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27 March 2020
newsletter
czech republic

Czech Republic: Government Economic Recovery Measures

Find the German version of this newsletter here

ANTIVIRUS Employment Protection Programme

The Government has approved the ANTIVIRUS Employment Protection Programme.

The programme is currently operating in five different modes of support for employers.

If the employer is unable to assign work to the employees because:

  1. the employee is in quarantine and the employer pays wage compensation amounting to 60 % of the average assessment base – in this case the employer may apply for a contribution covering full compensation of the amount paid;
  1. the government has implemented emergency measures requiring the closure of premises and the employer pays wage compensation amounting to 100 % of the average earnings to the employee – in this case the employer may apply for a contribution covering 80 % of the amount paid;
  1. at least 30 % of employees are in quarantine or are taking care of a child and the employer pays wage compensation amounting to 100 % of the average earnings to the employee – in this case the employer may apply for
    a contribution covering 80 % of the amount paid;
  1. there is a restriction on the availability of inputs (raw materials, products, services) necessary for the employer's activity (as a result of quarantine measures at the supplier in the Czech Republic or abroad) and the employer pays wage compensation amounting to 80 % of the average earnings to the employee – in this case the employer may apply for a contribution covering 50 % of the amount paid;
  1. demand for the employer's products or services has been reduced (as
    a result of quarantine measures at the employer's place of sale in the Czech Republic or abroad) and the employer pays wage compensation amounting to minimum 60 % of the average earnings to the employee – in this case the employer may apply for a contribution covering 50 % of the amount paid.​

It has to be proven that the obstacle to work is related to the COVID-19 outbreak. The contribution will be provided by the Labour Office of the Czech Republic retroactively (in April for March). The amount and duration of the compensation will depend on the reason for the obstacle to work and the point in time when the situation occurred.

The following table with grey background is a scheme published on 20 March 2020 by the Ministry of Labour and Social Affairs (translated into English). On the right side, we attach our comments reflecting the latest updates.

 

 

Situation

 

Provision of the Labour Code

 

Employee protections

 

Comments by Schoenherr (Prague)

I.

An employee was ordered to self-quarantine

Sections 191 and 192 of the Labour Code – Important personal obstacle to work on the employee's side

For the first 14 calendar days – compensatory wage/salary amounting to 60 % of the reduced daily assessment base , from the 15th calendar day – sick pay

According to the approved Targeted Employment Protection Programme, employers will be fully reimbursed for remuneration paid out

 

Approved by the Government

 

100 % of this amount will be refunded to the employer by the state

II.

The employee was

temporarily recognised as unfit for work due to illness

Sections 191 and 192 of the Labour Code – Important personal obstacle to work on the employee's side

For the first 14 calendar days – compensatory wage or salary amounting to 60 % of the reduced daily assessment base, from the 15th calendar day – sick pay

 

Not changed

(remains according to the existing legislative)

III.

The employee must take care of a child under the age of 10 due to the closure of an educational establishment

Section 191 of the Labour Code in combination with Section 39 of the Sickness Insurance Act – Important personal obstacle to work on the employee's side

for 9, alternatively 16 calendar day – care benefit

The government already adopted the emergency act and after approval by the Parliament of the Czech Republic a person is now entitled to the care benefit if they are looking after a child below the age of 13 or persons dependent on another individual's assistance and this dependency is classified at least as medium seriousness, for the entire duration of the emergency measure in the event of an epidemic.

 

Approved by the Government

 

Bill enacted

IV.

 

The employee must take care of a child over the age of 10 due to the closure of an educational establishment

Section 199 of the Labour Code – other unnamed important obstacle to work (requirement: care is necessary with respect to the specific needs of the child)

The employee is not entitled to compensatory wage/salary or benefit from the sickness insurance scheme

The government already adopted the emergency act and after approval by the Parliament of the Czech Republic a person is now entitled to the care benefit if they are looking after a child below the age of 13 or persons dependent on another individual's assistance and this dependency is classified at least as medium seriousness, for the entire duration of the emergency measure in the event of an epidemic.

 

Beyond the extension of situations in which care benefit is provided not changed

(remains according to the existing legislative)

V.

Not assigning work to the remaining employees due to the absence of a larger number of employees (i.e. due to quarantine, temporary incapacity to work, taking care of a child)

Section 208 – other obstacle to work on the employer's side

Compensatory wage/salary amounting to 100 % of average earnings

The Ministry of Labour and Social Affairs presented an Extended Employment Protection Programme which should fully compensate employers for remuneration paid out.

 

Approved by the Government

 

80 % of amount paid will be refunded to the employer by the state (absence of at least 30 % of employees at work)

VI.

Not assigning work to employees due input outage (supplies of material, services, components, foundations)

Section 207 a) of the Labour Code – obstacle to work on the employer's side (idle time)

Compensatory wage/salary amounting to 80 % of average earnings

The Ministry of Labour and Social Affairs presented an Extended Employment Protection Programme which should partially compensate employers for remuneration paid out.

