the Labour Code), whereas the amount of wage compensation provided by the employer is 60% of the employee’s average assessment base; or
• on the employer’s side “Inability to assign work due to enterprise closure as a result of adopted emergency measures” (an obstacle under Section 208 of the Labour Code), whereas the amount of wage compensation provided by the employer to is 100% of the employee’s average earnings.

The maximum amount of the contribution is derived from the current average supergross wage including social and health insurance contributions, and in this case amounts to approximately CZK 39,000.

Under the B regime the state will provide employers with a contribution in the amount of 60% of the wage compensation provided to an employee, including social and health insurance contributions, if the reason for the obstacle to work is on the employer’s side

“Childcare or Quarantine Ordered to a significant part of employees, i.e. at least to 30% of employees” (an obstacle under Section 208 of the Labour Code), whereas the amount of wage compensation provided by the employer is 100% of the employee’s average earnings; or
“Limitation of the availability of inputs, i.e. material, products and services which are necessary for its activities” (an obstacle under Section 207 of the Labour Code), whereof the amount of wage compensation provided by the employer is 80% of the employee’s average earnings; or
“Reduced demand for services, articles and other products of the company” (an obstacle under Section 209 of the Labour Code), whereas the amount of wage compensation provided by the employer is at least 60% of the employee’s average earnings.

The maximum amount of the contribution in this case is approximately CZK 29,000.


The conditions for obtaining the above contributions are as follows:

• the employer operates in the business sphere;
• the employer strictly complies with the Labour Code;
• the employees are in an employment relationship and participate in sickness and pension insurance;
• the employees have not been served with a termination notice and are not in the notice period as of the accounting date (with the exception of termination pursuant to Section 52 (g) and (h) of the Labour Code); and
• the employer pays the wages and social and health insurance contributions.

For the sake of completeness, we add that the contributions will also apply to agency workers, provided that the employment relationship with the employment agency was entered into before the day of the declaration of a state of emergency (i.e. 12 March 2020) and lasts for the entire duration of the Antivirus Programme.

The above contributions shall be provided to employers on the basis of an agreement concluded with the respective Labour Office of the Czech Republic retroactively. Employers shall be entitled to submit their applications for the contributions for March from 6 April 2020 (the expected launch date of the web application). All necessary operations between the employer and the labour office will be carried out remotely in electronic form.

If you have any questions regarding the state compensation in the area of employment or regarding other measures that an employer can use in the current difficult situation, please do not hesitate to contact us. More specifically, please contact our attorney-at-law, Lenka Droscová, who specialises in labour law.

Amendments to GEO no. 30/2020 on technical unemployment measures during the state of emergency

On 30th March the Romanian Government published in the Romanian Official Gazette GEO no. 32/2020 that amends, among others, the initial regulation on technical unemployment measures adopted in the context of COVID-19 epidemic by GEO no. 30/2020.

The amendments brought by GEO no. 32/2020 have the declared purpose of simplifying the conditions and formalities that need to be fulfilled in order for the employers to get the technical unemployment indemnity granted by the Romanian state.

1. Changes to the conditions that must be fulfilled by the employers in order to benefit from the indemnity granted by the state

Who shall benefit from the technical unemployment indemnity granted by the Romanian state? The employees of the employers that temporarily reduce or discontinue their activity, partially or totally, due to the effects of the COVID-19 epidemic, during the state of emergency, subject to an affidavit given by the employer in this respect.

The following documents are no longer required:

  1. the certificate of emergency situations is no longer required for the employers deciding the total or partial discontinuity of their activities based on decisions issued by the competent public authorities as per the applicable legislation;
  2. the affidavit from which to result the decrease of incomes of minimum 25% in comparison to the average incomes afferent to the period January – February 2020 and the lack of financial capacity to pay all employees, for the employers that are reducing their activities due to the effects of COVID-19 epidemic and that are not having the financial capacity to pay all the salaries to their employees.

In addition, all the employees of the employers mentioned at point 2 above shall benefit from the indemnity granted by the state (contrary to the previous regulation that capped the granting of indemnity only to maximum 75% of the employees having individual employment agreements active at the date of entering into force of the initial GEO no. 30/2020).

2. Clarifications on the amount of the indemnity granted to the employees for technical unemployment

In case the employer’s budget for personnel expenses allows it, the indemnity for technical unemployment granted by the Romanian state may be supplemented by the employer with amounts representing the difference up to minimum of 75% of the base salary corresponding to the occupied job, as per the general rule provided under art. 53 para. (1) of the Romanian Labour Code.

3. Additional provisions regarding the employees having concluded multiple individual employment agreements

In case an employee has multiple individual employment agreements concluded and at least one full-time agreement is active during the state of emergency, the employee shall not benefit from the indemnity granted by the Romanian state.

In case an employee has multiple individual employment agreements concluded and all of them are suspended due to the state of emergency, the employee shall benefit from the indemnity afferent to the individual employment agreement providing the most advantageous salary rights.

4. Changes in the procedural aspects for benefiting from the indemnity

The employers shall electronically submit with the competent employment agencies (i) a request signed and dated by the legal representative of the employer  together with an affidavit and (ii) the list of persons who shall benefit from the indemnity assumed by the legal representative of the employer, as per a template that will further be adopted by order of the ministry of labour and social protection and published in the Official Gazette.

The employers shall be held responsible for the correctness and the truthfulness of the data contained by such documents.

Please note that the templates provided under the initial GEO no. 30/2020 are no longer valid.

5. New terms for payment of indemnity by the state / employer

The term for payment of the indemnity by the Romanian state to the employer was modified to 15 days as of submission of documents by the employer (the initial term provided under the previous regulation was of 30 days as of such submission of documents).

The employer shall pay the indemnity to the employees within 3 days as of receiving the amounts from the state.

6. Provisions related to other beneficiaries of the indemnity granted by the state

Other professionals (such as individual companies or self-employed persons) and the persons having concluded individual labour agreements (Romanian: conventii individuale de munca) under Law no. 1/2005 on the management and functioning of cooperatives, that are discontinuing the activity due to the effects of the COVID-19 epidemic, during the state of emergency, shall benefit from a monthly indemnity amounting of 75% of the medium gross salary provided by Law no. 6/2020 on the state social security budget for 2020, based on an affidavit.

The natural persons obtaining incomes exclusively from copyrights and neighboring right, as regulated under Law 8/1996 on copyright and neighboring rights, that are discontinuing the activity due to the effects of the COVID-19 epidemic, during the state of emergency, shall benefit from a monthly indemnity amounting of 75% of the medium gross salary provided by Law no. 6/2020 on the state social security budget for 2020, on the basis of the documents requested by the National Agency for Payments and Social Inspection.

Also, GEO no. 32/2020 provides certain rules regarding sportsmen.