COVID-19

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It is apparent that the extraordinary situation around the COVID-19 generates a number of various and quite often complex legal issues in a broad range of areas such as employment, contracts, damages, data protection, state aids etc.

PETERKA&PARTNERS is addressing this timely and adequately and therefore, we decided to create a COVID-19 Help desk, which could be used as a centralized and efficient tool for clients to cope with all legal matters arising in these special circumstances.

All local contacts in our offices throughout the Central and Eastern Europe remain fully available for assistance and, in addition, we are offering through the COVID-19 Help desk a central point of contact on all related matters.

The COVID-19 Help desk will include experts from all our offices and assistance may be provided under the law of the various jurisdictions in the CEE region where PETERKA&PARTNERS operates and we will further cover matters with cross-border implications or origin. Support will be provided in all languages usually used.

Please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com

Related Legal Information

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With the Covid-19 pandemic spreading throughout the world, and the perfect storm on the global markets, it is the proper time for businesses to consider certain legal aspects relevant for their contractual relations in this context.

A major issue, in particular, is the concept of force majeure and its application in the light of recent events, i.e., how the outbreak of the virus and related government actions affect the legal position of each company in its business relationships, whether as a client or a supplier, and to what extent companies may be liable or exempt from liability depending on the specific circumstances in the inevitable economic disruptions.

A number of elements should be taken into consideration in such assessment, among others, these are:

  • the law governing the contract; what is the level of detail of the relevant provisions of the governing law and to what extent are such provisions imperative or do they allow companies to deviate in their contracts from the statutory concepts; 
  • the existence of a force majeure clause in the respective contract and the language used in this respect, whether the clause is broader or narrower;
  • whether an event is a force majeure event, and what precisely could actually qualify as a force majeure event;
  • evidencing of force majeure events, whether certificates are issued to this end by certain authorities or organizations, and what their value in the particular legal relationship is;
  • which contractual obligations are affected by the force majeure, in other words what failure to perform contractual obligations is exonerated as a result of the force majeure;
  • the conduct of the parties to the contract – whether they have taken or they should take certain steps in view of the force majeure provisions/clauses, whether they have taken action to mitigate any related damages, etc.;
  • for how long the effect of the force majeure lasts and whether at some stage the contract should be considered terminated or could be terminated by one or both parties and what the consequences of such a development are.

The answers to these and other questions may have major economic implications for businesses and it is recommendable to address them in a timely manner in order to mitigate the effects of the undergoing turmoil.

Please feel free to contact us at covidhelpdesk@peterkapartners.com for further assistance on the matter above and any other COVID-19 related matters.

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PETERKA & PARTNERS brings you a guide with an overview of the main employment issues arising in the context of COVID-19 pandemic covering nine jurisdictions in Central and Eastern Europe. The guide includes, among others, information about general emergency status in the countries concerned, health and safety, quarantine issues, home office and leave. For more details please click here.

Please do not hesitate to contact our COVID-19 Help desk should you have any questions related to the legal aspects of the coronavirus at covidhelpdesk@peterkapartners.com.

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Against the backdrop of the aggravated situation in the world in regards to COVID-19, Belarus has imposed mandatory isolation rules for people entering the country. Such measures were stipulated by the Decree of the Council of Ministers of the Republic of Belarus of March 25, 2020 No. 171.

People who have arrived in Belarus from countries where cases of COVID-19 infection are registered, for 14 calendar days from the date of arrival:

  • must be self-isolated at home;
  • are not allowed subsequent passage through the border of Belarus (until the expiration of the period of self-isolation).

These measures do not apply to:

  • employees of diplomatic missions, consular institutions of foreign states in the Republic of Belarus and those accredited with residences in other countries, international organizations and their representative offices located in the Republic of Belarus, as well as members of their families;
  • heads and members of official delegations;
  • drivers of vehicles when performing international road transport of goods;
  • crew members of aircraft, inland watercraft;
  • transport, train crews, locomotive crews of international railway transport;
  • foreigners transiting through the territory of the Republic of Belarus to return to their places of residence.

We note that apart from the above measures, no quarantine inside the country or other specific restrictive regime has officially been announced by the Republic of Belarus to date.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

This document reflects the status as of March 27, 2020. It is for informational purposes only and may not be considered a legal opinion or advice.

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Measures in currency control regulation - details here.

Suspension of amortization of assets – details here.

Presidential Decree № 143 "On supporting the economy" - details here.

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Due to many countries having closed their borders due to the COVID-19 pandemic, on 3 April 2020, the Council of Ministers of the Republic of Belarus adopted Resolution № 194/6 in respect of employees who were sent on business trips abroad and who now cannot return to the Republic of Belarus.

If it is impossible for an employee to return to Belarus from a business trip (including internships, seminars, conferences and other events related to professional development activities) from a country where cases of COVID-19 are being recorded, the Resolution prescribes to:

  • prolong the period of the official business trip of such employee up to the day of his/her arrival in the Republic of Belarus inclusively (“extension period”);
  • preserve the employee’s working place and position;
  • reimburse the employee for expenses incurred on the business trip abroad in accordance with the applicable laws;
  • pay to the employee a salary in the amount of no less than 2/3 (two-thirds) of his/her regular salary (unless otherwise provided for in a collective, or other, agreement or the company’s internal policies), during the extension period, and also during the period of mandatory self-isolation upon arrival in Belarus if the employee cannot perform work under the employment contract after a business trip;
  • provide the employee staying abroad on a business trip during the extension period with all mandatory payments and guarantees as provided by applicable laws if the employer assigns the performance of additional tasks during this period.

The Resolution shall be applied retrospectively to the relations that have arisen since March 12, 2020.
 

Please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

 

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In Belarus, it is the Belarusian Chamber of Commerce and Industry (BelCCI) that is authorized to confirm force majeure circumstances (force majeure). In connection with COVID-19, the BelCCI has recently published, on its official website, clarification in respect of the confirmation of force majeure. In particular, the BelCCI has clarified the following:


Authority of the BelCCI
: that only it is authorized to confirm force majeure in relation to specific agreements – foreign trade agreements or agreements concluded between Belarusian enterprises. Moreover, if the contract is concluded between Belarusian entities, then it should contain a specific provision on the right of the BelCCI to confirm the force majeure circumstances.


COVID-19 and force majeure
: COVID-19 or the epidemic and pandemic that arose in connection with it cannot be considered as force majeure circumstances per se, but as force majeure may qualify the restrictive and other measures aimed at preventing the spread of coronavirus and its consequences.

Restrictive measures may include decisions of state and local authorities, and government decisions, including those that aimed at restricting supplies, the free circulation of goods and labour staff, and closing borders.
If restrictive measures were taken on the territory of foreign states, documents confirming the presence of force majeure circumstances will be, among others, certificates of force majeure issued by the organizations authorized in those states to do so.


Force majeure – general issues: force majeure circumstances can include natural disasters (floods, hurricanes, fires, etc.) and public life events (wars, strikes, etc.).
Force majeure circumstances, as a rule, do not include:

  • changes in exchange rates;
  • decrease in revenue from the sale of goods, works, services, including in connection with the suspension of activities;
  • reduction in the number of visitors to cafés, restaurants, other catering organizations, casinos, hotels, cinemas;
  • increase in the cost of transporting goods, including by sea;
  • reduction in the number of ships on sea transport lines.

Force majeure circumstances are the ground for the release of entities from liability for non-fulfilment or improper performance of obligations under agreements, but it does not release the parties from the fulfilment of its contractual obligations. The obligation to prove the presence of force majeure rests with the person/entity who has not fulfilled, or improperly performed, an obligation under a specific agreement.
The BelCCI has also clarified the procedure for filing applications for the purposes of confirmation of force-majeure circumstances.

Please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

 

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The Ministry of Health of the Republic of Belarus in Resolution No. 24 dated March 31, 2020, approved the rules of conduct for persons who are in self-isolation for 14 calendar days from the date of their arrival in the Republic of Belarus from countries in which COVID-19 cases have been registered.

According to the rules, the abovementioned persons, must not leave their places of residence and shall be restricted from visiting places of work (studies), shops, shopping centres, catering facilities, sports, exhibition and concert halls, cinemas, train stations and other public places, except in cases of emergency:

  • visiting the nearest grocery store or pharmacy (in the absence of the opportunity to use the services of online stores to purchase them);
  • walking pets at a distance not exceeding 500 metres from their places of residence;
  • removal of waste.

In cases of emergency it is obligatory to use a medical mask and gloves, and also to keep at least 1.5 metres of distance from other persons.

 

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

This document reflects the status as of April 9, 2020. It is for informational purposes only and may not be considered a legal opinion or advice.

 

 
 
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Update on Grant for Medium-Sized Businesses in Bulgaria in Light of COVID-19
The application process for a grant for medium-sized enterprises1 has been opened. The deadline for application (i.e., filing of a project proposal) is 16:30 EEST on 24 August 2020.

The procedure has undergone several changes since its initial announcement (for more information you can take a look at our previous article on the subject here). Therefore, we would like to share briefly what we believe are the most significant changes in the procedure, in particular, mainly in the criteria that must be met by applicants:

  • Maximum range of grant per individual projectBGN 150,000 (approximately EUR 76,694), but no more than 5% of the amount of the turnover for 2019. The minimum amount per individual project has remained unchanged – BGN 30,000 (approximately EUR 15,339), however, the maximum amount has been increased from BGN 100,000 (approximately EUR 51,129) to BGN 150,000, but no more than 5% of the amount of the turnover for 2019 (as opposed to not more than 1% of applicant’s net revenues for 2019 according to the previous version of the procedure);
  • Period of economic activity criterion – eligible applicants must have at least two complete financial years prior to the announcement of the procedure (i.e., 2018 and 2019) with economic activity, as opposed to the previous version of this criterion where applicants had to be registered prior to 1 January 2019;
  • Monetary criterion – eligible applicants must have a turnover for 2019 of at least BGN 1,000,000 (approximately EUR 511,292), as opposed to the previous version of this criterion where the applicants had to have net revenues between BGN 3 million (approximately EUR 1.5 million) and BGN 50 million (approximately EUR 25.5 million) for 2019;
  • Calculation of the drop – eligible applicants must have a drop in the turnover of at least 20% for one of the calendar months in the period from 1 February 2020 to the month preceding the month of application (e.g., July if the project proposal is filed in August) compared to the turnover for the same month in 2019, as opposed to the previous version of this criterion where applicants had to have a drop in revenues of 20% or more in a calendar month in the period from 1 February 2020 until the month preceding the month of application compared to the average monthly revenue in 2019;
  • Coverage of personnel costs – personnel costs should be under employment contracts concluded before 1 July 2020, as opposed to the previous version of the procedure where the covered personnel costs were under both employment contracts and management and control contracts and the contracts had to be concluded before 13 March 2020.

As evident from the above, among others, turnover has become more relevant that net revenues.
For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.
This document reflects the status as of July 17, 2020. This document is for informational purposes only and may not be considered a legal opinion or advice.
  

1 Under Bulgarian law, medium-sized companies are companies with (i) an average number of staff of fewer than 250 and (ii) an annual turnover not exceeding BGN 97.5 million (approximately EUR 49,850 million) and/or whose asset value does not exceed BGN 84 million (approximately EUR 42,948 million).
  
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A new support instrument for medium-sized enterprises1 in Bulgaria is now in the pipeline. The support measure is structured in the form of a grant aiming to support such companies in overcoming the economic impact of the COVID-19 pandemic. As in the similar support measure targeted to micro- and small-sized enterprises, this measure will be channelled through the Operational Programme “Innovation and Competitiveness”. The final conditions of the grant are expected to be disclosed around mid-June 2020.

Nevertheless, according to the conditions and forms of the support initially disclosed and circulated for public discussion, it seems that Bulgarian medium-sized enterprises registered prior to 1 January 2019 as per the Bulgarian Commercial Act or Cooperatives Act could receive a grant in the range of BGN 30,000 (approximately EUR 15,339) to BGN 100,000 (approximately EUR 51,129) but not more than 1% of the company’s net revenues for 2019. The deadline for application (i.e., filing of a project proposal) is still to be determined.

Branches of foreign legal entities are not entitled to receive this grant. Further, certain sectors are excluded as well, e.g., finance, and food and beverage manufacturing.

Companies must meet certain criteria to be entitled to this support measure. For instance, the net revenues of the companies in 2019 must be between BGN 3 million (approximately EUR 1.5 million) and BGN 50 million (approximately EUR 25.5 million) and must have a drop in revenues of 20% or more in a calendar month in the period from 1 February 2020 until the month preceding the month of application compared to the average monthly revenue in 2019.

Companies must use this support to cover certain expenses/costs which, among others, are actually completed and paid by the company after 1 February 2020 and up to the final date of the respective project and are reflected in the company’s accounting documentation. Companies may use this support for the payment of various expenses/costs such as costs for raw materials, supplies, consumables for  production or services (of the companies), overhead costs, personnel costs (including gross remuneration and social security contributions), etc.

Certain costs, however, are explicitly excluded from the scope of the grant, e.g., leasing costs, costs related to bank loans, interest on loans and bank fees, taxation, personnel costs in case the company has received the “60/40” employment measure for the period covered by this grant, etc.

 

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at Covidhelpdesk@peterkapartners.com.

This document reflects the status as of May 27, 2020. This document is for informational purposes only and may not be considered a legal opinion or advice.

1Under Bulgarian law:
  • Medium-sized companies are companies with (i) an average number of staff of fewer than 250 and (ii) an annual turnover not exceeding BGN 97.5 million (approximately EUR 49.850 million) and/or whose asset value does not exceed BGN 84 million (approximately EUR 42.948 million).
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Post State-of-emergency Measures in Bulgaria

One week ago, the Bulgarian Government announced that the state of emergency period (initially announced for a period of 1 month and additionally prolonged until 13 May 2020) will not be subject to further extensions. In this respect, the Bulgarian Parliament adopted various amendments to the Health Act, the Act on Measures and Actions during the State of Emergency, the Labour Code and other acts which aim at regulating the post state-of-emergency period, among others: anti-epidemic measures, employment related measures, measures in support of citizens and companies, measures regarding enforcement procedures against natural persons, etc.

