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Anti-crisis shield: downtime benefits, co-financing, working time

In the previous article of 25 March 2020 on “Anti-crisis Shield project details”, we analysed the most important premises of the draft act being still at the stage of parliamentary work, constituting the so-called anti-crisis shield.

The special act, covering a number of solutions for entrepreneurs, with the main goal to maintain financial liquidity and employee security, was signed by the President of the Republic of Poland on 31 March 2020.

In this article, we will discuss the key issues related to the granting of downtime benefit, the conditions for applying for funding in connection with the decline in economic turnover following COVID-19, as well as instruments that allow employers to introduce more flexible employment conditions.

FINANCING

According to Article 15g paragraphs 1 and 2 of the act on combating COVID-19, an entrepreneur who has suffered a decline in economic turnover following COVID-19 may apply for benefits for the protection of jobs, for payment of funds from the Guaranteed Employee Benefits Fund to co-finance salaries of the employee in economic downtime or reduced working time following COVID-19.

The entrepreneur’s use of the above solutions is subject to the following conditions:

  1. No arrears in payment of tax obligations, social security contributions, health insurance, Guaranteed Employee Benefits Fund, Labour Fund or Solidarity Fund until the end of the third quarter of 2019.
  2. No premise to declare bankruptcy (pursuant to Article 11 or Article 13 (3) of the act of 28 February 2003 on bankruptcy).
  3. Decline in economic turnover following COVID-19.
  4. Being an entrepreneur in the meaning of Article 4 paragraphs 1 or 2 of the Entrepreneurs Law of 6 March 2018.

WHAT SOLUTIONS MAY BE IMPLEMENTED BY THE ENTREPRENEUR AND WHAT CONDITIONS MUST BE MET?

Referring to the above provision of the act on combating COVID-19, the entrepreneur may implement:

  • economic downtime: by paying the employee in the economic downtime the salary reduced by not more than 50%, but not lower than the amount of the minimum salary for work determined on the basis of the provisions on the minimum salary for work, including the actual working time. In this case, the salary is co-financed from the Guaranteed Employee Benefits Fund at 50% of the minimum salary for work determined on the basis of the provisions on the minimum salary for work, including the actual working time. Exception! The co-financing shall not apply to the salary of employees whose salary obtained in the month preceding the month in which the application was submitted was higher than 300% of the average monthly salary from the previous quarter as published by the President of Statistics Poland. According to the information obtained from WUP in Kraków, in the case of economic downtime, the maximum funding (from FGŚP) per employee will be 1,533.09 zł (gross), including social security contributions due from the employer on a full-time basis. Co-financing is based on the actual working time.
  • reduced working time: reducing the working time by 20%, not more than 0.5 of full-time, provided that the salary may not be lower than the minimum salary for work determined on the basis of the provisions on the minimum salary for work, including the actual working time. The salary is co-financed from the Guaranteed Employee Benefits Fund up to half of the salary, but not more than 40% of the average monthly salary from the previous quarter as published by the President of Statistics Poland, valid as at the date of submitting the application for the benefit. Exception! The co-financing shall not apply to the salary of employees whose salary obtained in the month preceding the month in which the application was submitted was higher than 300% of the average monthly salary from the previous quarter as published by the President of Statistics Poland. The maximum amount of co-financing (from the FGŚP) per employee will be 2,452.27 zł (gross).

The conditions and procedure for performing work during periods of economic downtime or reduced working time shall be determined in an agreement. The agreement is concluded by the employer with the trade unions operating in the plant, and if there are no trade unions operating in the plant – with employee representatives selected in accordance with the procedure adopted by the given employer. The employer shall provide a copy of the agreement to the competent regional labour inspector within 5 working days from the date of conclusion of the agreement. When determining the conditions and procedure of work during periods of economic downtime or reduced working time, no rules regarding termination notice amending working and pay conditions shall apply.

According to Article 15g paragraph 14 of the act on combating COVID-19, the agreement shall specify at least:

  1. occupational groups affected by economic downtime or reduced working time;
  2. reduced working time for employees;
  3. the period for which solutions related to economic downtime or reduced working time apply.

TO WHOM WILL THE ABOVE SOLUTIONS APPLY?

