ANTIVIRUS – EMPLOYMENT PROTECTION PROGRAM AND ITS POTENTIAL RISKS FOR EMPLOYERS
On March 31, 2020, the Government of the Czech Republic approved a targeted employment support program Antivirus (hereinafter referred to as the “Program”), which is intended to help companies to protect their workplaces and thus prevent collective redundancies. According to the Program, the state will reimburse wages for employees to employers through the Labor Office (under condition that the employer proves that an obstacle to work has arisen as a result of the spread of coronavirus).
The Program was launched on Monday, April 6, 2020 at 12 PM. With regard to the fact that the employer applying for a contribution has to conclude with the Czech Republic (represented through the Labor Office) a quite non-standard contract (hereinafter referred to as the “Contract”), we bring below a brief legal analysis of this Contract to point out potential risks that may arise for the employer as a result of its conclusion.
- SETTLEMENT OF DAMAGES
Pursuant to Article IX of the Contract, the employer also concludes a settlement agreement with the Labor Office pursuant to Section 1903 et seq. of Act no. 89/2012 Coll., The Civil Code, as amended (hereinafter referred to as “Civil Code”). According to that provision, all employer’s claims against the Czech Republic in respect to the damages caused by emergency measures and governmental crisis resolutions shall be deemed to be settled in respect to the damages resulting from the employer’s statutory obligation to compensate employees for wages caused by the obstacles to work (referred to in Article III of the Contract), arising during the period for which the employer is entitled to a contribution under the Contract.
In practice, the provision in question means that the employer applying for a contribution from the Labor Office loses any future possibility of claiming any other compensation from the state in relation to the employer’s statutory obligation to compensate employees for wages as a result of extraordinary measures and crisis resolutions of the Government of the Czech Republic.
- WITHDRAWAL FROM THE CONTRACT BY THE LABOR OFFICE
Pursuant to Article VIII of the Contract, the Labor Office is entitled to terminate the Contract if the employer breaches the provisions of Article II of the Contract (i.e. the conditions for the granting of the compensation), or if it repeatedly incomplete or misrepresents the information in the wage statement. The obligation to refund the contribution under Article VI of the Contract is not affected by the termination of the Contract.
In addition, under Article VIII of the Agreement, each Party may terminate the Contract if it becomes apparent that certain circumstances (existing at the time of conclusion of the Contract) were not known to the Party without its fault, provided that the Party proves that being aware of these circumstances, it would not enter into this Contract.
Finally, the Contract may be terminated by each Party if the circumstances that were decisive for determining the content of the Contract have changed substantially and the Party cannot reasonably be required to perform under the Contract.
The notice period in all the above cases shall be one month and it shall commence on the first day of the calendar month following receipt of the written notice. At the same time, the Labor Office is also entitled not to provide the employer with a contribution that would be due to the employer during the period of notice.
It should be mentioned that the Labor Office has, due to the very vague provisions, a relatively strong position to withdraw from the Contract and, if necessary, to request a return of the provided contribution.
- THE EMPLOYER’S OBLIGATION TO RETURN THE CONTRIBUTION
Pursuant to Article VI of the Contract, the employer undertakes the obligation to return the Labor Office the monthly paid contribution or (its part) if it was provided (i) in contradiction with the Contract or (ii) in a higher amount or (iii) if the employer breaches any obligation under Article II of the Contract.
The employer is obliged to return the contribution no later than 30 working days from the day when the employer become aware of any of the facts according to the previous sentence or when the employer received a written request for a refund to the Labor Office.
- CONDITIONS OF EMPLOYER’S ENTITLEMENT TO THE CONTRIBUTION
The Labor Office will provide contribution to employers in two different regimes for the period from March 12, 2020, to April 30, 2020 (the end date may be extended by a Government Resolution) (hereinafter referred to as the “Decisive Period“) under the conditions discussed in one of our previous articles. Below, we briefly summarize all the conditions for entitlement to the contribution as foreseen in Article I.3 and Article II of the Contract:
(a) the employer undertakes to pay its employees a relevant wage reimbursement in accordance with the arrangements set out in the under which they will apply for a contribution;
(b) the conditions of at least one of the two regimes in the Contract have been met by the employer;
(c) the employer has complied with and will continue to comply with the instructions and recommendations of the Ministry of Health and other public health authorities during the Decisive Period, except where these cannot be followed for objective reasons;
d) the employer will not draw the contribution on the part of the cost of wage compensation that was already covered by other means provided from the state budget, the budget of territorial self-governing units, higher territorial self-governing units, etc.
e) in the period of the last 3 years prior to the conclusion of the Contract, the decision to impose a fine on the employer for enabling the performance of illegal work pursuant to Section 5, Point 3 of Act No. 435/2004 Coll., on Employment, as amended (hereinafter referred to as the “Employment Act”) has not become final;
f) the employer can apply only for a contribution to the wage compensation for an employee who is in labor relationship that has not been terminated by notice at the time of filing the wage statement (the so-called “Wage Compensation Statement – Antivirus”) with the exception of notice pursuant to Section 52 (b). g) and h) of the Labor Code and who are simultaneously participating in sickness and pension insurance under the Czech legislation;
g) If the employer is a job agency pursuant to Section 14 par. b) of the Employment Act, the employer applies only to an employee whose labor relationship was concluded before March 12, 2020 and shall not expire before April 30, 2020. This does not affect the fulfillment of the condition stated in Article II point 5. of the Contract.
Finally, the first contribution for a calendar month will be provided to the employer only after proving the indebtedness under the Employment Act, unless other legislation stipulates that compliance with this condition is not required.
- CONCLUSION
The wording of the Contract contains a number of other provisions that would certainly deserve a more detailed analysis, such as the provisions relating to the control of performance of the agreed obligations or the details of the Wage Compensation Statement – Antivirus. It is also very important that the wage statement needs to be provided in the deadline specified in the Contract, otherwise the contribution will not be provided by the Labor Office.
Please do not hesitate to contact us for more detailed information regarding the contribution for the employee wage compensation.
For more information on this subject, please feel free to contact:
JUDr. Monika Rutland, partner
rutland & partners, law firm
tel: +420 226 226 026
email: monika.rutland@rutlands.cz