Below we have highlighted certain post state-of-emergency measures aimed at overcoming the consequences of the state-of-emergency period:

  • If the spread of contagious diseases leads to immediate danger to the life and health of citizens, the Council of Ministers is entitled, upon a proposal of the Minister of Health, based on the Chief State Health Inspector’s assessment of the risk, to declare an emergency epidemic situation (an emergency epidemic situation has been declared by the Council of Ministers for the period 14 May 2020-14 June 2020) for a fixed period of time for the purpose of protecting the life and health of citizens. The criteria which indicate immediate danger to the life and health of citizens are provided in the Health Act.
  • Within an emergency epidemic situation declared by the Council of Ministers, the Minister of Health is entitled, upon a proposal of the Chief State Health Inspector, to introduce temporary anti-epidemic measures on the territory of the whole country or only on a separate region. The anti-epidemic measures may include, among others, prohibition of entry onto the territory of the country for foreign citizens, temporary suspension or restriction of services or operation of establishments, temporary restrictions on the movement on the territory of the country. The said measures can be introduced by the respective regional health inspectorate in agreement with the Chief State Health Inspector on a separate region, municipality, city, town or village.
  • Within an emergency epidemic situation declared by the Council of Ministers, employers are entitled to undertake the same measures and will have the same obligations as within the declared state-of-emergency period, namely:
    - unilaterally to assign work from home;
    - to suspend work of the whole undertaking, part of it or of particular employees;
    - unilaterally to implement reduced working time for the whole undertaking or only for a particular department;
    - unilaterally to order its employees to use their annual paid leave when the work of the whole undertaking, part of it or of particular employees have been suspended;
    - to pay the full remuneration of the employees in the event of suspension of work.
  • Irrespective of whether an emergency epidemic situation is to be declared or not, until 13 July 2020, employers may:
    - unilaterally assign work from home;
    - unilaterally order its employees to use ½ of their annual paid leave.
  • The unpaid leave up to 60 working days used in 2020 is to be considered as years of work experience.
  • The unpaid leave up to 60 working days is to be considered as contributory service per 2020 for social security purposes.
  • The term of the scheme aimed at the preservation of jobs in companies affected by the COVID-19 pandemic operating in Bulgaria (known as the “60/40 measure”), introduced with the Act on Measures and Actions during the State of Emergency and subsequently regulated in details in Decree No. 55 of the Council of Ministers from 30 March 2020, is fixed from 13 March 2020 to 30 June 2020.
  • Suspension of the effects of default on payment under certain financial agreements by natural persons and legal entities is to be prolonged until 13 July 2020.
  • Imposing distraints/blocking of bank accounts of natural persons, hospitals and municipalities, imposing distraints/blocking of employment remuneration and pensions, medical equipment, as well as certain enforcement actions in respect of real estate and movable assets of natural persons remain suspended by 13 July 2020. Exceptions apply for maintenance obligations, claims for damages from torts and claims for employment remuneration;
  • By the 13 July 2020, public authorities and lessors of state or municipal property are entitled to reduce fully or partially exempt the lessee from paying the due amount for leasing or usage of property.
  • The governing authorities of the European Structural and Investment Funds remain entitled to amend unilaterally grant contracts, award grants under simplified procedural rules and transfer money from one operational programme to another for another 2 months (i.e., to 13 July 2020). The head of the governing authority is further entitled by a justified decision to terminate a procedure for the provision of a grant for the purposes of securing financing in line with the necessity of measures and overcoming the consequences.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

This document reflects the status as of 14 May 2020. It is for informational purposes only and may not be considered a legal opinion or advice.

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GRANTS AND FINANCE FOR BUSINESSES IN BULGARIA IN LIGHT OF COVID-19

Although the “60/40” employment measure seems to be the most discussed support instrument for businesses in Bulgaria these days, there are several other support measures available to micro-, small- and medium-sized enterprises1 (‘SMEs’) which deserve attention. Therefore, and since we have already touched upon the 60/40 scheme as support for the preservation of jobs in Bulgaria, we will briefly address the main aspects of some of the other support measures available for SMEs.

UNSECURED WORKING CAPITAL LOANS FOR SMEs

SMEs registered in Bulgaria and experiencing the negative economic impact of the COVID-19 outbreak could apply for an unsecured working capital facility of up to BGN 300,000 (approximately EUR 153,388). Companies can receive up to a 36-month grace period for repayment of both the principal and interest of such facilities.

This applies to all sectors. The loans will be given by certain commercial banks on the basis of a guarantee provided by the state-owned Bulgarian Development Bank.

Companies must meet certain criteria to be entitled to this support measure. For instance, companies must be able to evidence a drop in revenues in Q1 of 2020 compared to Q1 of 2019 and must have outstanding receivables from clients or payments due to suppliers after 1 March 2020.

The deadline for application is 31 December 2020.

OTHER WORKING CAPITAL FACILITIES AND LONG-TERM INVESTMENT CREDIT LINES FOR SMEs

Small- and medium-sized enterprises operating in various sectors could apply for financing of up to BGN 3.6 million (approximately EUR 1.8 million). This financing is to be used mainly for working capital needs but long-term investment credit lines are available as well. The maximum duration of the loan is 10 years.

In addition, companies experiencing temporary liquidity problems could receive a zero-interest loan for the period of the crisis if they preserve the employment level.

Such financing will be given by certain commercial banks on the basis of a guarantee by the Fund Manager of Financial Instruments in Bulgaria (‘Fund of Funds’). The list of these banks should be made available till the end of May 2020.

Details of the conditions and forms of the application are not yet clear.

1 Under Bulgarian law:
  • Micro-sized companies are companies with (i) an average number of staff of fewer than 10 and (ii) an annual turnover not exceeding BGN 3.9 million (approximately EUR 1.994 million) and/or whose asset value does not exceed BGN 3.9 million (approx. EUR 1.994 million);
  • Small-sized companies are companies with (i) an average number of staff of fewer than 50 and (ii) an annual turnover not exceeding BGN 19.5 million (approximately EUR 9.970 million) and/or whose asset value does not exceed BGN 19.5 million (approximately EUR 9.970 million); and
  • Medium-sized companies are companies with (i) an average number of staff of fewer than 250 and (ii) an annual turnover not exceeding BGN 97.5 million (approximately EUR 49.850 million) and/or whose asset value does not exceed BGN 84 million (approximately EUR 42.948 million).

FINANCING FOR SMALL START-UPS

Among others, small start-ups with short or almost no business history (currently, that have issued up to three annual financial statements) could apply for financing of up to BGN 50,000 (approximately EUR 25,565). Such financing could be given in the form of long-term investment and working capital loans for up to 10 years. The interest rates of these loans are reasonably below the market rates. The companies could receive up to a 24-month grace period and lower security requirements. In certain cases, these could even be unsecured loans.

This support measure is already available. Interested companies may apply through three particular financial intermediaries announced by the Fund of Funds.

EQUITY INVESTMENTS IN START-UPS AND INNOVATIVE BUSINESSES

Start-ups and rapidly growing companies active in, among others, bio- and nanotechnologies, robotics, information technologies, digitalization, and which have a high added value and the potential to support a fast economy recovery after the crisis could receive financing in the average amount of BGN 800,000 (approximately EUR 409,036) in the form of equity investment (i.e., the investor will acquire part of the company).

Such financing could be granted through the four venture capital funds in which the Fund of Funds is a main investor. Conditions for applying depend on, among others, the stage of development of the company and the amount of the investment requested. For these purposes, start-ups and innovative businesses must inter alia prepare presentations of their businesses, teams and their potential for growth.

GRANTS FOR MICRO- AND SMALL-SIZED ENTERPRISES

In the pipeline there is also a grant measure aiming to support micro- and small-sized enterprises in Bulgaria in overcoming the economic impact of the COVID-19 pandemic. This measure will be channelled through the Operational Programme “Innovation and Competitiveness”. The final conditions of the grant are expected to be disclosed around 30 April 2020.

Nevertheless, according to the conditions and forms of the support initially disclosed, it seems that Bulgarian micro- and small-sized enterprises registered prior to 1 January 2019 as per the Bulgarian Commercial Act or Cooperatives Act could receive a grant in the range of BGN 3,000 (approximately EUR 1,534) to BGN 10,000 (approximately EUR 5,113) but not more than 10% of the company’s net turnover for 2019. The deadline for application (i.e., filing of a project proposal) is 30 May 2020.

Branches of foreign legal entities are not entitled to receive this grant. Further, certain sectors are excluded as well, e.g., agriculture, and food and beverage manufacturing.

Companies must meet certain criteria to be entitled to this support measure. For instance, companies must have carried out business in 2018 and 2019 and must have a drop in revenues of 20% or more in the month preceding the month of application compared to the average monthly revenue in 2019.

Companies must use this support to cover certain expenses/costs which, among others, are actually started or completed by the company after 13 March 2020 and are reflected in the company’s accounting documentation. Although it is not completely clear from the wording of the conditions of the grant, according to recent unofficial clarifications from the government, it seems that companies may use this support even for the payment of rent.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.


This document reflects the status as of April 28, 2020. This document is for informational purposes only and may not be considered a legal opinion or advice.

 

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The COVID-19 outbreak in Bulgaria and the subsequently declared state of emergency by the Parliament (‘State of Emergency’) have already affected various aspects of doing business. Many businesses are concerned about the potential financial impact of the outbreak on their activities.

In this extraordinary situation, checking available insurance policy(-ies), is a step a company can take, among others, towards managing the risks of exposure to potential damages related to the COVID-19 outbreak, for example, when reorganizing its business processes.

Below, we have outlined our thoughts on a few of the topics that are likely to be considered as some of the main insurance-related questions being raised nowadays.

Non-payment of Premium instalments

It could not be excluded that because of the current circumstances some businesses may experience difficulties with payments of the instalments due under their insurance contracts. According to Bulgarian law, in case of a default on even one premium instalment with more than 15 days after payment is due, the respective insurance company can terminate the insurance contract. Often the general terms and conditions of the insurance policy provide even for an automatic termination of the contract in case of such non-payment. In this case, the law does not require any additional action from the insurance company in this regard.

It should be noted, however, that the recently-adopted legislation on the measures during the State of Emergency (‘New Law’. Act on theMeasures and Actions during the State of Emergency Declared with a Decision of the National Assembly as of 13 March 2020, promulgated with the State Gazette as of 24 March 2020) states, among other things, that the consequences of a default on contract payments (including penalties for late payment, cancellation of contracts, etc.) will not apply during the State of Emergency. Although it is not completely clear from the wording of the legal act, a possible interpretation of that provision is that it applies to insurance contracts as well. Therefore, it seems that insurance policies will not be terminated due to non-payment of premium instalments during the State of Emergency (as of today, the State of Emergency covers a period of 1 month, i.e., until 13 April 2020).

Nevertheless, in case of inability to pay a premium instalment, it seems recommendable for a policyholder to approach its insurance company in advance and try to re-negotiate the terms of payment in order to mitigate potential complications in this regard.

Force majeure

The Bulgarian Insurance Code does not provide specific requirements for the application of the concept of force majeure to insurance contracts. The New Law also does not prescribe any specific rules in this regard.

Thus, in order to assess whether force majeure will apply in a particular insurance relationship, one must consider the general legal rules governing force majeure events as well as the wording of the force majeure clauses (if any) of the respective insurance policy (for example, in the general terms and conditions) in light of the particular circumstances. Since the assessment of these questions may have a significant impact on the insurance relationship, it seems recommendable to address them in a timely manner in order to mitigate the risk of denied insurance coverage.

Insurance of company’s property/equipment when used outside of business premises

Nowadays, employers are not only entitled but even encouraged to introduce a remote form of work where possible (for example, home-office). In practice, although this is not a new concept for Bulgarian employment law, for many employers the option for such remote work is rather new and its establishment is performed ad hoc. Among the issues that should seriously be considered by the employers in this regard is the use of the companies’ property/equipment (for example, laptops) during the remote work. As we see it, an important aspect of this issue is the question whether this equipment is insured when used outside of the business premises.

This question is not explicitly regulated by the applicable insurance legislation. In practice, insurance companies have adopted different approaches when dealing with such situation – for example, some require an advance notification by the respective company in case the insured property is moved outside the business premises, while others simply provide coverage in such cases (i.e., no notification is needed), however, usually for an additional premium.

In view of the above, when introducing the option for remote work, it seems highly recommendable for the respective company to check, among others, its insurance contract(s) in order to be in compliance with the insurer’s requirements and, if necessary, to discuss potential amendments to the policy so that it ensures coverage to its business property, e.g., when used by the employees while working from home.

Filing of insurance claims

Other difficulties businesses may face in these extraordinary times are related to the filing of claims for insurance compensation. Basically, under the law, policyholders must notify the respective insurer within 7 days after becoming aware of an insured event. However, a particular insurance contract may provide for another appropriate term but no less than 3 days after becoming aware of an insured event. In certain cases (for example, theft or burglary) this deadline may be limited to 24 hours.

Nevertheless, in practice, nowadays, the approach adopted by many insurers on the market is to prolong these deadlines for some of their products (for example, property insurance) in view of the State of Emergency. The prolonged deadlines however are not applicable for all risks.

Given the above, and since it is recommendable to stay at home in order to avoid unnecessary trips/visits, it seems recommendable for policyholders to become acquainted with the deadlines adopted by their insurance companies and apply them accordingly. Additionally, it should be noted that many insurers have limited face-to-face meetings with clients, and thus, this should also be considered if planning a trip to such office.

General remarks

Generally, some insurance products available on the market afford insurance coverage in case of financial losses due to a decrease in income, unexpected expenses, lost/destroyed information/data, etc., i.e., products that may provide coverage in case of business disruption. However, these products are quite specific. Thus, it is rather impossible to apply a general approach towards them. Since there are also no general rules in the applicable legislation (including in the New Law), the particular provisions of those contracts should be considered in light of potential COVID-19-related damages.

Apart from the above matters, companies may be facing other additional unclarities in relation to their insurance contracts (for example, establishing whether an insured event has occurred or whether certain damages are covered under their policy).

For any legal matters arising in these special circumstances, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

This document is for informational purposes only and may not be considered a legal opinion or advice.

 

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Following several days of discussions with trade unions, employers’ organizations and other stakeholders, the Bulgarian government has announced the final parameters of the local scheme aimed at the preservation of jobs in companies affected by the COVID-19 pandemic operating in the country. 

The form of support remains as per the initial plan, i.e., payment by the state of 60% of the social security income of employees affected by the crisis for the period of the state of emergency (or part of it) but in any event for no longer than three months.

Payments shall be made to employers if they have:

  • suspended work of the whole company or of particular employees as a result of a specific order from the public authorities on the closure of certain businesses; this applies to the list of sectors attached to the government decree introducing the scheme, e.g., certain retailers, tourism and transport businesses, restaurants, cultural and sports activities, certain education services, and the organisation of congresses and exhibitions;

    or
  • suspended work of the whole company or of particular employees or reduced the working hours as a result of the declared state of emergency; this applies to companies that are able to evidence a drop in revenues of 20 % or more compared to a reference period (March 2019 as a rule); this generally applies irrespective of the economic sector concerned but certain sectors are excluded, e.g., agriculture.

The requirement to retain subsidized employees for at least 3 months after the expiry of the
period of support from the state has been dropped. As per the final rules adopted, the employer should retain the subsidized employees during the period of receipt of state support. Dismissal of other employees on certain grounds should not be undertaken either.

Further conditions apply. Applications and accompanying documentation should be filed to the Employment Agency by all employers interested in the measure.

Compensation shall be paid after the scheme receives the green light from the European Commission in accordance with the state aid rules. It seems though that this is not an obstacle to filing applications beforehand.