The above solutions apply both to employees who, in accordance with the provisions of the Polish law, remain in the employment relationship with the employer, as well as to persons employed under an outwork or task contract or other service contract, to which the provisions on commissioning apply, or who are in earning employment on the basis of a contract other than an employment relationship for an employer who is an agricultural cooperative or other cooperative engaged in agricultural production, if he/she is subject to the obligation to be included in retirement and disability pension schemes, with the exception of domestic help employed by a natural person.

FOR HOW LONG WILL THE BENEFITS APPLY?

The benefits stated above are due for a total period of 3 months from the date of submission of the application.

WHERE THE APPLICATION FOR THE BENEFIT MAY BE FILED?

Applications for assistance should be submitted to the Director of the Voivodeship Labour Office, attaching a copy of the contract concluded with ZUS or a copy of the tax office’s decision on debt repayment, if the entrepreneur had debt for contributions and concluded a contract with ZUS or obtained a decision on debt repayment, as well as copy of the agreement, which sets out the conditions and manner of performing work during economic downtime or reduced working hours. The application may be submitted in electronic form via the Praca.gov.pl portal or in paper form by sending to the Office’s address.

CO-FINANCING FOR ENTREPRENEURS NOT EMPLOYING EMPLOYEES

According to Article 15 of the act on combating COVID-19, a starosta may, on the basis of the concluded contract, grant an entrepreneur who is a natural person not hiring employees co-financing part of the costs of running a business in the case of a decrease in business turnover following COVID-19 for a period not longer than 3 months from the date of submission of the application, which may be extended by the Council of Ministers by way of a regulation.

The entrepreneur submits the application for co-financing to the powiat labour office competent for the place of business activity within 14 days from the day of announcing the programme by the director of the powiat labour office.

Co-financing is granted on the basis of an agreement concluded by Starosta with the entrepreneur.

DOWNTIME BENEFIT: TO WHOM AND ON WHAT CONDITIONS?

Another solution provided for by the act – downtime benefit – is due if, as a result of the occurrence of COVID-19, there was a downtime in the conduct of business by a person conducting non-agricultural business activity or by the principal or contracting party with whom a civil law contract was concluded.

According to Article 15 zq of the act, a downtime benefit is payable to a person who:

  • conducts non-agricultural business activity pursuant to the provisions of the Entrepreneurs Act or other special provisions. In this case, one-time benefit of 2,080 zł or 1,300 zł may be granted to compensate for the loss of income from business operations.

The 2,080 zł benefit may be paid if:

  • The business activity was opened before 1 February 2020 and this activity was not suspended, and the income obtained a month before the month in which the application for downtime benefit was 15% or more lower than the income obtained in the month preceding this month and was not higher than 300% of the average monthly salary from the previous quarter as published by the President of Statistics Poland.
  • Non-agricultural business activity was suspended after 31 January 2020 and the revenue from its conduct obtained in the month preceding the month in which the application was submitted was not higher than 300% of the average monthly salary from the previous quarter as published by the President of Statistics Poland.
  • There is no other entitlement to social security benefits.
  • You are a citizen of the Republic of Poland or a person with the right of temporary or permanent residence residing in the territory of the Republic of Poland, or a foreigner legally residing in the territory of the Republic of Poland.

The 1,300 zł benefit is payable if:

  • The tax is settled in the flat-rate tax plan and there is exemption from the payment of VAT;
  • There is no other entitlement to social security benefits.
  • You are a citizen of the Republic of Poland or a person with the right of temporary or permanent residence residing in the territory of the Republic of Poland, or a foreigner legally residing in the territory of the Republic of Poland.
  • For an agency contract, task performance contract, other service contract to which the provisions on the task or work contract apply. In this case, one-time benefit of 2,080 zł may be granted. However, if the sum of revenues from civil law contracts in the month preceding the month in which the application for downtime benefit was submitted is up to 1,299.99 zł (i.e. less than 50% of the amount of the minimum salary for work in 2020), then the downtime benefit is granted in the amount of the salary for these contracts. To take advantage of the support, the following conditions must be met:
  • The civil law agreement was concluded before 1 February 2020;
  • The income from the civil law contract obtained in the month preceding the month in which the application for downtime benefit was submitted did not exceed the amount calculated as 300% of the average monthly salary from the previous quarter as published by the President of Statistics Poland;
  • There is no other entitlement to social security benefits.
  • You are a citizen of the Republic of Poland or a person with the right of temporary or permanent residence residing in the territory of the Republic of Poland, or a foreigner legally residing in the territory of the Republic of Poland.

