Overview of some useful information in the area of taxes and contributions as well as labour law aspects in relation to COVID-19
19/03/20
Tax & Legal Alert, March 2020, Issue 1
In this issue, we would like to inform you about approved and planned measures that have been, as of today, prepared by the relevant bodies in the area of taxes and contributions in relation to the COVID-19 outbreak. We also bring you an overview of relevant sections of labour law applicable in relation to COVID-19 from the employer’s point of view.
Corporate & personal tax returns filings/payment of tax
The Ministry of Finance together with the Financial Directorate of the Slovak Republic has prepared a regulation (“Regulation”) based on which the sanction for not filing an income tax return (annual payroll report) and non-payment of tax due for a tax period for which the statutory filing deadline expires on 31 March 2020, 30 April 2020 or 31 May 2020, is relieved, provided the company or individual fulfil their obligation by 30 June 2020. Based on the current wording, it is not clear whether the sanction would first be levied and then cancelled, or not levied at all.
The same approach will apply to reporting and tax obligations of healthcare providers (doctors) in relation to income they received from holders, provided doctors meets their statutory obligations by 30 June 2020.
The Regulation has been published in the Collection of Laws and is already effective.
Other proposed measures include:
- Introduction of the option to extend the statutory deadline for filing a VAT return and payment of VAT liability due based on a written notification filed by the taxpayer.
- Relief of late payment interests arising from non-payment of corporate income tax advances on time, provided the underpayment arise in particular months and is paid up by the end of the calendar year (these months have not yet been specified).
- Postponement of payments of obligatory social security and health insurance contributions for periods from March 2020 until June 2020 for companies and self-employed individuals. The balance of outstanding amounts should be spread over and paid up within the following 18 months, i.e. from July 2020 until December 2021.
- Extension of statutory deadlines for performance of tax inspections and local investigations, in particular for actions involving personal meetings, witness and oral hearings, and consultations of the file.
- The extension of the deadline for payment of the customs debt to 30-45 days for importers of raw materials to be used for production and acquired from third countries.
- Exemption of employees’ salaries from social security and health insurance contributions and payroll taxes for employers that are unable to allocate work to these employees due to an order to stop or close their operation due to the preventive quarantine measures or directly related decrease in orders.
- Negotiations with the banking and financial sector on the possibility of postponing instalments of loans, mortgages and leases for individuals and legal entities. In this context, it is considered that the payment of the bank levy would be relieved proportionally. The exemption of insurance companies from the levy under the Act on special levy in regulated industries and the abolition or deferral of the insurance tax will be considered.
These measures are currently proposals and are under discussion and may be changed. We will keep you informed of further developments in this area.
Coronavirus – labour law from an employer’s perspective
Several preventive measures apply throughout the Slovak Republic to prevent the rise and spread of COVID-19. In this context, the Government of the Slovak Republic has declared an emergency imposing a work obligation to ensure the performance of healthcare and prohibiting the exercise of the right to strike to certain health workers. Otherwise, the declared emergency does not affect the exercise of rights and obligations under Act No. 311/2001 Coll. The Labour Code, as amended (the “Labour Code”).
Under Act No. 124/2006 Coll. on Occupational Health and Safety and Amending Certain Acts, as amended, an employer is obliged to apply general principles of prevention when implementing measures necessary to ensure occupational health and safety. An employer is also subject to obligations under the Labour Code, and other related legal regulations.
Below you can find useful information on employers’ options in the event of the closure of their operation, and in the event of the absence of an employee from work due to quarantine, or due to the closing of nursery and primary schools.
If an employer decides to or is forced to close their operation to prevent the spread of coronavirus, the options stated below are appropriate.
1. Home office
If an employee performs work which can also be performed from home (for example, administrative work which mainly involves working with a computer), an employer and an employee may agree on performance of work from home (home office). However, in general, home office may not be forced on the employee unilaterally by the employer. Pursuant to Section 52 (5) of the Labour Code, home office is not considered as home work (in Slovak: domácka práca) or telework (Section 52 of the Labour Code), if the employee performs it occasionally or under extraordinary circumstances at home or at a place other than the usual place of work, with the consent of the employer or upon agreement with the employer, provided the type of work which the employee performs under their employment contract, enables the same.