 

Approved by the Government

 

50 % of amount paid will be refunded to the employer by the state

VII.

Temporary closure or limitation of operation due to emergency measures taken by public health protection authority – Ministry of Health, regional hygiene station (i.e. closure of municipality)

Sections 191 and 192 of the Labour Code – Important personal obstacle on the employee's side (quarantine – Section 167 of the Sickness Insurance Act, Section 347 (4) of the Labour Code)

For the first 14 calendar days – compensatory wage/salary amounting to 60 % of reduced average earnings **, from the 15th calendar day – sick pay

 

Not changed (according to existing legislative)

 

It is not yet clear whether from 14 March to 23 March 2020 some of the operations will be subject to the regime under Section VIII below, and from 24 March 2020 in the regime hereunder (due to recent measure issued by the Ministry of Health effective from 24 March 2020).

VIII.

Temporary closure or limitation of operation due to emergency measures taken under the Emergency Management Act (i.e. in connection with the government resolution – gyms, clothing stores, restaurants)

Section 208 of the Labour Code – other obstacle to work on the employer's side

 

BUT: if demand/sales is limited and an agreement with a trade union is concluded or an internal regulation is adopted, partial employment can be applied – Section 209 of the Labour Code

Compensatory wage/salary amounting to 100 % of average earnings

According to authorised Targeted Employment Protection Programme, employers will be reimbursed 80 % of remuneration paid out

 

Compensatory wage amounting to 60 % of average earnings

 

Approved by the Government

 

80 % of amount paid will be refunded to the employer by the state

IX.

Temporary closure or limitation of operation due to reduced demand for services or limitation of product sales

Section 208 of the Labour Code – other obstacle to work on the employer's side

BUT: in case of agreement with a trade union or under internal regulation partial employment can be applied – Section 209 of the Labour Code
 

Compensatory wage/salary amounting to 100 % of average earnings
Compensatory wage/salary amounting to 60 % of average earnings

The Ministry of Labour and Social Affairs presented an Extended Employment Protection Programme which should partially compensate employers for remuneration paid out.
 

Approved by the Government

50 % of amount paid will be refunded to the employer by the state
 

X.

The employee can work from home

Section 317 of the Labour Code – if possible with regard to the nature of the work, in the above-mentioned situations it is possible to agree on work from home (except for temporary incapacity to work)

Wage/salary for the work done (employee is not entitled to compensatory wage/salary or benefit)

If the conditions are met, is it also possible to work from home when in quarantine.
 

Not changed (according to existing legislative)

 ** The condition for wage/salary compensation is a document confirming the quarantine order delivered to the relevant district social security administration.

Details on the application process will be most likely published by the Ministry of Labour and Social Affairs probably next week (after 30 March 2020).

Liberation packages introduced by the Ministry of Finance

Package I

  • Flat waiver of penalties for late filing of personal and corporate income tax returns and default interest until 1 July 2020 at the latest; without need to prove connection with COVID-19.
  • Waiver of all fines imposed for delayed filing for all tax claims of natural and legal persons in connection with COVID-19. This measure applies to all taxes managed by departments subordinated to the Ministry of Finance and all taxpayers (natural persons or businesses).
  • Flat waiver of all penalties for delayed control statement (kontrolní hlášení) in the amount of CZK 1,000 that originated between 1 March and 31 July 2020.
  • The General Directorate of Finance will allow the waiver of all individual penalties for not filing a control statement between 1 March and 31 July 2020 if a connection to COVID-19 is demonstrated.
  • Flat waiver of the administrative fee for filing an application for suspension
    or instalment of tax,  application for remission of default interest; delayed amount and application for remission of penalties for not filing the control statement concerning applications submitted after 31 July.

Package II

  • Waiver of the June advance on personal and corporate income tax. The June advance should not be paid at all.
  • Flat waiver of penalties for late filing of a real estate property tax return or for late payment of real estate property tax or an advance payment. In fact, all taxpayers will be automatically allowed to file a tax return on the acquisition of houses, flats, land, garages and the like and to pay this tax only five months later.
  • Introduction of loss carryback: sole traders and companies may recover any loss posted in 2020 from their 2019 and 2018 tax base, meaning they can claim a refund from the General Financial Directorate.
  • Suspension of the Electronic Sales Register (EET) for the duration of the state
    of emergency and the following three months.

Government loan programmes for corporate COVID loans

The initial COVID1 programme has been replaced by the COVID2 programme. As in the COVID1 programme, interest-free credit will be granted to small and medium size businesses for operational financing if their economic activities are limited due to the occurrence of coronavirus infection and associated precautionary measures. The COVID2 programme includes: (i) CZK 5bln of interest-free loans to be provided by Českomoravská Záruční a rozvojová banka, a.s., and (ii) CZK 5bln to provide guarantees for company loans from commercial banks. Some of that money will be used to pay a portion of the interest on those loans.

Marie
Gremillot

Attorney at Law

czech republic