Romanian Government recently modified the conditions under which the Romanian state will assist companies which face closure or significantly reduced activity due to the Coronavirus restrictions. More exactly, the rules for benefiting of technical unemployment aid during the state of emergency period have just been modified.
Basically, the government decided that it will pay all employers affected by Coronavirus the allowances that each employer is obliged to pay to employees they temporarily send home. We have drafted below a short technical unemployment guide summarizing the essential information for the companies that want to benefit from this specific state aid.
Who can benefit from state aid under the technical unemployment period?
The state aid for technical unemployment in the context of Coronavirus is regulated by Ordinance of the Government no. 30/2020, published on March 21 in the Official Gazette, but modified on Monday by Ordinance no. 33/2020. However, the technical unemployment concept is regulated first of all in the Romanian Labor Code, although not for the specific situations such as epidemic crisis.
In the context of Coronavirus and emergency, the Government has decided to provide financial assistance to employers, to encourage them not to lay off employees, but to send them into technical unemployment. Thus, the Government offers to support the unemployment benefit up to 75% of the national gross average wage for 2020, for each employee under this status.
According to the Labor Code, the employer must pay a technical unemployment allowance of at least 75% of the employee’s base salary. In cases where the amount paid by the Romanian state does not cover 75% of the employee’s base salary (the employee’s salary is higher than the national gross average wage), companies can cover the difference (if they want and if they have enough cash).
According to the latest applicable law, all employers who have been directly or indirectly affected by Coronavirus, but only for the emergency period, can receive state aid for the payment of the employees sent into technical unemployment. Both employers who interrupt their activity and those who reduce it are eligible to receive the aid. Also, it is not only companies, but also other types of employers – e.g. self-employed individuals, for example, who can hire employees – that have the right to receive the state aid).
Firms can resort to technical unemployment, under the conditions of the Labor Code, at any time, not only in the Coronavirus context. Now it is just a matter of state aid with the payment of technical unemployment benefits.
Otherwise, it means that technical unemployment benefits are compulsory under the Labor Code – now or on other occasions. Meaning that employers who use the technical unemployment mechanism must pay at least 75% of the salary to those employees sent into unemployment.
What are the conditions required to get the state aid?
Although initially provided so in the law, the emergency certificate is NOT required anymore to obtain this aid. This means that companies are not required to apply for the emergency certificate with the authorities before getting to receive the state aid.
All employers who will apply for technical unemployment for their employees will have to submit an application, together with an affidavit, and a list of employees who will receive the money. All will be sent by e-mail to the territorial Unemployment Agency.
The money will be paid by the Unemployment Agency directly to the accounts of the beneficiaries, according to the law.
All employers must know that the amounts can be received in advance: they money can be requested in advance, before being paid to the employees. Specifically, the money comes within 15 days of submitting the required documentation. Then, within a maximum of 3 business days from the bank transfer, the net allowances must be paid to the employees.
For the period 16 – 31 March 2020, employers can already submit applications. For the period 1 -14 April 2020 (at least), employers will request the money at the beginning of May 2020. The two periods represent the interval of the already declared state of emergency. The state of emergency period can be extended if the situation persists.
For how long is the unemployment benefit allowance subsidized by the government?
This will happen for the period of emergency established by the authorities. This period is now set at 30 days, but the probability of its extension is not excluded.
Should all employees be sent into technical unemployment?
No, each company may be in a different situation: there are companies forced by the state to close their business, due to the state of emergency. This means that they are rather forced into technical unemployment. But there are companies that are not required to close the entire activity, but maybe only certain branches or departments. However, if their revenues are significantly decreased such that they need to send people to technical unemployment, they can apply for state aid for those specific employees.
What will be the status of the employees during the technical unemployment?
They are still employees of the company. According to the Labor Code, they are available to the employer. When it is decided to resume work, the employees must return to work and receive the usual salaries again. This may also mean that the activity could resume at during a month, which will complicate things with calculating the unemployment allowance and the salary only for part of the month.
As per the Romanian labor law, the employment contracts are suspended during this period (this must be notified in the Electronic Register of Employees), but the employees are must still pay social contributions, out of the unemployment allowance, to health and pension funds.
Are individuals under technical unemployment entitled to other allowances or social benefits as well?
The technical unemployment allowance cannot be accumulated with other types of financial rights, such as the unemployment benefit or the allowance granted to parents for non-working days allowed to stay at home with children during this period.
What about employees that have several employment contracts?
If employees have several employment contracts and one of them is active (full time), they are not eligible to receive technical unemployment allowance Eligibility applies only if all contracts are inactive, and they will receive technical unemployment allowance for the contract with the highest salary.
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