Coronavirus (COVID-19): Technical Unemployment in the Context of the Crisis Generated by the Spread of COVID-19

The Government of Romania adopted the Emergency Ordinance no. 32/2020 that amends and clarifies the provisions referring to technical unemployment allowances incurred from the state budget.

What is technical unemployment?

• Technical unemployment consists in the temporary reduction or interruption of activity, without the termination of the employment relations, in other words a suspension of the employment agreements at employers’ initiative for economic, technological, structural or similar reasons. During the suspension of their employment agreements, employees shall benefit from a technical unemployment allowance.

What is the amount of the technical unemployment allowance?

• Without being amended, the amount of the unemployment allowance is 75% of gross salary, but no more than 75% of the gross average salary won used upon the substantiation of the state social insurance budget;
• The Government Emergency Ordinance no. 32/2020 introduces the possibility for employers to supplement the technical unemployment allowance by amounts representing the difference of up to minimum 75% of the basic salary corresponding to the job one has, if the budget destined to the payment of the personnel expenses allows it.

Who benefits from the technical unemployment allowance?

• The employees of the employers that reduce or interrupt their activity temporarily, fully or partially, as a consequence of the effects of COVID-19, during the decreed state of emergency, according to such employers’ affidavits;
• The ordinance thus eliminates the distinction between (i) the employers that interrupt their activity fully or partially based on the decisions issued by the competent public authorities under the law, which interruption would have been proven by the obtaining of the emergency certificate from and (ii) the employers that reduce their activity as a consequence of the effects of COVID-19 and do not have the financial capacity to pay all their employees.
• The ordinance eliminates the thresholding at maximum 75% of the employees with active individual employment agreements at the level of the employer reducing its activity;
• The ordinance eliminates the condition imposed to the employers that reduce their activity to prove they do not have the financial capacity to pay all their employees;
• The Government Emergency Ordinance no. 32/2020 also eliminates the relating to the minimum of 25% as to the average mean of the incoming payments in the period January-February 2020 to benefit from support from the state. In other words, for the settlement from the state budget of the technical unemployment allowance, employers do not have to incur a reduction of their incoming payments by at least 25% as compared to the average mean of their incoming payments from January-February.

What is the procedure to obtain the necessary amounts for the payment of the technical unemployment allowance?

• Employers shall submit by e-mail, to the county employment agencies and to the Bucharest employment agency, in whose area their registered offices are located, an application signed and dated by their legal representatives, accompanied by affidavits and the lists of the persons who are going to benefit from this allowance, assumed by the legal representatives of such employers;
• The necessary forms to benefit from the unemployment allowance may be downloaded by accessing  https://www.anofm.ro/  or  http://www.mmanpis.ro/, as the case may be.
• Unlike the provisions of the Government Emergency Ordinance no. 30/2020, by which only the employers that reduce their activity as a consequence of the effects generated by the COVID-19 pandemic had to assume liability for the fact that they registered a reduction of their incoming payment from the month prior to the submission of the affidavits, by minimum 25% as compared to the average mean of the incoming payments from January-February 2020, consequently these not having the financial capacity to pay all their employees, the Government Emergency Ordinance no. 32/2020 introduces the obligation for all employers that want to benefit from the necessary amounts for the payment of the unemployment allowance to assume the liability for the accuracy and genuineness of the data recorded in the documents they will submit.
• The Government Emergency Ordinance no. 32/2020 eliminates the necessity of the emergency situation certificates to benefit from the amounts corresponding to the payment of the technical unemployment allowance.

How will the allowance be paid?

• Payment shall be made to the accounts opened by employers at commercial banks, in maximum 15 days as of the submission of the documents, and not in maximum 30 days as initially provided by the Government Emergency Ordinance no. 30/2020;
• Employers must transfer their employees the technical unemployment allowances in maximum 3 working days from the receipt of such amounts from the state.

What fiscal consequence does the technical unemployment allowance have?

• This is subject to taxation and payment of the mandatory social contributions;
• The calculation, withholding and payment of the income tax, of the state social contribution and of the health insurance contribution is made by employers from the allowances cashed from the unemployment budget;
• For the calculation of the income tax the quota of 10% shall apply to the basis for calculation determined as a difference between the gross income and the mandatory social contributions related to a month;
• The income tax, the state social insurance contribution and the health insurance contribution is declared until the 25th included of the month next to the one for which the incomes are paid;
• The term for the payment and declaration of the obligations is the 25th included of the month next to the one when the payment from the unemployment budget is made;
• No work insurance contribution is owed for the technical unemployment allowance.

The Government Emergency Ordinance no. 32/2020 clarifies the situation of the employees with more individual employment agreements concluded

• If at least one full-time agreement is active during the instituting of the state of emergency, the employee in question will not benefit from the technical unemployment allowance;
• If all agreements are suspended as a consequence of the instituting of the state of emergency, the employee in question will benefit from the technical unemployment allowance related to their individual employment agreement with the most advantageous salary rights.

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