Government Emergency Ordinance no. 132/2020 on support measures for employees and employers in the context of the SARS-CoV-2 pandemic, as well as for stimulating employment growth, in force since 10 August 2020

20 Aug 2020

In short

By Government Emergency Ordinance no. 132/2020, measures were adopted to strengthen the labour market, limit the risk of social exclusion, prevent unemployment rising at the national level and ensure sources of income for employees, thereby helping to reduce the negative social effects caused by the spread of SARS coronavirus -CoV-2.

In detail

By way of derogation from the Labour Code, the Ordinance provides that, in cases of temporary activity reduction due to the state of emergency / alert, employers can reduce employees’ working time by a maximum of 50% of the duration provided in individual employment contracts. Employers have to inform and consult with the union / employee representatives or employees prior to communicating a decision to the employees.

The reduction of working time is established by the decision of the employer for a period of at least five consecutive working days, with employers obliged to establish the work schedule for the entire month. This measure also applies to shift work programmes and the unequal work programme.

The employer's decision to reduce the working time has to be communicated to the respective employee(s) at least five days before the effective application of the measure and sent to the General Register of Employees (REVISAL) no later than one day before the application of the measure. The decision has to contain, inter alia, the working hours, the distribution of the working day and the related salary entitlements.

Employees affected by the measure receive an allowance of 75% of the difference between the gross basic salary provided for in the individual employment contract and the gross basic salary for the hours actually worked as a result of the reduction in working time. This allowance is in addition to the due salary entitlements, calculated for the actual time worked.

The 75% allowance is borne by the employer and paid on the date of salary payment for that month, with those costs covered by the unemployment insurance budget. The procedure for settling the amounts and the measure application period are to be established by Government decision.

If an employer does not recover the benefit from the unemployment insurance budget, it does not have the right to recover the amounts from the employee.

The 75% allowance represents salary income, subject to income tax and mandatory social contributions, in accordance with the law. The rules provided by the Fiscal Code apply for the related income tax calculation.

If an employee obtains income in the same month both from salary and the 75% allowance provided by the ordinance, they are cumulated for personal tax deduction purposes. The monthly tax will be calculated as per the Fiscal Code provisions.

Some prohibitions apply during such periods of reduced employee working time:

The hiring of staff or sub-contracting for the performance of activities identical or similar to those performed by employees whose working hours have been reduced is prohibited. This applies at branch, subsidiary or other secondary office levels, as defined by law;
Employees affected by this measure may not perform additional work for the same employer;
Affected employees may not have their working hours reduced from five days to four days per week, with the corresponding reduction of salary, for periods exceeding 30 working days, according to the Labour Code;
Employers can not initiate collective redundancies;
Employers may not grant bonuses or other additions to the basic salary for the management structure. They may be granted only after the end of the period of application of the measure.

During the period of reduced working time, employees retain all other rights provided in individual employment contracts or collective labour agreements, in proportion to the actual time worked.

In order to apply reduced working time and request settlement of the 75% allowance, the following conditions must both be met:

The measure affects at least 10% of a unit’s employees;
The reduction in activity is justified by a year-on-year decrease of at least 10% in turnover from the month preceding the application of the measure or, at most, from the month before the month preceding it compared to the same month of the previous year. For non-governmental organisations, authorised individuals, individual enterprises and family enterprises, the decrease is related to the realised income.

The 75% allowance will be taken into account when establishing the contribution period of at least 12 months in the last 24 months before the date of registration of the application for unemployment benefit.

Employers will owe the employment insurance contribution for the period in which they ordered the reduced working time measure, both for the salary rights related to the working time and for the 75% allowance, which is treated as an internship in the unemployment insurance system.

In cases of temporary activity reduction due to the establishment of the state of emergency / alert, professionals (according to the Civil Code) and people with individual labour agreements (according to Law no. 1/2005) can benefit, upon request based on a declaration of own responsibility, from a monthly indemnity of 41.5% (i.e. RON 2,253) of the average gross salary (i.e. RON 5,429) for 2020.

The state budget pays that 41.5% through the National Agency for Payments and Social Inspection and the Bucharest municipality / county agencies for payments and social inspection. Income tax, social insurance contributions and social health insurance contributions are due on such amounts, in the quotas provided by the Fiscal Code or according to specific regulations, in the case of professionals insured within their own social insurance systems.

Tax obligations are declared through the single declaration on income tax and social contributions due by individuals, and paid within the terms provided in the Fiscal Code. For people with individual labour agreements based on Law no. 1/2005, the fiscal obligations are declared, withheld and paid by the cooperative society, through the obligatory declarations, within the terms provided in the Fiscal Code.

