PERMANENT KURZARBEIT - CHANGES STARTING IN MARCH 2022

#46Permanent Kurzarbeit - changes starting in March 2022

Slovakia will have legislation on short-time working so called “Kurzarbeit”. Kurzarbeit is a German term, which means a temporary reduction in the company's normal working hours, usually due to economic problems. The most common reason for Kurarbeit is making effort to preserve jobs in times of temporary economic difficulties - recently due to anti-pandemic measures the employers have had to close their operations or reduce their activities. Kurzarbeit is often associated with a corresponding salary reduction. If certain conditions are met, in these situations, employees may be additionally supplemented by partial compensation for the reduction in wages, which partial compensation is usually paid from social insurance.

The Short-Time Working Act (the "Act") will come into force on February 28th 2022, however most provisions will come into effect on March 1st 2022. The new legislation responds in particular to the consequences of the pandemic caused by the spread of COVID-19. The Act regulates the provision of support during short-time work, which will be addressed to the employer.

The abovementioned aid represents a partial reimbursement of the employer's costs to reimburse the employee's wages in time of the duration of the external factor, which has led to an obligatory reduction in the employer's business activities. Wage compensation provided to an employee from the part-time system will be income exempt from income tax and, consequently, from social and health insurance. Important terms with regard to the Act are:

1. Short-time work - According to the Act short-time work means the interval started with the restriction of the employer's activity due to an external factor (e.g. emergency conditions due to COVID-19) until the end of the restriction of the employer's activity.
2. Restricted activity of the employer - The activity of the employer is considered restricted if there is an obstacle to work on the part of the employer, as a result of which the employer cannot assign work to at least 10 % of their established weekly time.
3. The amount of aid granted - Aid is granted to the employer to compensate the employee's salary for each hour of obstacle to work on the part of the employer, in the amount of 60 % of the employee's hourly remuneration.
4. The maximum amount of aid granted - The maximum amount of the aid is 60 % of 1/174 times the average wage in Slovakia for the calendar year that two calendar years precedes the calendar year in which the support is provided.
5. The payment of the granted aid - The support will be paid to the employer on a monthly basis, but only for a maximum of 6 months in total for 24 consecutive months, unless the Government of the Slovak Republic decides on a longer period of support.

Once the conditions are met, the aid will be granted to the employer by Centre for Labour, Social Affairs and Family, or relevant office. The conditions that an employer must meet in order to become eligible for the aid under the Act are as follows: 

1. the employer is at the time of short-time work;
2. the employer has submitted an application to the Centre for Labour, Social Affairs and Family, at the latest by the end of the calendar month following the calendar month for which the application is requested;
3. the employer has an agreement with the employee or employees' representatives, the subject of which is the employer's obligation to apply for the aid;
4. the employer has paid social security contributions and compulsory old-age pension contributions for the entire period of the obligation to pay insurance and compulsory contributions, which lasted at least 24 calendar months immediately preceding the calendar month for which the employer is applying for support;
5. the employer has not violated the prohibition of illegal employment in the previous two years;
6. in addition, the following conditions must be met on the part of the employee:
   1. has worked for the employer for at least one month;
   2. has no ongoing notice period;
   3. has taken the annual leave for the previous calendar year and exhausted the positive working time account;
   4. work performed on the basis of an employment contract, not in civil service or as a judge, prosecutor, member of the armed forces or as a self-employed person.