It is worth mentioning here that support under the described scheme will not be provided for employment that is already otherwise supported through public resources.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

 

This document reflects the status as of March 30, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice.
  

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The Bulgarian state has already taken certain steps in view of cushioning at least to some extent the economic impact of COVID-19.

In broader terms, we could outline in this respect:

  • the postponement of certain time limits such as the postponement till 30 June 2020 of the time limit for the filing of annual corporate income tax returns and for payment of such tax;
  • the prohibitions during the period of the state of emergency (declared for the time being until April 13, 2020) for initiation of new enforcement proceedings for the collection of public liabilities and the undertaking of enforcement measures within existing procedures of the same kind.

In terms of direct financial support, the Bulgarian parliament has approved payment by the state for up to three months of 60% of the social security income for certain employees. The government should further elaborate the criteria to be met by the beneficiaries of such support and the respective procedures.

On the basis of the initial draft of the government decree, it seems that such support would be limited to several sectors, i.e., retail, tourism, transport, restaurants, and cultural and sports activities. Employers, within this scheme, should have suspended the work of at least 50% of their personnel and would be obliged to retain the subsidized employees for at least 3 months after the expiry of the period of support from the state. Further conditions are envisaged. It is to be seen in the very near future whether these conditions and the respective procedure for receipt of state support will remain as currently suggested.

Support for SMEs can be further expected from the Bulgarian Development Bank. The precise conditions and forms of support are to be clarified and formalised but it seems that the bank would intervene indirectly through the commercial banks on the market, e.g., via credit guarantees.

A step that may also be considered by businesses at some stage, especially those that would not qualify for other support measures above, is the possible filing of an application to the tax administration for approval of deferred payment or payment in instalments of public liabilities. Such possibility has been existing for years in the law but it might be used more actively now given the circumstances.

Such procedure does not apply to all public liabilities (e.g., VAT amounts can only be covered by this measure if already fixed after a tax audit), in some cases companies would have to pay interest for the period of deferral at the rate of 10% per year, companies should be ready to provide collateral and there are certain other requirements that should be met. Nevertheless, this instrument could be useful for some companies, especially if the tax authorities show more flexibility in the application of the rules.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

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Following the state of emergency declared in Bulgaria effective, for the time being, between March 13, 2020 and April 13, 2020 (“State of Emergency”), the Bulgarian Supreme Judicial Council (“SJC”) adopted measures related to the work of Bulgarian courts, among which include suspension of most criminal, civil and administrative trials, limitation of access to court premises, etc. Should the State of Emergency continue after April 13, 2020, we expect the SJC will issue an additional statement/decision in this regard.

Affected Proceedings

According to the SJC decision, there will be no court hearings in civil and commercial cases except for the following: securing future or pending claims, securing of evidence, exercising parental rights in relation to interim measures, permits for withdrawal of child deposits and certain cases under the Domestic Violence Protection Act.

Hearings on administrative cases will be suspended as well. The exceptions here include, among others, cases for provisional enforcement and enforcement suspension under the Administrative Procedure Code, enforcement suspension under the Tax and Social Security Procedure Code and securing of future or pending claims.

With respect to criminal trials, only limited cases (basically involving urgent actions, for example, regarding supervision measures) will continue to be reviewed.

Consequences

Basically, court hearings will be postponed until after the end of the State of Emergency. During that time access to court premises is generally prohibited.

However, the courts will continue to accept motions, petitions, evidence and other documents but only if those are sent by post/courier or by electronic mail. For the time being, all time limits for the filing of such documents should be observed.

No new cases will be initiated apart from the exceptions indicated above.

Further, during the State of Emergency no summons, messages and/or any other court papers (including rulings) will be served. Summons, messages or court papers related to the exceptions above will be communicated over the phone or by e-mail. Checks regarding pending cases can also be made only over the phone or by e-mail.

Awaiting new legislation

A new draft law is currently pending in the Parliament and, among other things, it states that time limits, whether set by the law or by a judicial/administrative/enforcement body, shall not be running during the State of Emergency. The deadlines for newly requested actions will be considered prolonged with the period of the State of Emergency. Further, enforcement proceedings under the Civil Procedure Code and under the Tax and Social Security Procedure Code will be stayed for that time.

It is to be seen whether the draft will be passed as submitted or the measures suggested will be modified by the Parliament.

While closing courtrooms and staying procedures makes sense for reasons of public health, certain legal issues may arise (for example, delays in the issuing of court decisions/rulings, missed deadlines, etc.). For any legal matters arising in these special circumstances, please do not hesitate to contact our COVID-19 Help Desk at covidhelpdesk@peterkapartners.com.

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26/6/2020 New legislation on provision of state subsidies for payment of rent – details here.

23/4/2020 Update: Economic measures for employers and entrepreneurs adopted by Slovak Government – details here.

23/4/2020 Government-guaranteed loans; exemption to enter Slovakia - details here.

3/4/2020 New employment measures - version EN, FR, SK.

30/3/2020 Economic measures for entrepreneurs proposed by Slovak Government – details here.

25/3/2020 Measures and recommendations of the new Slovak Government being discussed – details here.

23/3/2020 Frequent COVID-19 issues faced by employers - details here.

 
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23/4/2020 Legislative changes due to COVID-19 – details here.

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23/3/2020 Most important restrictions currently applied by state – details here.

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23/3/2020 Impact of anti-epidemiological measures on contractual relations – details here.

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31/3/2020 Updated measures related to employment – details here.

23/3/2020 Measures related to employment approved by the Czech Government on March 19 and 23, 2020 – details here.

 

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BANKING & FINANCE with regard to the current Covid-19 crisis

Measures adopted by the Czech National Bank

Monetary policy

The Czech National Bank (“CNB”) cut all key interest rates in two steps. It first lowered them by 0.5 percentage points on 16 March 2020 and then by another 0.75 percentage points on 26 March 2020. The two-week repo rate decreased to 1.00%, the Lombard rate to 2.00% and the discount rate to 0.05%.

The CNB is ready to cut interest rates further and adopt measures to address any liquidity problems in the Czech financial system if the economic situation requires it.

The CNB also stands ready to react to any excessive fluctuations of the exchange rate of the koruna (the Czech crown) using its instruments, in line with the managed float exchange rate regime.

Measures for banks and other financial institutions

The CNB expects the coronavirus epidemic to cause a downturn in economic activity, which will very likely unfavourably affect the quality of banks’ loan portfolios.

The CNB allowed banks to postpone loan instalments where clients have temporarily lost their income due to the coronavirus epidemic or preventive measures.

The CNB lowered the countercyclical capital buffer rate on bank loans located in the Czech Republic from the current 1.75% to 1% with effect from 1 April 2020. This decision means that banks will need less capital for every loan provided to the domestic economy. This will give them more leeway for lending to firms, the self-employed, and individuals hit by the impact of the coronavirus pandemic. If necessary, the CNB will fully release this buffer. This measure is equally applicably also to credit unions.

The CNB asked banks as well as insurance companies and pension management companies to withhold dividend payments or refrain from other steps which might jeopardize their capital resilience.

A gradual release of the countercyclical capital buffer combined with postponed dividend payments should help increase the ability of banks to finance the real economy.

As a preventive measure, the CNB increased the weekly number of monetary policy operations providing liquidity to banks. The liquidity-providing repo operations are now announced three times a week (on Monday, Wednesday and Friday) instead of the original weekly frequency. Banks’ bids in these operations will be fully satisfied at a fixed rate corresponding to the two-week repo rate, i.e., with a zero spread.

The CNB also postponed the deadlines for the submission of certain reports or notifications by various financial institutions, e.g., insurance companies, obliged entities on the capital market, issuers of securities.

Measures for bank clients

The CNB allowed banks to postpone loan instalments where clients have temporarily lost their income due to the coronavirus epidemic or preventive measures. In the CNB’s view, banks already have sufficient flexibility in postponing instalments for clients hit by a drop in demand or unpaid invoices for goods and services deliveries due to the coronavirus. This applies to all types of loans, i.e., loans to small clients and particularly loans to corporate clients, with the aim of preventing the potential transfer of negative impact among sectors.

Banks will work individually with individual clients to determine the reasons behind their payment problems and adjust the repayment schedules for the loans accordingly. This will apply if clients’ problems are only temporary and their ability to repay a loan in the future has not been fundamentally jeopardized.

The manner in which banks will enable postponed instalments for clients hit by a drop in demand or unpaid invoices for deliveries of goods and services due to the coronavirus now depends on their individual approach. It is purely their business decision.

Clients of banks may postpone loan instalments by three or six months under the Act on Certain Measures in the Area of Loan Repayment in Connection with the COVID-19 Pandemic (the loan moratorium). The moratorium is binding for all bank and non-bank lenders. It is possible to postpone instalments of both consumer and business loans, including mortgages agreed and drawn before 26 March 2020. If customers use the moratorium, the loan repayment period will be extended accordingly.

With effect from 1 April 2020, the CNB tempered its previous recommendation for the assessment of new mortgage loans. The LTV limit (the ratio of the loan amount to the value of the real estate to be pledged) was increased to 90% (from 80%), so the applicant's savings for down payment on housing acquisition can be lower. As of the same date, the limit on the DSTI ratio (the ratio between monthly instalments of total credit agreements and the borrower's net monthly income) was increased to 50% (from 45%). This lowered the amount of income necessary for servicing a specific debt. The duty to assess new mortgages according to the DTI ratio, which reflects the number of the household's annual net incomes needed to repay all its debts, was omitted from the CNB recommendation to banks. From now on, credit institutions will only monitor this indicator.

Measures adopted by the Czech-Moravian Guarantee and Development Bank

Small and medium enterprises (SME), including individual traders, could receive a loan of from CZK 500 thousand to CZK 15 million with a zero interest rate from the Czech-Moravian Guarantee and Development Bank (the “CMGDB”) within the COVID I Programme. Loans were granted for up to 90% of eligible expenditure, with a maturity of two years, including the possibility of deferred repayment for up to 12 months. As of March 20, 2020, the receiving of loan applications has been temporarily suspended due to the extreme interest in obtaining loans and the CMGDB’s inability to process them. It is questionable whether, and for how long, the COVID I Programme will continue.

Moreover, the COVID II Programme, in the form of the CMGDB’s guarantees for loans granted by commercial banks was introduced on March 30, 2020. The CMGDB granted guarantees for commercial loans to small and medium enterprises (SME), including individual traders outside Prague, from CZK 10,000 to CZK 15 million. A guarantee covers 80% of the principal amount and the applicant should also be able to draw a financial contribution of up to CZK 1 million to pay accrued interest. The expected duration of the guarantee is 3 years. The first round of acceptance of applications within the COVID II Programme ended on 3 April 2020. The next round will be announced according to the decision of the Ministry of Industry and Trade.

Furthermore, the COVID Prague Programme in the form of the CMGDB’s guarantees for loans granted by commercial banks was introduced in cooperation with the Capital City of Prague on April 8, 2020. The programme was addressed to businesses in Prague and its other conditions are the same as under the COVID II Programme described above. The acceptance of applications within the COVID Prague Programme ended on 21 April 2020, within a few days of the programme starting, due to the enormous interest from businesses in obtaining guarantees.

Currently, the COVID III Programme is being prepared and should be introduced at the beginning of May 2020. This programme should be once again in the form of guarantees from the CMGDB for loans granted by commercial banks and should be addressed to freelancers and businesses of up to 500 employees, regardless of whether they are from Prague or not. More details of this programme should be disclosed in the upcoming days.


INSURANCE
 with regard to the current COVID-19 crisis

There are no specific measures adopted in this area.
Entrepreneurs should bear in mind that most insurance policies do not provide for any coverage in case of force majeure events. However, as “force majeure” is not specifically defined in the Czech law (see chapter Corporate for more details), it always depends on the definition of force majeure in each particular policy; we recommend reviewing insurance policies, in particular to check for insurance exclusions.


This document reflects the status as of April 29, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case
.

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CONTRACT MANAGEMENT
with regard to the current COVID-19 crisis

Due to the current situation, the majority of businesses are faced predominantly with supply disruptions and liability for damages caused by such disruptions. The first recommendation is to review all major client contracts and contracts with suppliers, in particular as far as it concerns the existence and applicability of a force-majeure clause (if any), the possibility of termination or renegotiation of certain contracts if necessary, etc.

Despite the above, businesses remain generally liable for their commitments and should take into account that the possibility of their termination or renegotiation is only exceptional. Potential defaults with the fulfilment of contractual obligations towards business partners, which could occur due to the current situation, should be treated very seriously as they could lead eventually to insolvency.

Force Majeure

There is no specific definition of “force majeure” in Czech law. Its definition is based only on legal theory and a few court resolutions. The generally acceptable definition of force majeure is “a legal event objectively unpredictable and objectively unavoidable and independent of the will of the respective party”.

The current “state of emergency” and related governmental measures due to the spread of the COVID-19 disease could be considered force majeure within the generally acceptable interpretation of this term, but we may not exclude that local courts might have a different opinion.

However, force majeure may influence the contractual obligations of parties only to the following limited extent:

  • force majeure might be a liberating ground against claims for damages for breach of contractual obligation (such as damages for late delivery) and
  • force majeure might be a substantial change in circumstances giving right to a contract change or termination.

We stress that the definition of force majeure and its possible consequences on the obligations of the contractual parties stipulated in the contract prevails over general legal regulation.

If the consequences of force majeure:

  • are stipulated in the contract, the contract regulations apply;
  • are not stipulated specifically by the parties, the affected party can be liberated from payment of damages for breach of its contractual obligations and terminate the contract or agree on its change due to substantial change in circumstances. Nevertheless, the other contractual party is entitled to terminate the contract due to breach of the contractual obligations by the party affected by force majeure.

Substantial change in circumstances

Czech law contains a concept of what is known as “substantial change in circumstances”, which could help businesses deal with the current situation.

If there is such a substantial change in circumstances creating gross disproportion in the rights and duties of the parties by disadvantaging one of them either by disproportionately increasing the cost of the performance or disproportionately reducing the value of the subject of performance, the affected party has the right to claim the renegotiation of the contract with the other party if the conditions stipulated by law are fulfilled.

However, asserting this right does not entitle the affected party to suspend the performance.

The affected party must claim the renegotiation of the contract with the other party within a reasonable time after it became aware of the change in circumstances. This time limit is presumed to be two months. If the renegotiation is not claimed within this limit, the affected party loses the right to submit a lawsuit to the court.

Remedies

Czech law provides for the general obligation of the Czech Republic to reimburse affected natural persons and legal entities any damage that has arisen in connection with measures taken under the Crisis Act, which includes governmental measures as a consequence of the current “state of emergency” due to the spread of the COVID-19 disease declared under the Crisis Act.

However, each claim for reimbursement always needs to be assessed on a case-by-case basis.

Threat of insolvency

Under Czech insolvency law, a debtor is considered bankrupt if:

  • it has several creditors;
  • it has due and payable debts for more than 30 days; and
  • it is not able to fulfil them.

