Draft Act on short-time work allowance – „Kurzarbeit“ scheme

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The Government of the Slovak Republic approved the draft Act on short-time work allowance, which is the Slovak version of the so-called “Kurzarbeit” scheme. The aim should be the provision of allowance to cover the employee’s income at the time when the employer cannot assign work due to adverse external factors which cannot be controlled or prevented. The introduction of permanent “Kurzarbeit” scheme is expected in early 2022.

It is proposed that short-time work allowance would be paid upon fulfilment of certain conditions, such as:

  • the employer has paid social security contributions and compulsory pension contributions for at least 24 calendar months prior to the submission of the application for allowance;
  • the employer does not violate the prohibition of illegal employment for a period of two years prior to the submission of the application for allowance;
  • the employer enters into a written agreement with the employees’ representatives or directly with the employees (in case of employers where no employees’ representatives operate) regarding the application for allowance;
  • the employer applies for the allowance by the end of the following calendar month;
  • the employer is unable to assign work to employee for at least 10% of the weekly working hours;
  • the employee has been employed by the employer for at least one month as at the date of submission of the application for allowance;
  • the employee is not under a notice period;
  • the employee has used all vacation for the previous calendar year and positive balance of working time account, and there is no possibility of transfer to another job within the agreed type of work.

The allowance should represent 60% of the employee’s average hourly income up to the maximum amount calculated as 60% from the ratio of 1/174 of twice the average wage of an employee in the Slovak economy for the calendar year preceding two years when the allowance is provided. For example, if an estimated average wage in the national economy of the Slovak Republic would amount to EUR 1,100 in 2020, the maximum allowance would be 60% from the ratio of 1/174 and the amount of EUR 2,200, i.e. EUR 7.5862. If the obstacle at work on employer’s side would last throughout the entire month, the state allowance for wage costs would amount to EUR 1,320, which is 60% of employee’s wage, and the remaining 20% will be paid by the employer. The employee will receive 80% of his net salary. Allowance will be paid by labour office on a monthly basis, but for a maximum period of six months over 24 consecutive months. The employer’s obligation will be to subsequently maintain the job position for which allowance was received at least two months after the termination of support. At the same time, the draft Act introduces full electronic submission of applications for allowance.

Financial allowance will be paid from the newly established employment fund, which will be managed by the Social Insurance Authority. The employer will contribute 0.5% of the employee’s assessment base to this fund. The current rate of unemployment insurance contributions will be reduced by 0.5%, therefore total contribution will not increase for those who pay unemployment insurance.

Due to proposed change in the Income Tax Act, the short-time work allowance should be exempt from income tax.

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