On 13 March 2020, the Bulgarian National Assembly declared a state of emergency in the country due to the coronavirus outbreak and recommended a number of measures to local employers to minimize the spread of the virus in the workplace.
Throughout the first week of the state of emergency, these measures appeared to be difficult to implement (e.g. some required the consent of the employees) and insufficient to reflect the downturn in workflow and organizational issues faced by most employers. Thus, after some vigorous discussions in the Parliament, on the 24 March 2020 a new law with specific COVID-19 measures was adopted prescribing, inter alia, extra powers to employers.
NEW LAW ON CRISIS MEASURES
Is the new law what businesses expect and need – certainly not!
Being a legislation built on compromises, it does not provide employers with the flexibility required for such extra-ordinary situation. Even with the adopted emergency measures, employers will find themselves balancing between short-term solutions. In the continuing crisis, this shifts the burden to the business to carefully plan an overall strategy and construct the right queue of measures for their workstream.
Below we share our insight on the new crisis measures and their impact on employers:
EMPLOYERS HAVE ACCESS TO STATE SUBSIDIES OR OTHER ECONOMIC SCHEMES
Following several public announcements, the new law introduced promised economic measures for businesses, aiming to outweigh the negative results of the crisis. Although a budget of approx. 4.5 Billion BGN (approximately 2.3 Billion EUR) is defined to support business (whereas, it can be increased if necessary), only part of it will be directly accessible as a state subsidy.
Namely, the adopted state subsidy will compensate (some) employers with 60% of the insurable income of their employees, for the period of the crisis but not more than 3 months. Reading the text of the new law, there are few immediately noticeable downsides of the offered subsidy, namely:
i) not all but only a limited scope of companies will be eligible to use these subsidies - a decision of the Ministry of Counsels is expected to set the exact criteria, however, following initial information these will only be companies that were ordered to close down due to the state of emergency (e.g. tourism, restaurants, leisure/culture, etc.). All companies which indirectly suffered the outcomes of crises, including labour intensive sectors such as automotive and other productions, may not be able to benefit. Moreover, the subsidy will apply pursuant to additional conditions – including, a possible obligation for any recipients to keep workforce untouched for another 3 months.
ii) the subsidy will only cover 60% of the insurable income, but not of the actual salary of the employees. Currently in Bulgaria applies a cap on the insurable income of BGN 3,000 (approx. EUR 1,500). This means that sectors where employees enjoy higher salaries exceeding BGN 3,000 (e.g. IT, engineering, consulting) – if at all eligible for subsidy under p. i) – may only benefit with a 60% of the maximum insurable cap, not the actual salary.
iii) the subsidy will be at the expense of the social fund "Unemployment", operated by the National Insurance Institute. It is expected that this fund may be heavily overloaded as result of the crisis. Also, many employees may find it more beneficial to get dismissed and subscribe for state compensation for unemployment (up to 70% of the insurable income for a maximum of 12 months) than to put up with the crisis measures of employers. This is another argument why a very limited scope of companies will be given access to the state subsidy.
The rest of the defined budget is planned to be distributed through various programs of the Bulgarian Development Bank (e.g. commercial loans for the business, consumer loans for employees using a non-paid leave but still in continuance employment, etc.) and social schemes. These are yet to be determined and shall be accessible also for companies outside the state subsidy' criteria.
Lastly, the Parliament voted for simplified procedures and timelines for obtaining financial aid from the European structural and investment funds (ESIF). The local operating authorities in charge of the management of the ESIF funds shall further update their aid participation rules.
EMPLOYERS HAVE ADDITIONAL WORK ORGANIZATION RIGHTS
It is important to note that whilst imposing of distant work will no longer be an issue, employers still need to arrange the particularities of this regime of work. In a distant work the employer continues to carry a variety of employment obligations – to ensure health and safety conditions (an accident at the employee home may qualify as labour accident), to monitor working time compliance (employees' recoding of excessive hours will be treated as overtime and trigger compensation), to ensure data privacy and confidentiality (leakage of personal data or trade secrets due to employees using unreliable systems or software, may result in administrative fines and contractual liability).
The above obligations, if not properly settled by employers, may cause disturbances of the working process during the crisis.
In contrast to distant work, the biggest disappointment for businesses came from the adopted crisis measures for use of employees' leaves. Whilst employers were hoping for enhanced rights in releasing employees in paid/unpaid leave (for which, the LC requires the consent of the employees), the adopted new emergency measures only enabled them to order (without consent) ½ of the paid leave.
Having regard that the statutory paid leave in Bulgaria – and market standard – is 20 days per year, the practical impact of the above measure would relate to 10 working days on annual basis or 2 working weeks. Still, the new law does not restrict the measure to paid leave accrued in 2020 and depending on the circumstances, might be possible to extend it with unused paid leave from the previous year(s). Afterwards, if employers want to continue with the remaining ½ of the paid leave or unpaid leave, they shall seek agreement with the employees or combine it with another available measure - see Section 2 below.
Even under the new emergency measures, employers are not allowed to unilaterally decrease the salary of employees. This effect, however, can be ultimately achieved by implementing reduced working time within the company. Under the LC, employers are given the right to reduce the working time of all or some of their employees to not less than 4h per day (or half of the regular working day) and pay proportionately decreased salaries. With the new law on emergency measures, this right is further enhanced by eliminating the obligation for the employer to held prior discussions with the unions and by allowing reduced working time for the whole period of the crisis (regardless of its duration).
Furthermore, if combined with some of the other available measures under the LC (e.g. shifts, see below), employer may also reduce the working days and attendance of the employees at the work premises (e.g. instead of 5 days x 4h, shifts of 2 days x 8h).
Lastly, under the new law on emergency measures the above measures for employers to organize their working time are given effect as of 13 March 2020.
OTHER MEASURES AVAILABLE UNDER THE LABOUR CODE
While contemplating the important new crisis measures, employers shall still not forget the already available ones under general labour law. Although Bulgarian LC is one of the oldest pieces of legislation (adopted in 1987) and has little crisis-specific entitlements, it still provides for several solutions to be utilized by employers in the current situation. Namely:
OUR ADVICE TO EMPLOYERS
To summarize, there is no universal solution for businesses in the times of the COVID-19 emergency situation.
Businesses, however, have access to number of measures - which may or may not work alongside and which may or may not lead to the right combination for the company. Thus, our practical recommendation from the past weeks is that in a fast-changing environment as the present one, only organizations which have taken the time to carefully consider their strategy and the right queue of legal solutions to achieve said strategy in the long run, would be able to ensure proper protection against the crisis.
