The state’s financial support for employers continues – what did the new Decree on the 60/40 Measure change?

08.07.2020

The emergency epidemic situation in Bulgaria has been once again prolonged, this time until 31 July 2020. This decision will further increase the difficulties experienced by employers due to their reduced operations and decreased revenues as a result of the COVID-19 spread. The government has announced that for the time being the temporary closure of businesses by an order of the Minister of Health will not be implemented again as a measure against the spread of the virus. Yet, the headline news is increasingly reporting about employers which register large numbers of infected employees so leading to temporarily closures of businesses for disinfection and reduced production capacity. There is also the problem with the consumers, who still fail to return to their normal lifestyle as it used to be before March. This fact in return affects the financial results of companies which offer goods and services to consumers.

Against this backdrop, the Council of Ministers has decided, as expected, to prolong the implementation of the 60/40 Measure. The State will therefore continue to partially cover employers’ costs for remunerations and social security contributions in order to preserve employment of personnel.  

Decree No. 151, promulgated in the State Gazette on 7 July 2020 (“The Decree“) contains the updated application requirements for the measure. The revised 60/40 Measure will cover the period from 1 July to 30 September 2020.

The Decree expands the scope of the employees, for whom the employers may be provided with financial support. The initial categories of affected employees were those of employees who are idle and employees who are ordered to temporarily work part-time. Now the measure also extends to employees who are on a leave due to the announced emergency epidemic situation (on the grounds of Art. 173a of the Labour Code), employees whose employment is maintained after the employer has made a notification for planned collective dismissals, as well as all of the employees who are socially insured in the “Hotel and Catering” economic sector.  

The Decree now mandates that all employers have to prove decreased sales revenue in order to apply for the measure. This reduction must be of at least 20 percent in the month, preceding the month when the application is filed, compared to the same month of the previous calendar year. So, if an application is submitted in July 2020, the drop in sales must be proved by comparing the June 2020 to the June 2019 results. 

All formerly adopted requirements remain unchanged. The employers still have to keep the employees at work for a period that is equal to the period for which the financial support was received; employers are still prohibited to terminate employment contracts on certain legal grounds, etc.

The amount of the financial support payable to the employers also remains unchanged– 60 percent of the amount of the employee’s social insurance income as well as 60 percent of the social insurance contributions on the account of the employer. Pursuant to the Decree, the calculation is based upon the employee’s social insurance income in May 2020. Employers are still obliged to pay the employee’s social insurance income for May 2020 for the full period while the employer receives financial support under the Decree.

Employers that want to apply for the measure will be able to do so by an officially approved application form. Those applications will have to be filed with the respective Labour Bureaus. The National Social Security Institute will continue to make public all payments made under the Decree where the information will be available in the Institute’s official database.

For further information contact:

Ilya Komarevski, Partner
Ilya.Komarevski@tbk.bg

Mileslava Bogdanova-Misheva, Senior associate
Mileslava.Bogdanova@tbk.bg