Employers’ compensations

On 1 April 2020 in the State Gazette was published Ordinance № 55 laying down the conditions and procedure for payment of compensation to employers in order to preserve the number of employees in the period of state of emergency, announced by a decision of the National Assembly of 13 March 2020 (hereinafter referred to as Ordinance № 55). Two weeks after the promulgation of Ordinance № 55, the Council of Ministers in the Republic of Bulgaria amended the same one.

Ordinance № 55 was adopted in order to assist the employers in the state of emergency, which discontinued in whole or part of the work in the enterprise or of their employees, as well as when the employer has introduced part-time work in the enterprise or in its unit. Where such discontinuance of work has occurred, employers are entitled to compensation in order to preserve the number of the employees in the enterprise.

Compensation amounts to 60 percent of the amount of the income for January 2020 and the contributions due from the employer to any employee affected by the employer measures. The receiving of the compensations by the employers is related to the following condition – employers shall retain the employment of their employees after the expiry of the period during which the benefits are paid. Thus, if the employer receives compensation for one employee within one month, then the employer will be obliged to keep that employee for at least one more month after the payment of the compensation ceases.

It should be taken into account that the payment of compensation to employers is allowed for the period during which the enterprise ceased its activity, however no longer than 3 months.

Ordinance № 55 enumerates the cases where compensation should not be paid, that is in case:

– employees did not have an employment relationship with the employer before the date of the state of emergency;

– employees are on unpaid leave, temporary disability leave, pregnancy and childbirth leave when adopting a child up to 5 years of age or raising a child up to 2 years of age;

– employees for whom the employer receives financing in respect to salaries and social security contributions from: 1. the state budget, 2. funds from the European Structural and Investment Funds or 3. other public funds.

Ordinance № 55 sets out in detail the criteria which each employer must meet in order to receive compensation. One of these criteria is that the employer has to pursue an economic activity that is listed in Annex № 1 of Ordinance № 55. This means that not all employers will be able to benefit from the right to compensation, just those who are most affected by the emergency measures put in place.