Which employers and in what way shall be able to benefit from the 60:40 State Compensation Scheme?

As we have informed you in our newsletter from 24 March 2020, the government has expectedly adopted the specific conditions and mechanisms by which it aims to support the most affected business sectors. The goal is to preserve the jobs of the widest possible number of employees in the context of the COVID-19 outbreak and restrictions introduced in the working regime of many Bulgarian enterprises.

As we know that this Compensation Scheme may be one of the solutions for safeguarding your business to a certain extend, we are keen on sharing with you a brief summary of the Council of Ministers Decree 55 from 30 March 2020.

  1. Which employers will be entitled to receiving the state compensation?

Compensation will be paid to employers:

    • Which, by reason of the state of emergency introduced, and following an official order by a public authority, have ceased the work in the entire enterprise or part of it, including specific category of employers active in the following economic sectors: (i) certain types of retail; (ii) passenger land transport; (iii) passenger air transport; (iv) hospitality; (v) restaurants; (vi) bars; (vii) movie projection; (viii) tour operator activity; (ix) trade fairs; (x) private pre-school education; (xi) artistic and creative activity; (xii) cultural activities; (xiii) sporting and other recreational activities; (xiv) other economic activities;
    • Which, by reason of the state of emergency introduced, have ceased the work in the entire enterprise, part of it, or the work to be performed by certain employees, or have established part-time work for the entire enterprise or separate unit thereof, and have declared a reduction in their revenue of not less than 20% in the month preceding the month on which the compensation was claimed, compared to the same month of the previous calendar year (except for employers active in following fields: (i) agriculture, forestry and fisheries, financial and insurance activities; (ii) government, education, human health and social work; (iii) household activities as employers; (iv) the production of goods and services for own consumption by households.
  1. For what period will the compensation be received?

Employers will be able to receive compensation during the state of emergency, but for no longer than 3 months.

  1. What will be the amount of compensation?

The compensation will amount to 60% of insurance income for January 2020 for each employee whose employment is not terminated.

In the case of an established part-time work regime, the compensation shall be paid in a certain proportion based on the hours spent.

  1. Shall compensations also cover the employee’s social security contributions?

No, social security contributions continue to be payable by employers as before, and shall neither be covered by the state, nor rescheduled.

  1. How will the insurance income be determined?

The insurance income for January 2020 is determined as follows:

    • For employees who have worked on a normal basis – the average daily insurance income is multiplied by the number of working days for January;
    • For employees who have taken full-time leave due to temporary incapacity for work, pregnancy and childbearing or adopting a child up to the age of 5 – the average daily income used for determining the due compensation multiplied by the number of working days in January;
    • For employees who have taken parental leave for January to take care of a child up to age of 2 – the gross minimum wage in the country;
    • For employees who have taken unpaid leave for January or have not been insured with this employer – the gross minimum wage in the country.
  1. How much will the employees receive?

Employees shall receive the full amount of the salary pursuant to the employment contract signed with their employer.

  1. What is the procedure for receiving the State Compensation Scheme?

Employers must submit a special application to the Labor Office accompanied with certain documents to establish the employers’ eligibility to receive the financial assistance.

The Labor Office then verifies the application received and sends the Employment Agency a list of all approved employers entitled to compensation. The Employment Agency then submits the relevant information to the National Social Security Institute which makes the payments to the employers in need.

  1. Will employers have the right to receive compensation if they resume work in the enterprise or if they restore the normal working hours of their employees?

No, in this case, employers shall not be entitled to state compensation.

In case you need assistance in receiving the 60:40 State Compensation Scheme – from the assessment of whether your business can benefit from it, through preparation and submission of the necessary documents, to following up on the course of the administrative procedure – please do not hesitate to contact us, we are here to help.

We are ready to answer your questions