A short-time work scheme referred to as “Kurzarbeit” was introduced into Slovak legislation following the adoption of Act on Support during Short-time Work and on Amendments to Certain Acts (hereinafter referred to as “Act on Support for Short-time Work”). The purpose of this legislation is to provide a subsidy to employees and employers in emergency situations, which resulted in the employer’s inability to assign work to the employees. The newly adopted Act will enter into force on 1 January 2022.
Only employers who pay insurance premiums to finance subsidies during short-time work will be eligible for the short-time work scheme referred to as “Kurzarbeit”. However, the introduction of a new social insurance contribution does not increase the social security burden, as this type of insurance will form part of the unemployment insurance premium (i.e. the unemployment insurance premium at the rate of 1% paid by the employer will be divided into the unemployment insurance premium to finance the short-time work subsidy at a rate of 0.5% and the unemployment insurance premium at a rate of 0.5% of the assessment base).
In the event that an employer is unable to assign work to employees due to an obstacle caused by an external factor, the employer will be eligible to apply for short-time work subsidy from the “Kurzarbeit” scheme, which will be granted by the Social Insurance Agency through the Office of Labour, Social Affairs and Family. The subsidy will be paid directly to employers, who will then use it to pay wage compensation to employees.
Under the legislation, external factors are considered to be circumstances of a temporary nature which the employer could not influence nor prevent and which had a negative impact on the assignment of work to the employer’s employees, in particular:
- extraordinary event,
- state of emergency,
- extraordinary circumstance or occurrence of force majeure.
Under the legislation, an extraordinary circumstance refers to a circumstance that may be declared by the Government of the Slovak Republic:
- on the basis of information published by the Statistical Office of the Slovak Republic, where the gross domestic product for the preceding quarter at constant prices decreases year-on-year,
- and on the basis of a prognosis published by the Macroeconomic Forecasting Committee that follows immediately after, where the respective annual gross domestic product at constant prices decreases by at least 3% year-on-year.
War and state of war, seasonality of the activity performed, restructuring, planned shutdown, or reconstruction shall not be considered to be an external factor.
Who shall be eligible to receive the subsidy?
Employers, both natural and legal persons, may apply for the subsidy under Section 7 of Act No. 461/2003 Coll. On Social Insurance, as amended. For the purpose of receiving a subsidy from the “Kurzarbeit” scheme, the term employee refers to an employee who is:
- in an employment relationship or in a civil service employment relationship,
- in an employment relationship on the basis of a contract for the professional practice of sport.
What are the eligibility criteria for the subsidy?
The basic condition constitutes the employer’s inability to assign work to at least 1/3 of their employees at the extent of at least 10% of the prescribed weekly working time. Additional conditions that need to be met in order for the employer to be eligible for the subsidy:
- as of the date of submission of the application for the subsidy, the employer paid all required social security contributions and compulsory old-age pension contributions over the period of at least 24 calendar months preceding the month, for which the subsidy is requested;
- the employer did not breach the illegal employment legislation during the past two years preceding the submission of the subsidy application;
- the employer concluded a written agreement with the employee representatives or with the affected employees (in case there are no employee representatives at the employer’s), whereby the employer would apply for the subsidy, or the employer receives the consent of an arbitrator under the Labour Code to apply for the subsidy;
- the employer applies for the subsidy no later than at the end of the calendar month following the calendar month for which they apply for the subsidy.
In the event that the employer and the employee representatives or the affected employees fail to reach an agreement, the arbitrator, i.e. a person agreed upon by the parties to the dispute or a person appointed by the Ministry of Labour, Social Affairs and Family, shall resolve the dispute. The arbitrator shall decide within 10 days whether or not they agree with the submission of the application for the subsidy. The arbitrator shall receive a remuneration for the resolution of the dispute in the amount agreed upon with the employer. If no agreement is reached, the arbitrator shall be entitled to a fee of EUR 600. The remuneration shall be paid by the employer.
The subsidy shall be granted for employees:
- whose employment relationship has lasted for a period of at least one month as of the date of the subsidy application submission;
- who are not in the notice period;
- who have used their leave entitlement for the previous calendar year and have also used up their positive working time account balance and the employer cannot reassign them to another job position within the agreed type of work.
Amount of subsidy
The subsidy is granted to the employer in the amount of 60% of the employee’s average hourly wage for each hour of obstruction to work. The amount is capped at 60% of 1/174 of twice the average wage of an employee in the economy of the Slovak Republic. This amount shall be published by the Statistical Office of the Slovak Republic for the calendar year two years preceding the calendar year in which the subsidy is granted.
The use of the “Kurzarbeit” subsidy is conditional on an agreement between the employer and the employee representatives. This agreement entitles the employer to apply for the subsidy and also requires the employer to pay the employees compensation of at least 80% of their average wage for the duration of the obstacle to work, which is at least equal to the minimum wage.
Period of drawing of the subsidy
The employers shall be entitled to receive the subsidy in total for a maximum period of six months within any 24 consecutive months. However, the employer shall be obliged to maintain the job for which they received a subsidy for at least 2 months following the month in which they experienced the obstacle to work.
An employer employing 15 employees experienced an obstacle to work as a result of flooding from March 13 to March 22. During this period the employer was unable to assign work to seven employees. The employees’ working time is 40 hours a week. The employees’ average hourly wage is EUR 5.
The employer was unable to assign work to more than one-third of the employees as a result of flooding. This obstacle is regarded to be an external factor under the legislation. The employees were unable to be assigned work to the full extent of their working time (at least 10%) for a period of ten days. For this period, the employer shall be entitled to receive a subsidy of 60% of the employees’ average hourly wage, which equals EUR 3 (60% of EUR 5), i.e. the employer shall receive EUR 240 per employee (EUR 3 × (10 × 8 hours)).
However, employees shall be entitled to a compensation of 80% of their average wage (under Section 134 of the Labour Code, this constitutes the average hourly wage). Therefore, the employer shall be obliged to pay the employees the remaining 20% of their average hourly wage. As a result, the employer shall pay EUR 4 per employee (80% of EUR 5) for each hour for which the employer was unable to assign work to the employees, which equals EUR 360 per employee for the entire period of the obstacle to work on the side of the employer.
In the event that the wage compensation of 80% of the employees’ average wage would be less than the amount of the minimum wage, the employees shall be entitled to wage compensation equal to the minimum wage.