Therefore, all businesses should keep up-to-date records about due payments and remaining periods.

Once the company is bankrupt, its directors have to file an insolvency petition. If they fail to do so, they shall compensate creditors for the damages amounting to the difference between the amount of receivables registered and the amount received by the creditor in the insolvency proceedings.

The current and the former directors may become a guarantor of the debts of the bankrupt company toward its creditors, or be required to return all benefits received from the company within the two preceding years, if it is decided that the company is insolvent, and they had known, or should have known, that the insolvency was imminent.

If directors breach their duties, they must compensate the company for any damage or harm caused to the company resulting from such breach.

Directors must summon a shareholders’ meeting immediately once they become aware that the insolvency of their company is imminent, and suggest appropriate measures as to how to face such a situation. They should request instructions for business management from the shareholders at the meeting, which does not fully limit their liability, but can serve as proof that the company became aware and approved the directors’ actions. This could be considered a mitigating factor.

 

The document reflects the status as of March 19, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

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New governmental proposals to mitigate certain impacts of Covid-19 related to legal persons

On March 31, 2020, the Czech Government adopted the Draft Act on Particular Measures to mitigate the Impact of the Coronavirus Pandemic on persons participating in court and other proceedings, injured persons, victims of crime and legal entities (the COVID Lexicon for Justice, Insolvency and Enforcement), known as Lex Covid.

Free movement restrictions arising from the extraordinary measures adopted by the Czech Government, the Ministry of Health and Regional Hygienic Authority with the aim of tackling the pandemic situation related to Covid-19 (“measures”) have had a significant impact on the meetings of legal entities’ bodies and their corporate processes, especially when these entities did not allow in their foundation deeds or articles of association for the “per-rollam” option or for the use of technical means for the decision-making of their bodies.

Therefore, the adopted changes namely focus on making corporate processes easier and consist of following:

  • The decision-making of bodies will be possible also by technical means or per-rollam, even though such option is not allowed for in an entity’s foundation deed or articles of association. This option will also be possible for cooperatives whose general meetings are fulfilled by the meeting of delegates. 
  • The term of office of elected members in entities’ bodies (“member”), whose offices terminated or terminate during the measures (even also in the situation if such office terminates before Lex Covid comes into force), shall be automatically extended or renewed for the period of 3 months following the date of the termination or cancellation of the measures.
  • The option of “cooptation” of a member (i.e., election of missing members by members of the respective body themselves, if the total number of missing members is not below half of the total number of such members) will be allowed in all bodies, even if such an option is not allowed in an entity’s foundation deed or articles of association.
  • The period for the summoning of a general meeting which approves an entity’s financial statement will be extended for 3 months after the termination of the measures, but until 31 December 2020 at the latest; at this moment, a general meeting shall be held within 6 months following the end of the respective accounting period, i.e., usually on 30 June.

The rights and obligations set by the Draft shall apply only during the duration of the measures, which limit or make the meeting of the entity’s body impossible, but not later than 31 December 2020, unless it is set by the Draft expressly otherwise.

This document reflects the status as of April 14, 2020.
Lex Covid is now being discussed and adopted by the Parliament of the Czech Republic, and some amendments may occur.
We are closely monitoring the situation and will keep you updated.
This document is for informational purposes only and may not be considered a legal opinion or advice on howto proceed in a particular case.

 

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EMPLOYMENT
with regard to the current Covid-19 crisis

With the coronavirus outbreak and the spread of the COVID-19 disease, employers are facing new challenges and are obliged to adapt themselves quickly to the evolving situation in the areas of health and safety, remote work, special regimes of obstacles on both sides (the employer´s as well as the employee´s), and especially in the area of crisis management. Due to governmental decisions many establishments were closed for the public and other entrepreneurs are suffering losses due to a lack of staff, and a decrease in demand for their products or services.

The Czech government decided on the state of emergency and recommended explicitly that employers:

  • use to the maximum extent distant work if employees can work from home;
  • encourage paid holidays and other paid leaves;
  • limit work not substantial for the operations of the employer.

Below are listed selected employment issues reflecting the current situation.

Mandatory quarantine

Quarantine is ordered by the hygiene inspectorate or a physician (not the employer).

An employee is obliged to notify his/her employer of his/her absence and is entitled to receive salary compensation of 60% of adjusted average earnings, in the first 14 days, from the employer.

Subsequently, sick leave allowance is paid by Social Security.

Violation of the quarantine is strictly sanctioned (including a financial penalty up to 3M CZK).

Paid leave (holidays)

A unilateral order to take paid leave can be issued in writing at least 14 days prior to start of paid leave.

With the employee’s agreement the paid leave (holiday) can start immediately.

During paid leave, the employee is entitled to get 100% of his/her average earnings.

Home-office

Home-office is the preferred method of dealing with the current situation, if such mode of work is possible with respect to the nature of the work and if it is accepted by the employee. Home-office cannot be ordered.

Costs incurred by the employee are to be paid by the employer, for example, internet connection, electricity, etc.

Security and hygiene at work must be assured even at home and other aspects such as reporting, cybersecurity, etc., are to be taken into account by the employer.

The employee is paid with his/her salary.

Changes in working schedules

Rescheduling of shifts can be considered within weekly working hours planning, provided that the employee must be notified about any modification of his/her shifts based on such planning 2 weeks in advance at the latest (1 week in case of account of working hours), unless there is another agreement (general/ad hoc) with the employee.

Accepting employees´ requests for specific work arrangements

Requests from employees for unpaid leave or for supplementary spare leave which will be made up for in the future can be accepted. These measures cannot be imposed by the employer.

Care leave

Employers are obliged to allow employees caring for children up to 13 years old and disabled persons living in a common household to take care leave if their children cannot attend school due to school quarantine or if the school or the establishment caring for disabled persons has been closed (for reasons of epidemic).

The employees are paid through Social Security during the care leave as in the case of sick leave or quarantine.

Care leave compensation shall be paid during the entire duration of extraordinary measures related to the COVID-19 epidemic.

The corresponding act needs to be adopted by the Czech Parliament; however, the payment will be made retroactively.

Obstacles on the employer’s side

In case of obstacles on the employer’s side causing that the employee cannot work, the employee is entitled to receive compensation of salary, unless transferred to other work:

  • Minimum 80% of average earnings, if the obstacle consists in a temporary breakdown of machinery or equipment which not caused by the employer, in a problem with the supply of raw materials or power (energy) or some other operational causes (unless an employee is transferred to other work).
  • 100% of average earnings in case of other obstacles (this is according to the Ministry of Labour and Social Affairs, the case if the establishment was closed due to the recent governmental measure).
  • Minimum 60% of average earnings in case of partial unemployment: if the employer is not able to assign work to its employees to the extent corresponding to the weekly amount of hours because of the temporary reduction of demand in the employer´s products or services and if there is an agreement with the trade unions about the amount of salary compensation, the employee is to receive such salary compensation whose amount cannot be lower than 60% of average earnings. In case of no presence of trade unions, the agreement can be replaced by the issuance of internal rules.
  • Minimum 60% of average earnings, if the obstacle consists in a work disruption caused by adverse climatic conditions or a natural disaster (the pandemic is not considered as a natural disaster thus far, a legislative change will be necessary in this respect).

Measures related to employment approved by the Czech Government

The Czech Government has approved the ANTIVIRUS Programme measures. Employers whose business activities will be threatened because of the spread of the COVID-19 virus will be granted a contribution covering fully, or partially, the compensation of the salaries paid to employees due to obstacles on the side of the employee and on the side of the employer.

The contribution shall be paid by the Labour Administration. Details on how to request the contribution have not yet been communicated. For more details, please see our ANTIVIRUS Programme section.

 

The document reflects the status as of March 23, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

 

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31/8/2020 Some updates - details here.

27/4/2020 Immigration with regard to the current Covid-19 crisis - details here.

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CZECH GOVERNMENT CORONAVIRUS-RELATED MEASURES FOR SELF-EMPLOYED English version here.
VLÁDNÍ OPATŘENÍ PRO OSVČ V SOUVISLOSTI S KORONAVIREM česká verze zde.

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31/8/2020 Some updates - details here.

14/4/2020 Governmental proposals to mitigate certain impacts of Covid-19 - details here.

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Real Estate – details here.
Leases – details here.
COVID-19 Programme: Leases - details here

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Retail - details here.
COVID-19 Programme: Leases - details here.

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NEW TAX LIBERATION PACKAGE - details here.

TAX LIBERATION PACKAGES
English version here.

DAŇOVÉ LIBERAČNÍ BALÍČKY
česká verze zde.

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Lifeline provided to the Hungarian Businesses

First and foremost, we have to note that just as in several other countries in Europe, also in Hungary the economy was and is strongly affected by the pandemic, therefore, some major regulatory changes had to be introduced in order to help citizens and companies survive these tough times. Therefore, a moratorium on all credit repayment for individuals and companies was introduced, and a capped consumer loan interest rate is applicable now (see details below in section I). Of course, there are sectors that have been hit harder than others, therefore special rules might apply to further beneficial regulations.

1. Moratorium on all loan repayments for individuals and companies until 31 December 2020

  • A payment moratorium was announced by the Hungarian government based on all contractual loan and financial lease contracts (including employer loans) that were concluded before midnight March 18, 2020. This moratorium will be applied until December 31, 2020 (this date may be extended by the government). Please note that interest will continue to accrue during this period and the repayment period will be extended accordingly. The moratorium concerns all principal repayment and ancillary payment obligations, such as interest, commissions and fees set in loan and financial lease agreements and the extension of the repayment period applies to guarantees and pledges as well. Further to the above, it shall be noted that this is an obligation for the creditor, however, the debtor may decide to continue its payment obligation.

  • The total APRC (annual percentage rate of charge) of new consumer loans taken from March 19, 2020 will be capped at the Hungarian National Bank's base rate plus five per cent, which means, at the moment, 5.9%.

 

2. Sector specific legislation changes

  • The government believes that currently the sectors most affected by the COVID-19 pandemic have been the following: tourism, catering, entertainment, gambling, film, event management, performing arts, and sports services. Therefore, based on the newly issued decrees the rental fee for non-residential premises shall not be increased and the lease agreement shall not be unilaterally terminated by the landlord until 30 June 2020. Please note that the aforementioned period may be extended later.

  • In certain sectors (determined by the main activity’s NACE Rev. 2 codes, such as cabs, catering, performing arts, gambling, film industry, event coordination, certain publishing) no social contribution tax has to be paid by employers for employees and by individual entrepreneurs; while only a 4% social security charge is payable. These exemptions are valid for March-June 2020. Furthermore, no voluntary training contribution applies for this period. In certain sectors (cabs, beauticians, electricians, etc.) taxpayers under the lump-sum regime (KATA) are exempt from this tax for March-June 2020. Furthermore, KATA related public dues are suspended during the term of the state of emergency.

 

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

This document reflects the status as of April 3, 2020.
It is for informational purposes only and may not be considered a legal opinion or advice.

 

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Extraordinary changes to the field of Employment due to COVID-19

One of the first legal fields to be affected by the pandemic was employment law. On March 18, 2020 Government Decree No. 47/2020 (hereinafter: the Labour Decree) was issued with the aim of reducing the amount of employers’ obligations. Its last sentence made a major change to Hungarian labour law compared to any previously known principles, stating that the employer and the employee may reach an agreement derogating from any (!) provision of the Labour Code, even to the detriment of the employee. The consequences of this stipulation are hard to be assessed at this point.

1. Communication of work schedule

Under general rules, the employer is required to communicate to the employee at least a one-week work schedule at least 168 hours before the commencement of such working time. Nevertheless, in case of unforeseeable circumstances related to the employer’s financial or business affairs, the employer is entitled to amend the communicated work schedule to at least 96 hours before the commencement of such working time (in addition, the employer can also amend the communicated work schedule upon the employee’s request).

Nonetheless, the Labour Decree makes it possible for the employer to amend the communicated work schedule irrespective of the above rules, i.e., there is no statutory period to be taken into account.

2. Home office, remote work

As a general rule, labour law enables the employer to order the employee to work in a home-office regime unilaterally, however the right of unilaterally ordering permanent remote work is restricted. There is seemingly a contradiction in the previous sentence but under Hungarian labour law remote work and home office are two separate concepts as the former is a recurring type of work performance, while the latter is only for exceptional occasions. Without mutual agreement, remote work/home office can only last for 44 working days/352 working hours per calendar year. If this period is wished to be exceeded, the employment contract needs to be amended, as the Labour Code prescribes that remote work must be regulated in the employment contract.

Pursuant to the Labour Decree, the employer has the right to introduce home office or remote work unilaterally.

3. Health inspection

The Labour Decree provides that the employer may take all necessary and justified measures to check the health status of employees.

4. Collective agreements

Collective agreements are contracts generally made between an employer and a trade union, in order to provide better working conditions for employees in exchange for surrendering certain collective rights (i.e., strikes).

The Labour Decree specifies that the above rules (I-III) cannot be overridden by collective agreements while the Labour Decree is in force.

5. Derogation from the Labour Code with mutual agreement

As a final measure, the Labour Decree sets forth that the employer and the employee may reach an agreement derogating from any (!) provision of the Labour Code.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

This document reflects the status as of April 3, 2020.
It is for informational purposes only and may not be considered a legal opinion or advice.

 

 

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Miscellaneous governmental measures – mitigation of the consequences of COVID-19

1. Enforcement procedures

In this state of emergency, the government has introduced a law, based on which new amended rules shall be applied to enforcement procedures:

  • Court executors may not serve documents during the emergency, deadlines for deliveries resume on the 15th day after the end of the emergency.
  • If the debtor indicates an intention to pay in instalments, the court executor shall grant this without the prior consent of the applicant.
  • On-site procedures, traditional auctions (including real estate auctions) cannot be held, and on-site procedures cannot be performed until the end of the emergency.

2. Social Security

The eligibility for health insurance and family allowances for the care and upbringing of a child shall be extended until the end of the emergency. Under this rule, for those who are entitled to childcare benefits (GYED), childcare support benefits (GYES) and child raising allowances (GYET), such allowances shall be extended until the end of emergency. Also, there are several cases when these allowances shall be terminated.

3. Higher amount limit for contactless payments without a need for authentication

Payment service providers shall not apply a strong customer authentication method if a contactless electronic payment transaction does not exceed HUF 15,000 (fifteen thousand Hungarian forints). This new limit may be applied from March 25, and it shall be introduced from April 15 at the latest.

4. Partial Curfew

A significant governmental decree was announced on March 27, 2020 by the Prime Minister regarding a partial curfew. The governmental decree, and thus the partial curfew, is valid from March 28, 2020 until April 11, 2020. This period may also be extended later.