WHEN AND WHERE TO SUBMIT AN APPLICATION?

Determining the right to the downtime benefit is done at the request of the person referred to above, submitted to Zakład Ubezpieczeń Społecznych within 3 months from the month in which the epidemic was announced, in accordance with Article 15 of the Act. In the case of a person performing a civil law contract, the application is submitted via the principal or contracting authority, respectively.

ZUS pays the downtime benefit immediately after explaining the last circumstance necessary to grant it, in a non-cash form to the stated payment account. Note! In the case of convergence of rights to more than one downtime benefit, one downtime benefit shall be paid.

The benefit is granted in the form of a decision from which a party has the right to appeal to a competent court within the time limit and on the terms arising from the Civil Code, through ZUS.

The application may be submitted in electronic form via the Praca.gov.pl portal or in paper form, by post to the address of the competent ZUS.

IMPROPERLY COLLECTED DOWNTIME BENEFIT

If the benefit has been granted or paid on the basis of false statements or documents or in other cases of deliberate misrepresentation by the person collecting the benefit or the principal or the ordering party, or paid to a person other than the authorized person, the person who has improperly collected the downtime benefit is obliged to return it together with statutory interest for late payments. The amount of downtime improperly collected determined by a final decision and the amount of interest and costs of the warning shall be barred after 3 years from the date on which the decision to determine and return of the improperly collected payment became final.

CHANGES TO CONDITIONS OF EMPLOYMENT

In connection with the occurrence of COVID-19, more flexible employment conditions may be applied in order to preserve jobs, namely:

  • limiting the continuous daily rest of the employee to not less than 8 hours and the continuous weekly rest of the employee to not less than 32 hours, covering at least 8 hours of uninterrupted daily rest;
  • conclusion of an agreement on the introduction of an equivalent working time system in which the extension of the daily working time may be allowed, but not more than up to 12 hours, in a reference period not exceeding 12 months. The extended daily working time is balanced by a shorter daily working time on some days or days off;
  • conclusion of an agreement on the use of less favourable employment conditions for employees than resulting from employment contracts concluded with these employees, to the extent and for the time agreed in the agreement.

The above solutions may be applied by an employer who has no overdue tax liabilities, social security contributions, health insurance, Guaranteed Employee Benefits Fund, Labour Fund or Solidarity Fund until the end of the third quarter of 2019, as well as who has experienced a decline in economic turnover following COVID-19.

On 7 April 2020, the Council of Ministers adopted a draft act on specific support instruments in connection with the spread of the SARS-CoV-2 virus, which contains further solutions to counteract the negative socio-economic effects of the coronavirus. The submitted proposals include:

  • enabling entrepreneurs to obtain relief in repayment of tax liabilities in connection with COVID-19;
  • enabling joint-stock companies to make decisions by means of distance communication;
  • exemption from 1 July 2020 from the tax on civil law transactions of sale and conversion of virtual currencies;
  • entities with permission to organize promotional and prize lotteries will be able to organize lottery at a later time than stated in the permit received. In this case, the permit will not expire due to the failure to start operations during the period stated;
  • enabling submission of tax declarations and applications for issuing certificates with any tax office;
  • additional facilities for foreigners staying in the territory of the Republic of Poland on the basis of a Schengen visa or as part of a visa-free system

Sources:

  • Act of 31 March 2020 amending the act on special solutions related to the prevention, counteracting and combating COVID-19, other infectious diseases and crisis situations caused by them, as well as some other acts (Dz.U.2020 poz. 568);
  • https://www.gov.pl/;
  • https://www.zus.pl/;
  • https://wupkrakow.praca.gov.pl/;
  • Draft act of 7 April 2020 on specific support instruments in connection with the spread of SARS-CoV-2 virus.

Author: Trainee Attorney-at-Law Hanna Baszyńska

Editorial supervision: Attorney-at-Law Paweł Tokarski

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