After the Romanian President declared a state of emergency, a series of special regulations have been adopted in order to help businesses survive in these circumstances.
One such special regulation is the Emergency Ordinance no. 30/2020 regarding the compensation paid by the State to the employees of companies whose salaries can no longer be paid by their employers and their employment contracts are suspended.
The provisions of this Emergency Ordinance apply to all employers, no matter whether they are companies, PFAs (authorized private individual) or liberal professions and even NGOs.
The provisions of this Emergency Ordinance apply in the following situations:
1. Where, due to the state of emergency and the decisions of the relevant authorities the employers completely or partially stop their activity (hotels, restaurants, cafes, shops, any cultural, scientific, entertainment, sporting, religious, gambling, fitness, spa and treatment activities that are usually held in a closed facility);
2. Where the employers are forced to reduce their activity because of the spread of the Covid-19 virus and are financially unable to pay all salaries.
In the first situation, the employers must submit a declaration stating that they have been affected by the state of emergency along with a list of their employees and their salaries.
In the second situation, the employer will need to submit a declaration stating that the income they registered during the previous month has been reduced in comparison to the income for January – February 2020 and that they are unable to pay all their employees. The employer must also send a list of all employees who are to receive the compensation.
Along with the declarations and the list mentioned above, the employer must also submit a simple request asking for compensation from the state for their employees. These documents are to be submitted in the current month for the compensation that needs to be paid for the previous month. Within 15 days after submitting the documents, the compensation will be paid by the state out of the special budget for unemployment benefits. The compensation will be paid to the employer who has the obligation to distribute the money to the employees within 3 days of receiving it.
In both situations, the government will pay a compensation to the employees consisting of 75% of the basic salary for their respective job. This compensation cannot be more than 75% of the average gross salary estimated for 2020 in Romania. This means that the gross compensation for each employee will be at most four thousand and seventy one (4.071) lei. If the employee’s salary is usually higher than this amount the employer may cover the difference between the compensation and the employee’s usual salary.
It is important to mention that the compensation will be paid only for the duration of the state of emergency. So if the employer suspended the employment contracts before the state of emergency was decreed by the President of Romania, then for the employees whose contracts have been suspended in these circumstances, the compensation will be calculated starting with 16th March 2020 and be until the state of emergency is over.
Another important detail is that the compensation mentioned above is the gross amount. So, the salary taxes will be applied to the compensation as well. The taxes will be calculated, deducted from the gross compensation and paid to the respective tax authority by the employer. For this purpose, the employer is obliged to submit a declaration with the tax authority.
This regulation is part of a governmental program meant to help businesses as well as individuals survive in the current uncertain financial situation. Nevertheless, since it introduces a new procedure, employers are bound to face some issues in trying to obtain the compensation for their employees. For more information please do not hesitate to contact us.
Mihaela Lupu/Nicholas S Hammond