The governmental decree on the curfew introduced the following measures/obligations:

  • The distance kept between people shall be at least 1.5 m from now on (instead of 1 m). This means that, for example, customers standing in a queue for a cashier (in shops) shall keep the abovementioned distance between each other.
  • Based on the governmental decree one’s place of residence may be left only if there is good reason. The governmental decree itself lists these good reasons which are, among others, the following:
  • Employment and conducting business; going to shops which sell equipment related to these activities (e.g., technical articles such as laptops, computers, or construction materials, etc.)
  • Going to a retail store which sells products used daily (i.e., perfume, drugs, household cleaners, chemicals and hygiene paper)
  • Marriages and funerals in a narrow family circle
  • Shopping in pharmacies
  • Shopping at fuel-stations
  • Shopping at tobacco shops

If you are interested in the entire list, please do not hesitate to contact us.

  • Further to the above, during the partial curfew period, daily between 9 a.m. and 12 p.m. only customers who are aged 65 or above may enter any store. After 12 p.m. the aforementioned customers (aged 65 or above) shall not be allowed to enter the store. Keeping this rule is the business operator’s duty.

 

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

This document reflects the status as of April 3, 2020.
It is for informational purposes only and may not be considered a legal opinion or advice.

 

 

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Measures proposed by Polish Government to overcome crisis caused by spread of COVID-19

The Polish Government has prepared new regulations aimed at limiting the negative effects of the COVID-19 epidemic, including support for the Polish economy, entrepreneurs, employers and employees. The new regulations were adopted on March 31 and (with some exceptions) they are effective from April 1.

The package of measures, known as the “Anti-Crisis Shield”, focuses on protection and support of the labour market, granting instruments to improve financial liquidity for entrepreneurs and provides for relief in public law liabilities.
Among others, the following measures will be implemented on the basis of the “Anti-Crisis Shield”:

Relief in the payment of Social Security Contributions
Self-employed and micro entrepreneurs (employing up to 9 employees) – at their request – may be released from the obligation to pay unpaid contributions for compulsory social insurance, due for the period from March 1, 2020 to May 31, 2020.
In the event of a positive decision to postpone the payment deadline or to divide into instalments payments of social security contributions due for the period from January 1, 2020, on the basis of an application submitted to the Social Insurance Institution during the period of the state of epidemic or within 30 days following its cancellation, no prolongation fee will be charged.

Tax relief
In the event of a positive decision to postpone the payment deadline or to divide into instalments payments of taxes, on the basis of an application submitted to the tax authorities during the period of the state of epidemic or within 30 days following its cancellation, no prolongation fee will be charged.

New regulations enable CIT and PIT taxpayers who bear the negative consequences of COVID-19 to deduct the loss incurred in 2020 from operating income earned in 2019. The deduction of "loss" from income by deducting loss achieved in 2020 from the income of 2019 will be possible provided that in 2020 the taxpayers achieve revenues lower by at least 50% compared to 2019. Based on the general provisions, it is possible to deduct the loss from business activities in a given year from the income achieved in the next five years.
In order to make the deduction, the taxpayer is obliged to submit a correction of the tax return for 2019.

Changes in functioning of companies

  • introducing the statutory instruments providing for the possibility of remote operation of the companies’ organs, i.e., management board, supervisory boards and shareholders of companies by enabling participation in meetings via means of distance communication and adopting resolutions;
  • extension for 3 months (for 2 months in the case of entities conducting supervised activities) of the deadline for preparing the financial statements and approving them, including holding ordinary shareholders’ meetings/general meetings in commercial companies under a regulation of the Minister of Finance.

Co-financing of remuneration for employers who will maintain employment
Employers forced to announce the interruption of work or reducing working time which will not reduce employment may obtain financial benefit from the Guaranteed Employee Benefits Fund to co-finance the employees’ remunerations. The benefit will be available for:

  • entrepreneurs affected by a decline in economic turnover of not less than 15% during any two consecutive calendar months, falling after January 1, 2020 to the day preceding the day of submitting the application for co-financing, compared to the total turnover from the corresponding two consecutive calendar months of the previous year,
  • entrepreneurs affected by a decline in economic turnover of not less than 25% in any calendar month indicated after 1 January 2020 to the day preceding the day of submitting the application for co-financing, compared to the turnover from the previous month.

The co-financing may be granted to support the payment of the remuneration of employees whose remuneration was not higher than 300% of the forecasted average monthly gross remuneration in the national economy in 2020 in the month preceding the month in which the application for co-financing was filed.

In the case of an announced interruption of work, the employees’ remuneration is co-financed from the Guaranteed Employee Benefits Fund, in the amount of 50% of the minimum remuneration for work determined on the basis of the provisions on the minimum remuneration for work, with respect to the working time.

In the case of reduced working time, the employees’ remuneration is co-financed from the Guaranteed Employee Benefits Fund, up to 50% of the remuneration, but no more than 40% of the average monthly salary from the previous quarter announced by the President of the Central Statistical Office, effective as of the date of submission of the application for co-financing.

Reduction of working time will be possible by 20%, but to no more than 50% of full working time and the paid remuneration may not be lower than the statutory minimum remuneration.

Applications for co-financing should be submitted to the Directors of Voivodship Labour Offices.

Each of the benefits will be due for a total period of 3 months from the date of signing the agreement. In order to overcome the economic effects of COVID-19, the Council of Ministers may extend this period, taking into account the period of the state of epidemic threat.

Expiry of mutual obligations under lease agreements
During the prohibition on operating in large scale commercial facilities (with a sales area of over 2,000 m2) the mutual obligations of the parties to the lease agreement under which the commercial space is used shall expire.

Postponement of certain obligations under Anti-Crisis Shield:

  • temporary extension of the deadline for submitting a notification of payment to an account not included in the list of VAT taxpayers from 3 days to 14 days,
  • extension of the deadline for submitting annual income tax returns and payment of corporate income tax and personal income tax due for 2019 until 31.05.2020,
  • postponement of the date of advance payment for income tax due to the remuneration paid in March and April (until 01.06.2020),
  • postponement of the deadline for payment of the annual fee for perpetual usufruct until 30.06.2020,
  • facilitating VAT settlement by postponing of entry into force to 01.07.2020 of a new Standard Audit File for Tax,
  • postponing to 13.07.2020 the deadline for companies to register in the Central Register of Beneficial Owners,
  • extension of the deadline for submitting information on transfer prices to 30.09.2020,
  • postponing the obligation to create Employee Capital Plans (PPK) in medium-sized enterprises, by postponing the deadline for conclusion of an agreement for management of PPK until 27.10.2020 and conclusion of an agreement for operating of PPK until 10.11.2020,
  • extending the period of preparation of paper waste record documents to 31.12.2020,
  • deferring the tax on retail sale until 1.01.2021.

Other important facilities granted by Anti-Crisis Shield:

  • temporary suspension, however, not longer than until 30.06.2020, of the deadline for reporting domestic tax schemes,
  • introducing new procedures regarding the organization of the work of courts – in the event that the court has completely ceased operations due to the spread of COVID-19, another court shall be appointed to hear urgent cases. The catalogue of urgent cases dealt with by courts during the cessation of activities is listed in the new regulations,
  • the opportunity for "small taxpayers" to refrain from paying the simplified income tax advances paid for March-December 2020,
  • during the period of the epidemic and during the 30 days following its cancellation, with the exception of Sundays on which a holiday falls, the prohibition on performing trade-related activities consisting in unloading, receiving and displaying goods of first necessity and entrusting an employee or employee with such activities is lifted,
  • exemption from charging contractual penalties for delays in the execution of tenders related to the epidemic,
  • co-financing of part of employee remuneration costs and due social security contributions by the Starosta in the event of a decrease in economic turnover,
  • co-financing of a part of the costs of running a business in the event of a decrease in business turnover for entrepreneurs who are natural persons and do not employ employees,
  • one-off loans of up to PLN 5,000 for micro entrepreneurs,
  • payment from the Social Insurance Institution of a new kind of benefit, i.e., a downtime benefit in the amount of 80% of the minimum remuneration for work in 2020 (for people employed under civil law contracts) and in the amount of 50% of the minimum remuneration for work in 2020 (for self-employed),
  • the possibility of reducing uninterrupted daily and weekly rest for employees, and introducing an equivalent working time system to preserve the level of employment,
  • extension of legal stay and work permits for foreigners.

For more details on the measures provided by the “Anti-Crisis Shield”, as well as for information on any legal matters arising out of these special circumstances, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

 

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ANTI-CRISIS SHIELD English version here.
TARCA ANTYKRYZYSOWA Wersja polska tutaj.

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TAX SETTLEMENTS DURING COVID-19 PANDEMIC PERIOD English version here.
POSTULATY ZWIĄZANE Z ROZLICZENIAMI PODATKOWYMI W OKRESIE PANDEMII COVID-19 Wersja polska tutaj.

 
 
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PETERKA & PARTNERS Russia is closely monitoring the new regulations and policies set by the government, which may have an impact on business activities, and will continue to keep you informed on legislative updates.
On 8 June 2020, Moscow Mayor Sergei Sobyanin signed decree No. 68-UM “On the steps to remove the restrictions established in connection with the introduction of a high-alert regime”, subject to the sanitary and epidemiological requirements established by the Office of the Federal Service for Supervision of Consumer Rights Protection and Human Well-Being in the City of Moscow, by decree of the Moscow Mayor No. 12-UM and other legal acts.

Removing the restrictions will take place in three stages:

1. From 9 June 2020:

  • the self-isolation regime and digital passes are cancelled for all citizens (including those older than 65 years of age);
  • hairdressing parlours, beauty salons, photo shops, veterinary clinics and employment agencies will resume work;
  • the multifunctional migration centre of the city of Moscow starts operating normally;
  • public organizations, organizations engaged in employment and staff recruitment activities may return to their usual activities; film studios, recording studios and research institutes may return to usual activities as well.

2. From 16 June 2020:

  • the access of visitors and workers to buildings, structures, constructions of organizations and individual entrepreneurs engaged in real estate operations, activities in the field of renting, leasing, law, accounting, management consulting, advertising, market research, technical inventory of real estate is renewed;
  • restrictions on the provision of planned dental care will be lifted;
  • resumed work of seasonal summer cafés at stationary catering facilities;
  • museums, exhibition halls and zoos will open their doors; visits by electronic tickets.

3. From 23 June 2020:

  • opening of stationary catering establishments;
  • restrictions on the work of the sports industry (fitness clubs, pools and fitness centres) are  lifted.
  • removal of restrictions on the operation of kindergartens, and social protection institutions; passenger navigation on the Moscow River will resume.

However, it must be borne in mind that the time limits for lifting restrictions may be changed in accordance with the developing epidemiological situation.

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Non-working days in Russia. Who is exempted? – details here.

Guidelines on compliance with non-working days – details here.

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Support measures in Russia due to COVID-19

The Government and the Central Bank of the Russian Federation are taking prompt measures against the economic impact of the coronavirus and aimed at supporting businesses. The Russian Government has prepared a plan to support the economy in connection with COVID-19 (please see the Plan of priority measures (actions) to ensure sustainable economic development in the face of a worsening situation due to the spread of the coronavirus infection – on the website of the Russian Government: http://static.government.ru/media/files/vBHd4YRxpULCaUNNTFLVpPSZbMCIA2Zq.pdf)

I. General measures

  • Creation of a financial reserve fund of up to 300 billion rubles;
  • Creation of a guarantee fund for loan restructuring;
  • Support measures for public state contracts;
  • Etc.

II. Business support measures

1. Measures were taken in relation to all business entities:

  • until May 31, 2020, all on-site scheduled and unscheduled tax inspections are postponed at the Federal level (with some exceptions), and inspections that have already been initiated have been suspended, no blocking of bank accounts is available;
  • the Russian Ministry of Economic Development was instructed to (i) submit a draft Federal Law to the Government of the Russian Federation by April 1, 2020, providing for the possibility of introducing a moratorium on bankruptcy applications, and (ii) speed up the approval, and submit to the Government of the Russian Federation, a draft Federal Law introducing a procedure for restructuring the debts of organizations;
  • the possibility to be released from liability for non-repatriation of currency proceeds due to COVID-19 (to be considered in each particular case).

2. Measures for certain industries: aviation, transport, tour operators, developers, pharmaceutical companies, etc.

3. Measures to support small and medium-sized enterprises: concessional lending, deferred lease payments for three months (for tenants of state or municipal property), refinancing of small and medium-sized enterprises’ loans, tax deferral benefits, and measures to stabilize their financial state during the pandemic. It is planned to introduce a mechanism for non-application of penalties, the possibility of extending the terms and adjusting prices in 2020 for public procurement, etc.

4. Measures for other industries and sectors of the economy: at the stage of adoption, they will primarily concern the industries that are most seriously affected.

5. The new tax law, effective since April 1, 2020, has introduced a decrease in the social contribution rate for small and medium-size enterprises from 30% to 15%. The decreased rate is relevant to remuneration exceeding the minimum wage (approximately 12 thousand rubles) and calculated as 10% to be paid to the Pension Fund and 5% to the Medical Insurance Fund.

6. The powers of the Russian Government with regard to tax administrative measures have been extended considerably. Within the year 2020 the Government is entitled to extend the deadlines for tax and social contribution payments, to extend the deadlines for submission of tax returns and other documents, to specify additional grounds for tax deferrals, and to postpone and cancel tax control measures. Regional authorities are entitled to extend the deadlines for tax payments under special tax regimes, including for the unified agricultural tax, unified simplified tax, as well as for regional and local taxes.

At the current stage the Government has taken certain measures, including the following:

  • extended the deadlines for tax payments (including corporate income tax, unified agricultural tax, unified simplified tax) for 3-6 months for small and medium-size enterprises included in the Register as of March 1, 2020, and involved in the industries mostly negatively affected by the coronavirus. Micro-enterprises are entitled to an extension of the deadlines for social contribution payments for 4-6 months;
  • extended the deadlines for submission of tax returns by 3 months;
  • introduced additional grounds for deferral of tax payments: for the companies involved in the most negatively affected industries and for strategic companies subject to certain conditions.

Separate support measures may be introduced in different regions of Russia, however Moscow is taking a lead by having introduced the following measures (https://www.mos.ru/mayor/themes/12299/6382050/):

1. The deadline for advance payments of corporate property tax and land tax for the first quarter of 2020 has been extended until December 31, 2020.
This applies to taxpayer-companies operating in the fields of public catering, tourism, culture, sports, hotels and entertainment.

2. The deadline for payment of the trade fee has been extended until December 31, 2020.
This item will come into effect from the date of entry into force of the Federal Law, according to which local authorities will have the right to extend the dates of payment of regional and local taxes and fees themselves.

3. Partial exemption from rent payments.
This applies to companies in the fields of culture, physical activities and sports, exhibitions, entertainment and educational activities that lease land and premises in city (Moscow) ownership. At the same time, the lease will be reduced only if the company was forced to stop working due to high-readiness for pandemic arrangements. They will not be charged for all of the time they spent idle.

4. Until December 31, 2020 rent payments for April, May, and June 2020 under lease agreements for land plots and premises in city ownership can remain unpaid.
This applies to companies in the fields of hotel services, catering and tourism. The same deferrals and exemptions from rent will be given to city enterprises and institutions that themselves lease land and premises.

