New Law on financial support provides bigger assistance for the companies

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In April 2020 the Government of the Republic of Macedonia enacted decrees with force of law for financial support for the companies and the natural persons acting independently, affected by the health-economic crisis caused by COVID-19, ie financial direct support of 14.500 denars per month, for every employee of the companies affected by the crisis.

The financial support refers to each enterprise from the private sector which employs workers on the basis of an employment contract, any legal entity which employs workers on the basis of an employment contract and employers which hire workers to perform tasks through private employment agencies, under the Law on Private Employment Agencies.

With this measure, a salary payment is made to workers by the employer – applicant for financial support in an amount up to 14.500 denars per month per worker, in proportion to the hours spent at work prior to the crisis caused by COVID-19.

This measure – financial support for salary payment continues to be valid for the last quarter of the year, ie for the months of October, November and December. A novelty in this measure is that the support will be determined gradually, according to the decline in revenues of companies. The bigger the decline of revenues of companies covered by this measure, the bigger will be the support from the state for salaries payment and it will range from the current 14.500 denars to 21.776 denars. In order to exercise the right to it, the companies that will apply must keep the number of employees they had as of July 31, 2020.

In order to continue this measure, The Government of the Republic of Macedonia enacted the Draft Law on financial support to the employers affected by the crisis caused by COVID-19 for salaries payment for October, November and December 2020.

The employers will be able to apply for financial support up to 21.776 denars per employee, until the 7th of the month for the previous month, and beneficiaries can be the companies that have a decline in revenues in the reference period from April to October 2020 at least 30%, compared to the same period last year.

The new Law on financial support to the employers affected by the health-economic crisis caused by COVID-19 for salaries payment for October, November and December 2020 envisages higher financial support to be paid to the companies most affected by the crisis.

Namely, the companies that have reduced revenue from 30% to 40% will receive financial support up to 14.500 denars per employee; for reduced revenue from 40,01% to 50% are provided up to 15.955 denars per employee; for reduced revenue from 50,01% to 60%, up to 17.410 denars per employee; for reduced revenue from 60,01% to 70%, up to 18.865 denars per employee; for reduced revenue from 70,01% from 80%, up to 20.320 denars per employee; and for reduced revenue of over 80%, the amount of financial support for payment of salaries will be up to 21.776 denars per employee. The Law stipulates that the companies that have made a profit of more than 10 million euros cumulatively in the last three years are not covered.

The financial result of the companies from April to October, November and December 2020 is taken as a reference period in the Law and is compared with the same period last year. In case the company is registered after September 2019, the date of registration in the Central Registry is taken.

The companies applying for the measure may not pay dividends and business performance bonuses or other annual bonuses until the day of salary payment for December 2020.

Regarding the employees, the companies that apply for financial support can have a maximum of 10% of the employees with a monthly net salary of over 120.000 denars. The companies cannot apply for financial support for a salary of an employee who in June, July, August and September achieved a net salary higher than 39.900 denars for each month separately for full or part-time. Also, the measure will not be able to be used for employees for whom the measure “Macedonia employs” is used, as well as for employees who are hired for additional work.

The employers using financial support can reduce the number of employees two months after the end of the month for which the financial support is used, up to February 2021, except in case of retirement, termination of the employment contract by the employee, an amicable takeover of the employee, termination of the employment contract without notice period by the employer due to violation of the work order and discipline or work obligations, etc.

The Law also provides protection mechanisms in order the employee to receive the salary in full. Namely, in case the employer pays a lower salary to the employee than the amount assigned to him, fines of up to 10 thousand euros are provided, depending on the size of the legal entity.

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