In the view of the above, if an employee is unable to perform their work from home or does not agree with the same, an employer must resolve the situation using other options below.
2. Change in work schedule
In accordance with Section 90 (9) of the Labour Code, an employer may change the working time schedule so employees do not work during a certain period and they will perform additional work as compensation subsequently. However, an employer is obliged to announce distribution of working time to its employees at least 1 week in advance with validity for at least 1 week. An employer may determine the working time schedule only after agreement with the employees’ representatives (if they operate at the employer). The employer is also obliged to announce such a schedule on the employer’s site, which is accessible to the employee. For an uneven distribution of working time, the average weekly working time may not exceed the established weekly working time.
3. Taking holiday
Under the Labour Code, taking of holiday is determined by an employer after discussion with an employee according to a holiday plan determined with the prior consent of the employees’ representatives such that the employee may normally draw their holiday as a whole and by the end of the calendar year. When determining holiday, it is necessary to take into account the employer’s tasks and justified interests of the employee. The employer is obliged to notify the taking of holiday to the employee at least 14 days in advance. Such a period may be reduced provided the employee grants their consent with the same.
Based on the above, if an employer wishes to close its operation for the following 14 days with employees taking holiday during such a 14-day period, the consent of the employees to taking holiday is required.
Currently, it is not known how long the coronavirus emergency will last. However, if an employer closes its operation for more than 14 days due to preventive reasons, the period exceeding 14 days after the closure of the operation may be resolved by ordering the taking of holiday by the employer. As stated above, such a taking of holiday must be discussed with the employee (however, their consent is not required in this case). If employees’ representatives operate at the employer, their prior approval of ordering the taking of holiday is required.
It is also possible to order a collective taking of holiday to all employees or to a group of employees if it is necessary due to serious operational reasons (such a condition will probably be met in the current situation). It is possible to order the collective taking of holiday for a maximum of 2 weeks (respectively 3 weeks if serious operational reasons are notified to the employees at least 6 months in advance). Notification obligations towards employees and consent by the employees’ representatives are required as for the ordering of holiday to individual employees.
4. Taking time-off
If an employee is entitled to time-off for overtime work, an employer may agree with the employee on drawing such time-off in the agreed period. However, neither taking time-off, nor the period in which time-off may be taken may be ordered by the employer, as the law foresees an agreement between the employer and the employee.
5. Obstacles due to the employer
If an employer cannot follow any of the above scenarios and is not able to assign work to its employee (downtime), the Labour Code considers such a situation to be an obstacle at work due to the employer. An employee is then entitled to wage compensation of 100% of their average earnings.
If employees’ representatives operate at an employer (i.e. employee trustee, works council or trade union), the employer may conclude a written agreement with them defining serious operational reasons for not being able to assign work to its employees (in our situation, these reasons would be related to coronavirus and consequent operational reasons, for example, that the employer has no orders from its customers or was obliged to close down its operation due to a declared emergency). In this agreement, the parties may agree that employees will be entitled to wage compensation of at least 60% of their average earnings.
Quarantine of an employee and their absence from work
Under the Labour Code, an employer is obliged to justify an employee’s absence from work during a quarantine period. This is a substantive personal obstacle to work due to the employee. During the first 10 days, the employee is entitled to income compensation from the employer (25% of the daily assessment base for the 1st to 3rd day and 55% of the daily assessment base for the 4th to 10th day). From the 11th day, such an employee is entitled to sickness payment from the Social Insurance Agency.
Closure of nursery and primary schools and absence of an employee from work
Under the Labour Code, an employer is obliged to permit an employee’s absence from work during periods when they are caring for a child under 10, if the school the child attends was closed by a resolution by the respective authorities, or if a quarantine was ordered at such a school. The situation is the same as for a person who otherwise takes care of such a child who became ill or was quarantined. Such an employee is entitled to a nursing allowance paid by the Social Insurance Agency.
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