5. A 50% reduction in fees for contracts with a trade permit.

This applies to non-stationary retail outlets (stalls, pavilions) of small and medium-sized businesses in underground (subway) passages and lobbies. The fee will be reduced for the entire duration of the high-readiness for pandemic arrangements.
Please note that on Wednesday March 25, 2020, the President of Russia introduced additional measures aimed at supporting people and certain categories of businesses (mainly for small business), so there may be further developments in this field. PETERKA &PARTNERS is following the measures closely and will keep you updated in case of any news. Please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

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Deadline to hold annual GMS in 2020 pushed back – details here.
Consideration for Shareholders’ Meetings due to COVID-19 – details here

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On April 3, 2020, the government of the Russian Federation issued a Decision extending the validity period of time-barred licences and other permits that expire (have expired) between March 15 and December 31, 2020, and are included in the list set out in Appendix No. 1. to the Decision. The aforementioned list is rather limited and covers only seven types of licences and permits, including, e.g., licences for the production and circulation of ethyl alcohol, alcoholic and alcohol-containing products, licences for the use of subsoil, as well as state registration of a medicinal product for medical use. These licences and permits are automatically extended for twelve months.

In other cases listed in Appendix No. 2 to the Decision, the respective authority may adopt one of two decisions. Firstly, when the deadline for validation of compliance with the mandatory requirements on renewal of a permit or periodic confirmation of conformity, re-accreditation, or re-certification falls within the period of the validity of the Decision, conducting the aforementioned procedures may be postponed for up to 12 months. Secondly, the subsequent confirmation of the conformity with the mandatory requirements, providing for renewal of the permit or periodic confirmation of conformity, re-certification, re-certification, or re-examination, is deemed successfully completed.

Moreover, obligatory on-site inspections of licence applicants and licensees, as well as on-site verification measures necessary to obtain, reissue or extend the validity of licences and permits, are carried out using remote monitoring tools, photo, audio and video recordings and video conferencing.

PETERKA & PARTNERS remains at your full disposal should you need any assistance in this respect. Please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

 

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State intervention in real estate lease agreements – details here.
Lease deferral for the business in the most suffered economic areas – details here.

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Supreme Court published important clarifications of certain legal issues related to COVID-19 pandemic - details here.

Bankruptcy moratorium; work of courts in the Russian Federation - details here.


 
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The economic crisis generated by the COVID-19 pandemic and the constant changes within the legal framework have placed an additional burden on taxpayers. Consequently, the Romanian authorities have adopted several fiscal measures, with Emergency Ordinance no. 99/2020 regarding some fiscal measures, the amendment of certain normative acts and the extension of certain deadlines (hereinafter referred to as “Emergency Ordinance 99/2020”) being the latest.

Benefits for HORECA field
Those taxpayers who pay a particular tax for certain activities (hotels, hostels, camping sites, restaurants, catering, bars, trailer parks, camps and other similar activities) are exempt from paying such tax for a period of 90 days starting from the day of the entering into force of Emergency Ordinance 99/2020, specifically as of 25 June 2020.

Furthermore, when recalculating the tax, the relevant taxpayers are also exempt from paying the tax owed for the period of time when they had their activity suspended, either totally or partially, due to the state of emergency. The declaration and payment of the particular tax for the first semester of 2020 must be done by 25 October 2020 (inclusive).

Fiscal facilities for profit tax and income tax
Taxpayers who pay profit tax and taxpayers who pay income tax for microenterprises are granted a deduction of 10% if they pay the taxes up until the 25 July 2020 for the second trimester of 2020, respectively up until the 25 October 2020 for the third trimester of 2020. This deduction also applies accordingly to taxpayers who pay a particular tax (as identified above).

Suspension of enforcement for tax receivables
The enforcement of tax receivables via garnishment or via order of payment and auction cannot be started and, if it has already been started, is suspended. This measure is applicable until 25 October 2020.

Notwithstanding the above-mentioned, for certain categories of receivables, such suspension of enforcement will not be applicable (for example, state budget receivables established through a final criminal court decision, etc.).

Facilities regarding tax liabilities
As for the tax liabilities matured between the 21 March – 25 October 2020, there is no obligation to calculate or pay interest or delayed payment penalty. The afore-mentioned benefits shall cease after 25 October 2020.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

  

ro53

As of the 17 June 2020, the state of alert has been extended in Romania for an additional 30 days. Some of the main measures brought by Government Decision no. 476/2020 regarding the extension of the state of alert in Romania and the measures that are taken during this period for preventing and withstanding the effects of the COVID-19 pandemic envisage:

  • The reopening of shopping malls – however, the playgrounds, arcades, cinemas, food courts therein will remain closed;
  • The reopening of day-care centres, kindergartens and after-school activities during the summer holidays, under certain conditions;
  • The reopening of gyms and outdoor pools, under certain conditions;
  • The reopening of restaurants, under certain conditions;
  • The possibility to organize sporting competitions, under certain conditions, and with no spectators;
  • The postponement of flights to certain countries and the temporary closing of certain border crossing points.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

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Due to the Covid- 19 pandemic, the competent Romanian authorities issued a series of measures1 in an attempt to diminish the economic effects brought about by this event.

Labour related benefits

  • As of the 1 June 2020, private employers whose employees were technically unemployed are granted, over the course of a period of 3 months, a deduction of 41.5% of their gross salary, but not exceeding 41.5% of the average gross salary established by the current Romanian social security legislation (i.e., 41.5% of RON 5,429, thus: RON 2,253).

The deduction is granted only for individual employment agreements that were suspended for a minimum period of 15 days during the state of emergency/alert period.

Nevertheless, the condition for benefitting from such deduction is for employers to maintain the working relations until the 31 December 2020, with the exception of seasonal workers. Please note that this rule will not be applicable in case of mutual termination or resignation of the employee.

  • Employers that hire full time and for an indefinite period, between the 1 June 2020 and the 31 December 2020, employees (registered as unemployed with the relevant authorities), who are over 50 years old and whose employment agreements ceased during the emergency/alert period for reasons that were not attributable to the employees, will be granted monthly, for a period of 12 months, for each such employee, 50% of their salary, but not more than RON 2,500.

Equally, employers that hire full time and indefinitely, up until the 31 December 2020, employees who are between 16 and 29 years old will receive monthly, for a period of 12 months, for each such employee, 50% of their salary, but not more than RON 2,500.

For the incentives for both age groups, employers must maintain the working relations for at least 12 months starting from the last month they were granted the facility.

These facilities do not apply to public authorities and institutions or to employers who are in the process of bankruptcy or liquidation.

Lease-related benefits

Lessees, private legal entities or freelance professionals, are entitled to ask for a delayed payment of the lease if either its activity has been suspended or its income in March 2020 has decreased by at least 15% compared to the average income in 2019, in the case of pieces of real estates registered as their seats or working points.

1 Some of the most recent measures can be found in Emergency Ordinance no. 92/2020 regarding the establishment of active supporting measures for employees and employers in the context given by the spread of the SARS-CoV-2 virus and the amendment of other normative acts (EO 92/2020), in Law no. 62/2020 regarding the granting of certain facilities in respect of lease payment during the emergency situation (Law no. 62/2020) and in Emergency Ordinance no. 90/2020 on the amendment of Government Ordinance no. 6/2019 regarding the establishment of fiscal facilities and the amendment of other normative acts (EO 90/2020).

In addition, natural persons can ask for such delayed payment of the rent for their residence, if they have been affected directly or indirectly during the state of emergency.

In this respect, both categories of lessees will have to conclude addenda to the relevant lease agreements, and will submit a request to the competent fiscal body. The fiscal body will pay the relevant rent to the lessor. This facility was applied during the state of emergency and throughout the month of June 2020. The lessees will pay back to the fiscal body the relevant amount in equal instalments, after the period during which the payment was delayed, until 31 December 2020.

In 2020, individual tax payers that reduce for the year 2020 the lease for the real estate by at least 30% lower than the rent in February 2020 will not pay tax on the income resulting from rents for the period during which the reduction of the rent was negotiated and until 31 December, at the latest.

In addition, for tax payers that pay profit tax or tax on the revenues of micro-enterprises, the incomes earned from lease agreements will be taxable in a proportion of 80% if, throughout 2020, they reduce the amount of the lease by at least 20% in comparison with the February 2020 lease.

Moreover, the fiscal liabilities that would have fallen due during the state of emergency are not considered outstanding until 25 June 2020.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

 

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The shift from a state of emergency to a state of alert is bringing a slow but certain revival of economy in Romania. Consequently, the competent authorities deemed it necessary that legal measures be taken in this respect. The insolvency prevention procedures and insolvency procedure were targeted by Law no. 55/2020 on certain measures for preventing and withstanding the effects of the COVID-19 pandemic (entered into force on 18 May 2020).

Conditions to start insolvency procedure

During the state of alert, debtors may file a request in order to start an insolvency procedure, but they are not obliged to do so. However, the obligation to file the request will be reinforced at the end of the state of alert and shall be performed in a legal term of 30 days starting from that moment.

As regards the creditors’ possibility to start the insolvency procedure, there is an additional condition. Therefore, they can file such request only after they prove that they reasonably tried to conclude a payment convention with the debtor. This condition is applicable only in respect of those debtors who suspended their activities, either totally or partially due to COVID-19 measures.

The minimum value of the receivable for which the insolvency procedure can be started has increased during the state of alert to 50,000 RON (approximately 10,340 EUR) for both creditors and debtors, if the debtor’s activity was suspended.

Before the state of alert, the debtor was able to start the procedure only if the amount of tax receivables was less than 50% of the declared total receivables. During the state of alert, this condition is no longer applicable.

The extension/suspension of legal terms

Among the measures introduced by Law no. 55/2020 were amendments focusing on the extension/suspension of several legal terms, as follows:

  • As for the ongoing arrangement with creditors’ procedures, the period of time given for the negotiations or for the drafting/negotiation of the offer is extended by a maximum of 60 days. As for the payment of the obligations set by the arrangement in case the debtor started to execute the arrangement, the term is extended by 2 months.
  • As for debtors undergoing a judicial reorganization procedure, the term for the execution of the plan is extended by 2 months. Under specific conditions, the extension of the terms regarding the execution of the plan varies.
  • As for the debtors under an observation period, the term of this period is extended by 3 months. Furthermore, the term for the proposal of the judicial reorganization plan is also extended by 3 months.
  • The legal term of 5 days in which the debtors who are involved in extrajudicial negotiations or in negotiations carried out in an ad-hoc mandate procedure or within an arrangement with creditors are obliged to file a request is suspended until the end of the state of alert.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

 

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The general meetings of shareholders of Romanian companies can take place under special conditions due to the current Covid-19 pandemic, as a result of the various implemented restrictions in the movement of population. New rules allow meetings to be held by means of distance communication platforms and provide for the postponement of the statutory term for holding ordinary general meetings of shareholders. New rules allow meetings to be held by means of distance communication platforms and provide for the postponement of the statutory term for holding ordinary general meetings of shareholders.

According to recent legislation in force as of 8 May 2020 (Emergency Ordinance no. 62/2020 for the adoption of certain measures for companies, in order for them to conduct meetings of statutory bodies, as published in the Romanian Official Gazette Part I no. 372/08.05.2020), new requirements for holding shareholders’ meetings of Romanian companies have been put into place. The new rules apply also to general meetings of shareholders (“GMS”) convened during the state of emergency, but which are held after the state of emergency ends, as well as to GMS convened and held within 2 (two) months as of the end of the state of emergency.

It has been decided that the deadline for the ordinary meetings held by companies as provided under the Companies Law (i.e., five months as of the end of the previous financial year) is to be extended until 31 July 2020 (in order to be in line with the same postponed deadline for submitting the financial statements for 2019).

  • New rules concerning convening of general meetings of shareholders

Companies may convene GMS not only by publishing notices in Part IV of the Official Gazette and in newspapers, but also by any means of remote communication (i.e., classic or electronic mail), provided that each shareholder communicates to the directors of the company, in writing, an e-mail address or other contact details to which correspondence with the company may be received.

Companies should make available on their websites (or, alternatively, by e-mail, post or courier) information regarding the issues on the agenda, the annual financial statements, the annual report of the board of directors and, if the case, of the supervisory board report and the proposal on the distribution of dividends.

  • New rules on holding GMS

GMS may be held by correspondence or by direct means of distance communication (e.g., teleconferencing, videoconferencing or a combination of several methods) even if the company's articles of association prohibit or do not mention this option.

The holding of a general meeting by teleconference or videoconference is possible, as long as the secrecy of the vote can be ensured. Also, should a secret vote be required for certain matters, the body competent to convene the meeting should ensure that the shareholders' vote is expressed in such a way as to remain secret.

Should the general meeting be held by correspondence, shareholders will communicate their vote by mail in the manner indicated in the convening notice so that the vote is received by the company by the date of the meeting.

  • Resolutions of GMS

The resolutions of a general meeting, including all items on the approved agenda, will be signed, in handwriting, or with an extended electronic signature, by the chairperson of the board of directors/the director with full powers of representation/the chairperson of the board or by his/her proxy.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

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The coronavirus crisis has created a number of economic difficulties for companies, many of them in great need of liquidities. In this context, the Small and Medium-Sized Invest Program ("SME Invest Program"), through which the state guarantees certain loans contracted by small and medium-sized enterprises ("SMEs") for investments and working capital, has undergone certain changes during the recent period.

Certain elements of the existing SME Invest Program have been amended for the purpose of extending the benefits of state aid during this crisis. For instance, recent rules provide that:

  • The state will fully cover the interest for the eligible beneficiaries.
  • In addition, the state will also cover the risk commission which would normally have to be borne by SMEs. The maximum duration of financing for investment loans has been, however, decreased to 72 months while the guarantee period for working capital loans will be for 36 months with the possibility of an extension with another 36-month period.
  • Financial and insurance brokerage, real estate or companies carrying out lease or leasing activities may now also apply for grants related to the IMM Invest program, although this was not previously possible.

