Slovakia: New Government State Aid For The Coronavirus Crisis: A Slovak Version Of Catch 22?

The Slovak Government has introduced state aid measures to support employers and the self-employed affected by the coronavirus crisis. This article sets out details of the measures and comments on some issues around their effectiveness.

The Slovak Government announced the introduction of two schemes of state aid in the context of the coronavirus crisis on 29 March 2020. The first one was meant for employers who were forced to close their units based on the measures of the Slovak Public Health Authority (PHA) and the second one was targeted to employers who stayed open and whose revenues dropped down. Deadlines for filing the applications were planed for 6 and 9 April but the second one has been postponed several times.

The week after Easter, the structure of state aid changed dramatically. Not only the number of schemes doubled (from two to four) but the number of qualifying conditions raised as well. At the time of writing (as of 20 April 10:00) there is a scheme of state aid for:

• employers (including self-employed who are employers) who were forced to shut down their units based on the measures of PHA;
• self-employed individuals who had to close their units or whose revenues dropped;
• employers (including self-employed individuals who are employers) who keep job positions even in case of interrupting or reducing their business;
• self-employed inidivduals or sole trader companies who have no other income from 13 March (date of PHA's decision).

Scheme 1

As of 13 March 2020, all retailers (except for groceries, drug stores, pharmacies, and pet stores) were ordered to close down. Where these employers made their employees use garden leave (technical unemployment) they are eligible to aid amounting to 80 % of employees' salaries, up to a maximum of EUR 1,100 (per month per employee). Where the technical unemployment was based on an agreement with employee representatives and the employer paid employees less than 80 % of their salaries, state aid would recover the actual costs up to a maximum of EUR 880.

Scheme 2

Self-employed individuals who had to interrupt or reduce their business activities are eligible to state aid if their revenues dropped. The amount of state aid corresponds to the decrease in revenues shown in the tables below (under Scheme 3).

Scheme 3

Employers that are able to keep job positions during the corona restrictions are allowed to chose from two state aid options:

• recovery of personal costs up to 80% of the salary of an employee who is on garden leave (technically unemployed),  up to a maximum of EUR 880;
• contribution per employee of the amount shown in the tables below.

In both options, the employer is obliged to keep the job position for two months following the month for which the state aid was paid. State aid is only available for employees who were on garden leave, i.e. not for those who were using their holidays, or who were on pandemic or sick leave.

It is important to emphasise that employer can choose only one of these options for the whole duration of the Corona crisis and can not change it on a monthly basis.

Scheme 4

This scheme will be online from 20 April and supports specific entrepreneurs such as one-man companies as well as self-employed individuals who have no other income. The contribution is EUR 105 per month for March 2020 and EUR 210 per month for April and May 2020.

Finally, all general conditions applicable to all schemes still have to be met. All applicants must:

• have no tax debts;
• have no health and social security debts;
• have incurred no penalty for so-called 'illegal employment';
• not be bankrupt, in liquidation or restructuring nor been designated as a 'business in difficulty' under the Commercial Code.

Last but not least, the Government has adopted another form of help in the form of waiving the employer's part of social and health contributions from employee's salaries. The employee's part of contributions is not waived and should be paid respecting the regular deadlines. Waiver of contributions will apply only to those employers who closed their operations in April for at least 15 days. The announcement of the waiver came, unfortunately, too late to fulfill the 15-day-closure condition, meaning employers who did not close last week (or sooner) would not be eligible. The waiver looks very much like Joseph Heller's 'Catch-22'.

More details are expected soon; stay tuned.

Originally Published 22 April, 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.