LEX LABORIS CORONAVIRUS Survival instruments in the labour law area

The amended Act on special solutions related to preventing, counteracting and combating COVID-19, other infectious diseases and crisis situations caused by them, also called COVID-19 Anti-Crisis Shield (hereinafter referred to as the “Act”) has been the response to the challenges and the slowdown that have affected most employers due to the SARS-CoV-2 virus.

The pandemic has had a significant impact on the economy in Poland, in particular on the labour market. An extremely serious problem for employees and employers is the threat of collective redundancies and an increase in the level of unemployment. The amended Act is aimed at counteracting the negative economic effects associated with the COVID-19 epidemic in Poland, including the introduction of a protective package for entrepreneurs to maintain and protect workplaces.

An application for subsidizing from the Fund of Guaranteed Employee Benefits

The Act gives entrepreneurs who have experienced a drop in turnover as a result of the COVID-19 pandemic the opportunity to submit an application for co-financing from the Fund of Guaranteed Employee Benefits of:

• remunerations of employees covered by economic downtime, including premiums to the Social Insurance Authority (ZUS);
• remunerations of employees covered by reduced working hours, including premiums to the Social Insurance Authority (ZUS).

To submit this application,the entrepreneur must meet the statutory conditions, including no arrears in the payment of public levies up to the end of the third quarter of 2019 and no reason to declare bankruptcy. The entrepreneur must also demonstrate that as a result of COVID-19 he experienced:

• a decrease in the turnover of goods or services of not less than 15%, comparing the total turnover in any of the 2 following months (falling after January 1, 2020, but before the day of submitting the application) to the total turnover achieved from the same 2 months of the previous year, or
• a decrease in the turnover of goods or services of not less than 25%, comparing the total turnover in any month chosen by the entrepreneur (falling after January 1, 2020 but before the day of submitting the application) to the turnover from the previous month.

Economic downtime or reduction of employees’ working hours can be introduced based on an agreement concluded with the trade unions or employee representatives selected in accordance with the procedure adopted at the given employer.

By introducing economic downtime, the employer is entitled to reduce the employee's remuneration for work by no more than 50%. However, the remuneration may not be lower than the minimum remuneration indicated in the legal acts. In this situation, the Fund of Guaranteed Employee Benefits will co-finance the employee's remuneration costs by up to 50% of the minimum remuneration for work.

The employer may also reduce the employee's working time by up to 20%, not more than down to half of the full-time employment. The reduced remuneration may not be lower than the statutory minimum remuneration. The co-financing from the Fund of Guaranteed Employee Benefits for entrepreneurs submitting an application amounts up to half of the employee's reduced salary, but cannot be higher than around 500 EUR.

In one workplace, both economic downtime and reduced working time can be introduced, but a specific employee can be covered only by one of these options. Furthermore, the entrepreneur may not terminate employment agreements for reasons not related to the employee, if the employee is covered by economic downtime or reduced working time, during the entire period of receiving benefits from the Fund of Guaranteed Employee Benefits (maximum 3 months).

Benefits from the Fund of Guaranteed Employee Benefits are granted for a total period of 3 months from the month of submitting the application.

An application for subsidizing from local (community) authorities - the Staroste (micro, small and medium-sized enterprises)

Pursuant to the Act, the Staroste may subsidise entrepreneurs with a part of the cost of employees' remunerations and social security contributions in the case of a drop in turnover following the occurrence of COVID-19. The amount of support granted to a specific entrepreneur depends on the size of the drop in turnover (decrease in turnover cannot be less than 30%). The possibility of co-financing concerns only micro, small and medium-sized enterprises.

Benefits from the Staroste are granted for a total period of 3 months from the month of submitting the application by the entrepreneur.

According to the Act, the entrepreneur cannot receive co-financing for the same costs of running the business which have already been or will be financed from other public funds.

Loan to micro-enterprises

The Staroste may also grant a one-time loan financing from the Labour Fund to cover the current costs of running a business, in order to counteract the negative effects of COVID-19. This solution is addressed only to micro-entrepreneurs who were running their business before April 1, 2020.

The limit of the loan amount is 5,000 PLN (around 1,100 EUR) and the repayment period should be no longer than 12 months (with a 3-month grace period in principal and interest payments).

At the micro-entrepreneur's request, the loan and interest are subject to redemption, on the condition that the micro-entrepreneur continues to run the business activity for a period of 3 months after the loan is granted.

Exemption from premiums to the Social Insurance Authority (ZUS)

According to the Act, entrepreneurs may apply for an exemption from the obligation to pay social security premiums for a period of 3 months - from March 1, 2020 to May 31, 2020.

Entrepreneurs who have reported less than 10 insured persons for social insurance are exempt from paying the full amount of contributions for the months indicated above.

Entrepreneurs who have reported from 10 to 49 insured persons for social insurance, may apply for exemption from paying premiums for the above mentioned months in the amount of 50% of the total amount due for premiums indicated in the settlement declaration submitted for a given month.

The application for exemption from the obligation to pay contributions must be submitted by the entrepreneur to the Social Insurance Institution no later than by June 30, 2020.

According to our observations, many entrepreneurs have used or plan to use the instruments described in this article.