In addition to the benefits, the recent rules also include certain limits when it comes to getting access to the SME Invest Program, such as:

  • The period of interest subsidization has been limited to last until December 31, 2020. This state aid scheme will continue in 2021 and possibly in 2022, but only if the economic growth estimated in these two years will be below the one registered in the year 2020.
  • Moreover, in the context of the Coronavirus pandemic, as an eligibility requirement, SMEs should submit a written statement undertaking not to terminate the working relations with their employees until December 31, 2020.
  • In addition, subsidies are conditioned by certain maximum financing values, namely lei 5,000,000 for financing working capital, respectively lei 10,000,000 for investment loans. The financing of micro and small enterprises regarding working capital should fall within certain limits as well: (i) maximum lei 500,000 for micro-enterprises, respectively (ii) maximum lei 1,000,000 for small enterprises.
  • The new rules also provide that the abovementioned financing for SMEs will not be greater than the highest value of: (i) the double of the amount representing the salary expenses, including the mandatory social  contributions due by the employer related to the salaries, as registered at the level of the year 2019; (ii) 25% of the beneficiary's net turnover for 2019, or (iii) a value that results from their liquidity needs, including both working capital costs and investment costs, in which case the amount of the loan cannot exceed the liquidity needs from the moment of granting the loan for the next 18 months. For companies established after January 1, 2019, the maximum amount of the loan cannot exceed the amount estimated for the first two years of activity.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

 

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New measures have been adopted in the area of economic and social protection during the state of emergency in Romania caused by COVID-19 epidemic. Among the latest measures published in the Romanian Official Gazette available for companies, it is worthwhile mentioning that:

  • Official bonuses for the timely payment of corporate and micro taxes for the first quarter have been established. Large taxpayers will benefit from a 5% bonus if profit tax is paid for the first quarter of the year, while small, medium and micro taxpayers will benefit from a 10% discount.
  • The conditions under which the state grants the payment of technical unemployment have been simplified. Any employer directly or indirectly affected by coronavirus can apply for technical unemployment benefits, but only for the state of emergency period. Employers, both interrupting and reducing their activities, are targeted. The state will pay the technical unemployment of 75% of the basic salary, but not more than 75% of the average gross salary for 2020 for all suspended employees. The employers will be expected to submit by email an application, a sworn statement and a list of employees in technical unemployment to the relevant local employment agency. The form of these three documents is established through an order issued by the Ministry of Labour and Social Security. The state grants the employer the gross amounts from which the employer pays the employees the net allowance. The employer is required to calculate, withhold and pay the related income tax, social security contribution and health insurance contribution from the gross allowance.
  • The companies will be able to postpone the payment of their loan rates if their income has been affected by the Covid-19 epidemic. Basically, this will be one of the requirements to be met in order for the companies to request the deferral of loans and leasing rates for periods ranging from one to nine months (but not later than the end of the year 2020). Other conditions will be that they not be insolvent and have no arrears on loans and leasing. The postponement of the loan rates will be available for those companies directly or indirectly affected by the COVID-19 pandemic.  Deferral requests may be made until May 14, 2020 by mail, email or telephone. In addition, companies should hold the certificate of emergency issued by the Ministry of Economy, Energy and the Business Environment which will be obtained online through its website.
  • The form of the statement which employers are required to use for the settling of the allowance paid to parents who are employees has been adopted. Employers will issue a sworn statement which can be submitted to request from the state the allowances related to the days off paid to parents during the temporary closure of educational facilities.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

 

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The Ministry of Economy, Energy and the Business Environment of Romania has regulated the conditions under which the economic operators affected by the SARS-COV-2 pandemic can obtain emergency situation certificates (“ESC”) to benefit from the facilities provided by Government Emergency Ordinance no. 29/2020 on some economic and fiscal-budgetary measures and Government Emergency Ordinance no. 30/2020 for the amendment and the supplementation of some normative acts, as well as for establishing measures in the field of social protection in the context of the epidemiological situation generated by the spread of SARS-CoV-2.
Order no.791/2020 regarding the granting of emergency situation certificates to economic operators whose activities are affected by the SARS-CoV-2 pandemic (“Order”), that entered into force as of 25 March 2020, regulates the conditions under which the Ministry of Economy, Energy and the Business Environment issues emergency situation certificates to those economic operators whose activities have been affected by the SARS-COV-2 pandemic.
The Order regulates two types of ESC:

  • Certificate type 1 (BLUE) – issued to applicants that interrupted their activities, totally or partially, during the state of emergency, as a consequence of the decisions taken by the competent public authorities;
  • Certificate type 2 (YELLOW) – issued to applicants that register a decrease in revenue in March 2020, of a minimum of 25% of the average revenue in the period January-February 2020.

Please note that applicants are allowed to file a request for only one type of emergency situation certificate.
An ESC can be used either in relation with a public institution, with the purpose of obtaining certain benefits/support measures, or in commercial relations.
In order to obtain an ESC, applicants shall upload, on http://prevenire.gov.ro/ (“Online Platform”), the following documents, having attached the electronic signature of the economic operator’s legal representative or of a proxy:

  • Identification data of the applicant;
  • An affidavit on the liability of the legal representative (his/her own liability) stating that all of the information and documents underlying the application for obtaining the ESC are true and correct and comply with the legislation in force in relation to the type of certificate requested.

Applicants that are not registered with the Trade Registry Office shall submit documents attesting the authorization of the activity.
An ESC is valid without a signature and stamp and can be verified on the above-mentioned Online Platform.
In case of inspection and control performed by competent bodies, the documents underlying the issuance of the above-mentioned affidavit on a legal representative’s own responsibility shall be verified.
The Ministry of Economy, Energy and the Business Environment will issue the emergency situation certificates only during the state of emergency in Romania.
For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

 

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First set of economic and tax-budgetary measures in context of COVID-19 epidemic

The Romanian Government has adopted the first set of measures to support entities and individuals affected by COVID-19. The Government Emergency Ordinance no. 29/2020 on certain economic and tax-budgetary measures, as published in the Official Gazette no. 230/21.03.2020 (“GEO 29/2020’’) provides for certain types of direct or indirect aid for small and medium-sized companies, professionals and/or individuals.

Please find below, a brief summary enclosing the measures:

  • Postponement of the first deadline for the payment of local taxes (i.e., tax on land, buildings and means of transportation)

For 2020, the deadline of March 31 has been extended to June 30 (until when the 10% bonus for payments in advance will be applicable).

  • Postponement of deadlines for benefiting of fiscal restructuring

A debtor intending to restructure its fiscal obligations has to notify the competent fiscal body on its intention by July 31, 2020, under the revocation of its right to benefit from the restructuring of the budgetary obligations.

The request for restructuring can be submitted until October 30, 2020, under the sanction of revocation.

  • Exemption to pay interest/suspension of enforcement

No interest and penalties shall be calculated, or become due, for the fiscal obligations due starting with the date of the entry into force of GEO 29/2020 and unpaid until the passing of 30 days as of the end of the state of emergency. The above tax obligations are not considered as outstanding fiscal obligations.

In addition, the enforcement measures applied for the recovery of budgetary debts have been suspended or not started, except for the enforcement applied for the recovery of those budgetary debts established by court decisions in criminal matters. The enforcement shall be suspended by credit institutions or third parties, through the effect of the law, without any other formalities from the tax authorities.

  • Facilities for profit tax payers applying quarterly prepayments

Taxpayers applying the system of declaration and payment of the annual profit tax with quarterly prepayments can make quarterly prepayments for the year 2020, at the level resulting from the calculation of the current quarterly profit tax. The calculation method is maintained for all quarters of the fiscal year 2020.

  • Other facilities for small and medium-sized companies ("SME")

Among the facilities granted to SME, the following may be noted: deferred payment for utilities (electricity, natural gas, water, telephone and internet services, as well as the rent for buildings for social headquarters and secondary offices), non-applicability of delay penalties for SME under the contracts with the public authorities for the duration of the state of emergency, and the possibility to obtain loans secured by the state with subsidized related interest.

  • Postponement/suspension of submission of UBO statements for companies, associations and foundations

The deadline for the submission of the UBO statement with the Trade Registry for companies, and with the Ministry of Justice for associations and foundations (i.e., 21 July 2020), has been prolonged by 3 (three) months to the end of the state of emergency. At the same time, during the state of emergency, the submission of the UBO statements for companies/associations/foundations has been suspended.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

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Covid -19 in Romania: Temporary amendments in the field of prescription and termination of rights terms

The Decree no. 195/2020 instituting the state of emergency on the territory of Romania (the “Decree”) lays down, among others, certain measures in the field of prescription and termination of rights, attempting to uphold, under the special and restrictive circumstances of the COVID-19 pandemic, the legitimate rights and interests of creditors facing bad debts, and of other persons, whose legal actions might be prevented due to the current practical limitations.

Article 41 of the Decree provides that “prescription and termination of rights terms do not begin to lapse, and, if they have begun to lapse, they will be suspended during the entire duration of the emergency state instituted under this decree”.

This provision would imply the fact that, temporarily, and during the entire duration thereof, the “state of emergency” has been added to the cases of prevention of start of lapse and suspension of lapse of prescription and termination of rights terms.

It is worthwhile adding that the Civil Code does not provide for such state of emergency as a cause with any impact in the fields of prescription and termination of rights. However, the Romanian Civil Code provides, as a general rule, that, actually, force majeure is a case during which prescription does not start to lapse. In addition, force majeure is a case of preventing the start of the lapse of and suspending the course of termination of rights terms.

According to the Romanian Civil Code, force majeure is “any external, unpredictable, absolutely invincible and unavoidable event”, and it must be emphasized upon the fact that the state of emergency cannot be equated with force majeure, the former lacking the afore-mentioned characteristics.
Nonetheless, it seems that the drafters of the Decree assimilate, on a temporary basis, the state of emergency with force majeure, because the article of the Decree quoted above goes on to provide that ...” the provisions of article 2532 point 9, 2nd thesis of the Civil Code will be temporary inapplicable”.

The above-mentioned text of the Romanian Civil Code provided that “force majeure, as long as it is temporary, does not constitute a case of suspension of prescription, unless it occurs in the last 6 months before the expiry of the prescription term”. 

Thus, under the Decree, any prescription term in the course of lapsing at the beginning of the instituting of the state of emergency, will be automatically suspended, even if it is not in the last 6 months before the expiry of the term, for the course of the entire duration of the state of emergency, the latter being assimilated to force majeure.

However, the Decree does not go on to temporarily amend any other effects of the suspension of prescription and termination of rights terms, which will remain applicable, as stated in the Romanian Civil Code.

As a last remark, it must be noted that the assimilation of the state of emergency to force majeure operated in the text of the Decree will be applicable exclusively in the field of prescription and termination of rights terms. It must be, therefore, stated, that the state of emergency will not be invoked as a case of force majeure in the case of the performance of contracts, unless other derogatory legislative texts come into force in the next period.

For any legal matters arising in these special circumstances, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com

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GENERAL MEASURES TO COUNTERACT THE SPREAD OF COVID-19

1. Introduction of a quarantine throughout Ukraine
The Government of Ukraine introduced a quarantine throughout Ukraine from 12 March 2020 until 24 April 2020, which provides:

  • Prohibition of gatherings by ban on events/gatherings involving more than 10 people

Exceptions:
- trade of food, fuels, hygiene products, medicines and medical products;
- when ensuring work of state and local self-government bodies;
- banking and insurance activities.
In addition, from 3 April 2020 the movement on the streets for more than two people is prohibited, except in cases of escorting children.

  • Suspension of work of:

- educational institutions;
- restaurants/cafes (it is allowed to provide catering services with the use of targeted delivery of the order, provided personal protective equipment is provided to the appropriate personnel);
- shopping and entertainment centers;
- fitness centers and cultural establishments.

  • Compulsory self-isolation or observation (from 29.03.2020):

Persons who have had a contact with a patient with COVID-19 or those who are ill with this disease and do not require hospitalization are considered persons who need self-isolation. Such persons are obliged to refrain from contacting other people (other than those whom they cohabit with) visit public places. It is permissible to visit urgently places of trade in foodstuffs, hygiene products, medicines, medical supplies and health care facilities, if such person uses personal protective equipment and a distance of at least 1.5 meters.
Visitors to countries / regions with local transmission of COVID-19 in the community (except for drivers and service personnel of cargo vehicles, crew members, if there is no reason to believe that they were in contact with a patient with COVID-19) are considered to have had a contact with the patient with COVID-19 and are subject to compulsory observation (isolation) in specialized institutions within 14 days after crossing the state border

2. Introduction of an emergency regime throughout Ukraine
The Government of Ukraine introduced an emergency regime throughout Ukraine from 25 March 2020 until 24 April 2020. The emergency regime does not limit citizens' constitutional rights and does not involve the government interference in the management of private companies, but only consolidates efforts to overcome the threat of COVID-19 and establishes a special enhanced regime for the work of public authorities.

3. Restrictions on movements and transportation:

  • Ban on entry to Ukraine of foreigners from 16 march 2020 until 24 April 2020 (except for those who are entitled to permanent or temporary residence in Ukraine, are spouses or children of citizens of Ukraine, employees of foreign diplomatic missions and consular posts accredited in Ukraine, representations of official international missions, organizations accredited in Ukraine, and their families; drivers and service personnel of freight vehicles, crew members);
  • Closing of the borders for regular passenger transportation service from 17 march 2020 until 24 April 2020;
  • Closing of the borders for rail, air and bus passenger transportation from 28 march 2020 until a special decision is made (however, the borders are not closed for citizens of Ukraine who cross the border on foot or by car);
  • Ban on air and bus city, intercity and interregional passenger transportation, subways until 24 April 2020;
  • Ban on rail city, intercity and interregional passenger transportation until a special decision is made.

4. Increase of liability for violation of sanitary-anti-epidemic legislation

  • Establishment of administrative liability in the form of a fine for violation of quarantine, sanitary-hygienic, sanitary-anti-epidemic rules and norms, as well as decisions of local authorities on the fight against infectious diseases: for individuals - from 17,000 UAH up to 34 000 UAH, for officials - from 34 000 UAH up to 170 000 UAH;
  • Establishment of criminal liability for violation of rules and norms established to prevent epidemic and other infectious diseases, as well as to prevent mass non-communicable diseases (poisoning) and to control them, if such actions have caused or deliberately may cause the spread of these diseases: in the form of penalties from 17 000 UAH up to 51 000 UAH or arrest for up to six months, or restraint of up to three years, or imprisonment for the same term. If such actions have caused death or other grave consequences - in the form of imprisonment for a term of five to eight years.

5. Increase of liability for violation of legislation related to state regulated prices

  • Increase of administrative liability for violation of the procedure of formation and application of prices and tariffs, including for goods needed to prevent the spread of COVID-2019: if the price exceeds 1.2 times the price determined by the Government of Ukraine for such goods, individuals are subject to fine from 3400 to 4250 UAH, officials - from 4250 to 5100 UAH;
  • Increase of administrative liability for violation of legislation related to state regulated prices: providing the authorized bodies with false information - a fine in the amount of 17000 UAH; failure to comply with the requirements of the authorities or creating obstacles to the performance of the functions assigned to them - a fine in the amount of 34000 UAH.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact our COVID-19 Help desk at at covidhelpdesk@peterkapartners.com.

The document reflects the status as of April 3, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

 

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1. A force majeure
The introduction of a quarantine established by the Government is considered a force majeure. Details here.

2. Exemption from lease payment
The tenant is exempted from lease payment for all the time during which the property could not be used by him from the moment of introduction of a quarantine until its end. Details here.

3. Exemption from land payment
There shall be no charge and no payment for the period from 1 March to 31 March 2020 of land payment (land tax and rent for state and communal property land) regarding the land owned or used (leased) by natural or legal persons. The land payment for April 2020 shall be paid until 30 June 2020 and no penalties shall be charged for payment within this period.