A Government Decision will establish the duration of application of the measure of temporary reduction of the activity, the categories of professionals, and the procedure for paying the indemnities.

In 2020, professionals and people with individual labour agreements based on Law no. 1/2005 who receive from the consolidated general budget an indemnity equal to 75% of the average gross salary (RON 5,429 lei) established for 2020, in accordance with the provisions of GEO 30/2020.

People who carry out unskilled activities on an occasional basis (day labourers) in areas affected by the interruption or restriction of activity due to the state of emergency / alert for a period of three months will be granted from the state budget an amount representing 35% of the remuneration due for a working day. The beneficiary of works can decide when to make such payments, but no later than 31 December 2020.

Such amounts are granted by the beneficiary of works, from their own budget, at the time of payment of the daily work, and subsequently fully settled, on request, from the state budget, through the National Payments Agency and Social Inspection and the Bucharest municipality / county agencies for payments and social inspection. Settlements are to be effected within a maximum of ten days from the date of request, on the basis of a procedure approved by Government decision. The amount granted represents salary income, subject to income tax and mandatory social contributions, according to the provisions of the Fiscal Code.

For employees with individual employment contracts for a fixed period of up to three months, until 31 December 2020, 41.5% of their salaries for the days worked is supported by the unemployment insurance budget, but not more than 41.5% of the average gross earnings for 2020 related to the period worked.

Employers have to pay in full the value of the work performed, with the amount representing 41.5% being subsequently settled by the National Agency for Employment (ANOFM). Such settlements are made within ten days following the employer’s request, based on a declaration of own responsibility fulfilling the conditions provided by the ordinance, accompanied by a list of the people for whom the settlement is requested. The settlement procedure is to be approved by Government decision.

For remote working activity, employers are granted one-time support of RON 2,500 for each person working remotely for at least 15 days during the state of emergency / alert in order to purchase the required hardware and technological services. Such amounts are granted to employers in order of receipt of applications, until 31 December 2020, from the unemployment insurance budget through allocated ANOFM funds. The granting procedure and categories of goods that can be purchased will be established by order of the Minister of Labour and Social Protection published in the Official Gazette, within ten days as of the publication of this emergency ordinance.

Within 30 days of being granted such remote working support, employers have to send ANOFM supporting documents regarding the purchases made. In the event of non-compliance with the obligation to submit supporting documents, employers have to reimburse the full amount within 30 days as of the expiry of the justification period.

Having applied reduced working time measures, employers face sanctions for employees found to have received or performed work, including remotely, outside of those reduced hours. Fines of RON 20,000 apply to employers for each person thus identified, up to a total amount of RON 200,000. Labour inspectors are responsible for identifying such contraventions and applying sanctions.

Source: [Government Emergency Ordinance no. 132/2020 on support measures for employees and employers in the context of the epidemiological situation caused by the spread of SARS-CoV-2 coronavirus, as well as to stimulate employment growth, published in the Official Gazette no. 720 dated 10 August 2020]

The takeaway

The main measures adopted by Government Emergency Ordinance no. 132/2020:

Employers can reduce the working time of employees by up to 50% of the duration provided in individual employment contracts, with the union / employee representatives or employees being consulted prior to the communication of the employee's decision.

Employees affected by the measure receive an allowance of 75% of the difference between the gross basic salary provided for in individual employment contracts and the gross basic salary for the hours actually worked as a result of the reduction in working time.

To apply reduced working times and request settlement of the 75% allowance, the following conditions must both be met:

The measure affects at least 10% of the unit’s employees;
The reduction in activity is substantiated by a 10% year-on-year decrease in turnover from the month preceding the application of the measure or, at most, from the month before the month preceding it, compared to the same month of the previous year. For non-governmental organisations, authorised individuals, individual enterprises and family enterprises, the decrease is related to the realised income.

In cases of temporary reduction of the activity due to the state of emergency / alert, professionals (according to the Civil Code) and people with individual labour agreements (according to Law no. 1/2005) can benefit, upon request on the basis of a declaration of own responsibility, from a monthly indemnity of 41.5% (i.e. RON 2,253) of the average gross salary (RON 5,429) for 2020.

The provisions of the ordinance do not apply to: public institutions; employers in bankruptcy, dissolution, liquidation or that have had their activities suspended, according to the law; employers registered in non-cooperative tax jurisdictions.