Requirements and Procedure for Payment of Compensations to Employers Who Have Suspended Work Due to the State of Emergency

A Decree of the Council of Ministers (CM) shall be enacted soon, which to specify the requirements and the procedure for payment of compensations to employers who have suspended work due to the state of emergency (hereinafter referred to as the Decree).

Due to the big interest on behalf of employers, we will hereby review in brief the main requirements for the payment of compensations, as provided for in the draft of the Decree. Please be informed that as of the current moment, the Decree is not yet enacted by the CM in its final version and thus amendments are possible. AFA shall inform you in a timely manner about the development on the topic and for the contents of the definitively enacted texts.

1) It is provided for that the compensation shall be at the amount of 60 percent of the social security income for the month of January 2020 for the employees whose work was suspended due to the state of emergency.

2) In order to receive compensation, an employer should have suspended work in the applicant undertaking by means of an order issued in the employer’s own discretion or on the grounds of an act of a public body, for the entire period of the state emergency or part of it, but for no more than 3 months. This possibility is available only for undertakings applying for compensations for employees hired in the sectors and economical activities explicitly listed in the Decree, and namely:

• Processing industry, with the exception of tobacco production; production of coke and refined petroleum products; production of chemical products; manufacture of medicinal substances and products; manufacture of computer and communication equipment, electronic and optical products;
• Construction;
• Retail trade, except of motor vehicles and motorcycles, with the exception of retail trade in non-specialized stores, predominantly with food, beverages and tobacco; retail sale of food, beverages and tobacco in specialized stores; retail trade of medicines and other pharmaceutical goods; retailing of medical and orthopedic goods; retail trade in open stands and markets; retail trade not in retail outlets;

• Other types of passenger ground transport;
• Freight transport and relocation services;
• Passenger air transport;
• Hospitality;
• Restaurants and fast food establishments;
• Drinking establishments;
• Publishing activity;
• Movie projecting;
• Public relations consultancy;
• Activity of advertising agencies;
• Market research and opinion polling;
• Travel agency and operator activity; other travel and booking activities;
• Artistic and creative activities;
• Other activities in the field of culture;
• Sports and other activities related to entertainment and recreation;
• Maintaining of good physical condition;

3) Applicant employers must meet the following requirements:

• The employer must be a local natural person or legal entity or a foreign legal entity carrying out business in the Republic of Bulgaria;
• The employer must apply for compensation for employees hired in sectors and economic activities listed in the list under it. 2 above;
• The employer has no obligations for taxes and statutory social security contributions, as well as for interest thereto, towards the state or the municipalities,
• The employer has not been declared insolvent and is not in insolvency or liquidation proceedings;
• The employer is obliged to keep the employment of the persons for whom he has received compensation for a period of not less than the period for which the compensation is paid;
• For the period for which compensation is paid, the employer is obliged not to terminate the employment contracts of employees by means of termination notice on the grounds of closure of part of the undertaking, staff cut, reduction of the work load or upon suspension of the work for more than 15 working days;
• There must be no effective penal decrees or court decisions for violations of the Labour Code or of the Labour Migration and Labour Mobility Act as regards the employer for a period of 6 months preceding the issuance of the employer’s order for suspension of work in the undertaking.
• During the period for which compensation is paid, the employer must not receive financing from the state budget, European Structural Funds or other public funds as regards the employment of employees whose work has been suspended due to the state of emergency.

This material is not exhaustive, is only of general nature and does not represent a specific advice or consultation. Should any additional questions arise, please do not hesitate to contact us at tel.: 02/943 37 00, fax: 02/943 37 07, е-mail: office@afa.bg or at: 38, Oborishte Str., Sofia 1504.