4. Exemption from tax on real estate
There shall be no charge and no payment for the period from 1 March to 31 March 2020 of tax on real estate other than land with regard to non-residential real estate owned by natural or legal persons. The tax on real estate charged for April 2020 shall be paid until 30 June 2020 and no penalties shall be charged for payment within this period.

5. Exemption from the payment of a single contribution to compulsory state social insurance
The following persons shall be temporarily exempt from the charge and payment of the single contribution to compulsory state social insurance in respect of the amounts to be calculated and paid for the periods from 1 to 31 March and from 1 to 30 April 2020:
- private entrepreneurs;
- persons engaged in independent professional activity, namely scientific, literary, artistic, educational or teaching, as well as medical, legal practice, including advocacy, notarial activity, or persons engaged in religious (missionary) activity, other similar activities, and earn income from such activities;
- farmers.
No penalties shall apply for late payment, incomplete payment or untimely submission of reports regarding a single contribution to compulsory state social insurance to tax authorities that was made from 1 March 2020 to 30 April 2020.

6. Extension of the period of payment of taxes by individuals
Extension from 01 August to 01 October 2020 of the period of payment by individuals of taxes specified in their annual declarations of property and income for 2019.

7. Release from liability for violation of tax law
No penalties shall apply for violation of tax law committed during the period from 1 March to 31 May 2020 (except for penalties for violation of accrual, declaration and payment of value added tax, excise tax, rent).

8. Release from liability for breach of term for filing of financial reports and annual reports
Persons responsible for submitting and publishing annual financial (consolidated) report are exempt from liability for breach of the timing of such report if it is published during the quarantine period or within 90 calendar days of the day following the end of the quarantine, but not later than 31 December 2020.
An additional deadline is provided for the submission of annual information about the issuer: such annual information may be disclosed by the issuer of securities before 30 April 2020, or after that date - within 5 working days after the general meeting of shareholders.

9. Temporary prohibition of documentary and factual inspections
The establishment of a moratorium on documentary and factual inspections for the period from 18 March to 31 May 2020, except for inspections regarding violations of the requirements of the legislation in part of:
- accrual, declaration and payment of value added tax;
- accounting, licensing, production, storage and transportation of fuel, ethyl alcohol, alcoholic beverages and tobacco;
- targeted use of fuel and ethanol by taxpayers;
- equipment of excise warehouses by flowmeters and / or uniform meters;
- carrying out the functions defined by the legislation in the field of production and circulation of ethyl alcohol, alcoholic beverages and tobacco, fuel.
Documentary and factual inspections, which commenced before 18 March 2020 and were not completed, are suspended until 31 May 2020. Such suspension interrupts the period of inspection and does not require any further decision by the supervisory authority.
The establishment of a moratorium on documentary and factual inspections on the correctness of the calculation and payment of a single contribution to compulsory state social insurance for the period from 18 March to 18 May 2020. Documentary and factual inspections, which commenced before 18 March 2020 and were not completed, are suspended until 18 May 2020. Such suspension interrupts the period of inspection and does not require any further decision by the supervisory authority.

10. Temporary prohibition of state supervision (control) activities
Temporarily, until 30 June 2020, it is prohibited to carry out by the state supervision (control) activities in the field of economic activity, except for state supervision (control):
- upon activities of entities that are classified as high-risk entities;
- in the field of compliance with requirements for formation, establishment and application of state regulated prices
- in the field of sanitary and epidemiological well-being of the population.

11. Release from liability for violation of consumer credit agreement
In the event of delay by the consumer from 1 March 2020 to 30 April 2020 of the fulfillment of obligations under the consumer credit agreement, the consumer shall be released from liability for such delay (including, but not limited to, the consumer is exempted from the obligation to pay a penalty stipulated by the agreement for late execution (default, partial fulfillment) by the consumer of obligations under such agreement).

12. Prohibition on raising the interest rate on the loan agreement
Raising the interest rate on the loan agreement during the quarantine is forbidden.

13. Release from liability for violation of the legislation on the legal status of foreigners and stateless persons
To foreigners and stateless persons who were unable to travel outside Ukraine or were unable to apply to the territorial bodies of the State Migration Service of Ukraine with an application for the extension of their stay in Ukraine and / or for the exchange of a temporary / permanent residence permit during the quarantine, no administrative liability for violations of the legislation on the legal status of foreigners and stateless persons shall apply, if such violations occurred during or after the establishment of the quarantine. The issuance of identity documents confirming the citizenship of Ukraine or the special status of the person during the quarantine period is carried out at the place of the person's address.

14. Limitation of the Law “On public procurement”
Until 18 April 2020 the procedure of public procurement shall not apply to cases where the subject matter of the procurement are the goods, works or services which are necessary for the implementation of measures aimed at preventing the occurrence and spread, localization and elimination of outbreaks, epidemics and pandemics of COVID-19. As a result of such procurement the customer shall publish in the electronic procurement system a report on concluded contracts, a procurement contract and all annexes thereto, a report on the performance of the contract, which is simplified procedure in comparison with general procedure of control of public procurements established by the Law “On public procurement”.

15. Extension of some terms
The following terms are extended for the duration of the quarantine:
- accrual of penalties for delayed fulfillment of obligations;
- warranty period of use of the goods;
- the term of exercise of the pre-emptive right to purchase a share in the right of joint partial ownership;
- general and special limitation period for claims (especially for claims: arising from improper quality of works under a contract for capital construction; for compensation to the customer of the losses caused by the shortcomings of the project under the contract on carrying out design and research works; claims to a surety; claims regarding termination of a donation agreement; claims for damages in connection with damage to rental property; lawsuits in labor disputes).

16. Extension of a term for holding of annual general meetings of shareholders
The annual general meeting of shareholders for the 2019 financial year shall be held no later than three months after the date of termination of the quarantine. If due to the action it is impossible to hold a general meeting of shareholders in accordance with the procedure established by the Law of Ukraine "On Joint Stock Companies", the general meeting of shareholders may be held remotely in the order and terms determined by the temporary order of remote holding of the general meeting which shall be approved by the National Securities and Stock Market Commission.
If the term of office of the members of the supervisory boards of joint-stock companies expires in 2020, the powers of such members of the supervisory boards shall be fully extended until the date of the general meeting of shareholders.

17. Increase of the maximum marginal income levels for single tax payers
Increase of the marginal income levels for single tax payers: Group I - UAH 1,000,000; Group II - UAH 5,000,000; Group III - 7 000 000 UAH.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact our COVID-19 Help desk at at covidhelpdesk@peterkapartners.com.

The document reflects the status as of April 3, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

 

 

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1. Temporarily (until 30 June 2020) exemption from value added tax and from import duty of the import into the customs territory of Ukraine of medicines, medical devices and / or medical equipment necessary for the implementation of measures aimed at preventing the occurrence and spread, localization and elimination of outbreaks, epidemics and pandemic of COVID-19, the list of which is determined by the Cabinet of Ministers of Ukraine.

2. Setting until 31 May 2020 a zero rate of excise duty on 100% ethyl alcohol used for the production of disinfectants.

3. Establishment of a temporary quarantine permit for the production of disinfectants without their state registration provided that such disinfectant does not contain any active substances dangerous for human health.

4. Temporary introduction of a new (simplified) regulation for production of ethyl alcohol used for the production of disinfectants.

5. Temporarily (until 31 May 2020) granting a permission for the shipment of ethyl alcohol from the excise warehouse of ethanol producers to manufacturers of medicines and manufacturers of chemical and technical products, for the production of disinfectants.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact our COVID-19 Help desk at at covidhelpdesk@peterkapartners.com.

The document reflects the status as of April 3, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

 

 

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EFFECTS OF COVID-19 PANDEMIC ON COURTS IN UKRAINE

In order to stop the spread of COVID-19, the Government of Ukraine has adopted several legislative acts regulating, inter alia, the issues of court proceedings (the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Aimed at Providing Additional Social and Economic Safeguards in Relation to the Spread of Coronavirus Disease (COVID-19)” № 540-IX of March 30, 2020;  the Order of the State Judicial Administration of Ukraine "On Approval of the Procedure for Working with Technical Means of Video Conferencing During a Court Session on Administrative, Civil and Economic Processes for Participation of Parties Outside the Court" № 169 of April 8, 2020).  

The main legislative changes concerning the functioning of courts are as follows:

  • A court may decide to restrict non-litigants' access to a hearing held during quarantine if participation in a hearing may threaten a person's life or health (in commercial, criminal and civil proceedings).
  • The terms established by procedural law for filing applications and documents, appealing to a court, as well as for committing other procedural actions, remain for the duration of quarantine (in administrative, commercial and civil proceedings).
  • The procedural terms set by the court in its decision may not be less than the quarantine period in administrative, commercial and civil proceedings).
  • Parties to court proceedings may participate in a court hearing in a videoconference outside the courtroom using their own technical devices after registration in the EasyCon System (software), which began to operate, in pilot mode, on 13 April 2020.
  • Such participation is subject to the following:
    • The participant shall register using a digital signature in the EasyCon System on the official web portal of the Judicial System of Ukraine at www.court.gov.ua and receive information from a moderator by means of telephone or e-mail regarding the technical possibility of holding a hearing by videoconference.
    • The computer shall comply with the technical requirements for access to the EasyCon System, including operating system requirements (minimum required: Microsoft Windows XP or Win7, MacOS X 10.7.5+, Ubuntu 12.04+, Debian 7.2.0+), RAM (minimum 1 GB), network, camera and availability for additional devices (headsets, speakers);
    • The participant must file a videoconference application not later than five days before the hearing and send a copy of the application to other participants within this term;
    • The judge decides on the possibility of holding a court hearing by videoconference on the condition of the availability of the appropriate technical capacity of the court (availability of equipment and the possibility of its use on a certain day and at a certain time);
    • The participant is obliged to enter into, and authorize him/herself in, the EasyCon System 10 minutes before the start of the court hearing, activate the technical equipment (microphone, headphones and camera) and test their performance with the EasyCon System, and then to expect the Court Secretary's invitation to attend the hearing;
    • The authentication of the participant shall be done by his/her authorization in the EasyCon System using a digital signature;
    • Identification of the participant shall be carried out at the beginning of the court hearing by providing a passport or other identification document before the camera, opened to the photo page.

However, holding a court hearing by videoconference outside the courtroom is possible if there is a technical capacity for such in the court where the case is being considered. The risks of the technical impossibility of participating by videoconference outside the courtroom, interruption of communication, etc., are borne by the participant who submitted the relevant application.

 

For any further information and assistance with respect to the above, and any other COVID-19 related legal matters, please do not hesitate to contact our COVID-19 Help desk at  covidhelpdesk@peterkapartners.com.

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EMPLOYMENT WITH REGARD TO THE CURRENT COVID-19 CRISIS

Due to the last amendments to the legislature of Ukraine:
1. General recommendations to employers

  • in case of detection of signs of disease of employees employers are recommended to immediately refer such employees for medical examination;
  • if employee reveled to be ill, he/she obtains medical certificate and goes on sick leave. Medical certificate can be issued to persons, who are still healthy, but contacted infected person.

Refusal to undergo the examination may not be a ground for suspension from work. In case employees contacted with infected persons:

  • employee may obtain sick leave for self-isolation;
  • employer may suggest, if possible, more isolated premises to work in/ remote work etc.;
  • employer may suspend such employee from work.

Authorities announced the introduction of e-procedure of obtainment of medical certificates.

2. Remote (home) work
Establishment of the requirement for the employer to enter into a written contract in case when the employee works remotely (at home). Exception: at the time of threat of spread of an epidemic, pandemic and (or) at the time of threat of military, technogenic, natural or other nature, the condition of remote (home) work and flexible working hours may be laid down in the order of the employer without obligatory conclusion in writing of an employment contract for remote (home) work.
Remote work from home may be agreed if employee needs self-isolation, refuses to work in the office, cares children at home, problems with transportation, employer deems it reasonable, etc.:

  • Consent of the employee is needed;
  • Provision of the employee with all equipment required for work or compensation of amortization of personal equipment; reimbursement of costs (e.g. communications/work materials), if agreed;
  • No changes in work conditions (except for work place and connected issues), unless employer and employee agreed otherwise;
  • Unless the employee and the employer have agreed otherwise in writing, the remote (home) work provides full remuneration.

3. Reduction (part-time work)
Employees (insured persons, except for persons receiving a pension) upon the request of the employer for payment have a right on a partial unemployment benefits in case if such employees are losing part of their wages as a result of forced reduction of working hours due to termination (suspension) of production because of quarantine measures established to prevent the emergence and spread of COVID-19:

  • a partial unemployment benefit is set for each hour for which the employee has been reduced to working hours, at the rate of two-thirds of the tariff rate (salary), but not exceeding the amount of the minimum wage;
  • the payment shall be made by the employer from the first day of reduction of working time within the term of suspension (reduction) of production, but not more than the quarantine period;
  • the employer may apply for funds to pay employees with partial unemployment benefits within 30 calendar days from the date of suspension (reduction) of production.

4. Downtime
The downtime because of the introduction of a quarantine shall be considered a downtime which is not the fault of the employee and is paid at the rate of not less than 2/3 of the tariff rate (salary) set for the employee.

5. Vacation
An Employee may ask for any remained part of regular paid vacation (e.g. annual main vacation for min 24 calendar days).
Specific vacation due to Quarantine:

  • If requested by an employee an employer is obliged to provide unpaid vacation to mother, father, grandmother, grandfather or other relative, who cares for the child under 14 y.o., or person who adopted the child under 14 y.o., stepparent of the child under 14 y.o.
  • Unpaid vacation for the period of quarantine may be provided in the case of a mutual agreement with employer and this period is not included to the general 15-days term established for unpaid vacation.

6. Granting a status of an unemployed person
During the quarantine period the status of an unemployed person is granted to persons from the first day of their registration in the territorial bodies of the State Labor Office upon their personal application without requiring the availability of suitable work.
Unemployment benefits are granted from the first day of granting the status of unemployed. Unemployment benefits can be paid without a personal visit of the unemployed person to the territorial body of the State Labor Office, provided that the unemployed person intends to stay in the status of unemployed by any means of communication (telephone, electronic means, etc.).


7. Payment of a temporary disability allowance
An employee shall be paid a temporary disability allowance of 50% of the average salary (but not more than 21,020 UAH per month) during the COVID-19 countermeasure for the period of staying in specialized health care institutions and for self-isolation under medical supervision.

The first five days of temporary disability because of an illness or injury not related to an accident at work shall be paid at the expense of the employer.
Temporary disability allowance is paid by the State Fund to insured persons beginning from the sixth day of disability for the whole period before the restoration of working capacity or before the establishment by the medical and social expert commission of disability regardless of the dismissal, termination of business or other activity of the insured person during the period of disability.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact our COVID-19 Help desk at at covidhelpdesk@peterkapartners.com.

The document reflects the status as of April 3, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

 

 

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