Waiver of social security contributions - Category C of the "Antivirus" program – June 2020
On 16 June 2020, the Chamber of Deputies of the Parliament of the Czech Republic, after being returned by the Senate, approved a law from the Ministry of Labour and Social Affairs ("MLSA") containing another form of targeted support for some smaller employers trying to maintain employment despite the difficult situation. This takes the form of a waiver of social security contributions for employees in employment for the period from June to August 2020. The law was approved in the original version of the government proposal, the Senate's amendments were not adopted. The Act was signed by the President of the Republic on 19 June 2020 and is now awaiting publication in the Collection of Laws.
The existing Regimes A and B of the Antivirus program will thus be supplemented by the so-called Category C, which consists in waiving social security premiums and contributions to the state employment policy ("Premiums") paid by employers for employees ("employment contracts") for June. to August 2020.
However, according to the explanatory memorandum to the law, the current form of the Antivirus program, which consists in compensating paid wages in connection with an obstacle at work, is not suitable for all employers. In this period of resumption of employers' activities, it is therefore more appropriate that the support measure should no longer be tied to the conditions that employees did not or could not perform work, i.e. to an obstacle to work.
This form of targeted support is intended for smaller employers, provided that they meet the conditions set by law. The Ministry of Labour and Social Affairs has set the conditions for support under Category C so that employers strive to maintain employment of their employees.
The first condition for an employer's entitlement to a waiver of Premiums is that the number of his employees participating in health insurance does not exceed 50 on the last day of the calendar month. The employer must maintain 90% employment and 90% of employees' assessment bases compared to the end of March 2020. Furthermore, the employer must pay the insurance premiums that are required to be paid by his employees within a specified period and amount in accordance with the Act on Social Security Premiums.
Employers listed in Section 109 (3) of the Labour Code are excluded from entitlement to support in Category C. These are employers whose employees are remunerated for their employment. Providers of health services, which will be subject to a special law (currently being discussed as Parliamentary Press No. 868), are also not entitled to a waiver of the Premium. Eligible employers also include those employers who, as of 1 June 2020, are not tax residents of the Czech Republic or another EU / EEA Member State and have not achieved most of their income for the last completed tax period of corporate income tax from sources in the Czech Republic. The law also contains certain limits regarding the amount of forgiven insurance premiums in relation to employee remuneration exceeding certain multiples of the average wage.
The law is thus intended to prevent cumulative compensations. This means that the concurrence of the premium waiver with the simultaneous drawing of the contribution for the compensation of wages paid to employees for the period from June to August 2020 is excluded.
Please note that the waiver of insurance premiums only applies to employees. Therefore, it cannot be applied in the case of employees who work for the employer for agreements on the performance of work or work activities, even if, as a result of the amount of remuneration (higher than CZK 3,000 or CZK 10,000), the employer would be obliged to pay for these employees. pay premiums. Similarly, this support cannot be applied in the case of an agent, even though his remuneration is taxed and subject to insurance premiums in the same way as for employees (however, if the agent has a valid employment contract in addition to the contract, he may qualify under this employment contract). These persons will also not be included in the above-mentioned criteria determining the origin of the employer's entitlement, as they are not employees.
Furthermore, it is necessary to pay attention to situations where the employee remains in employment, but is not involved in health insurance, especially for the purposes of calculating the maximum decrease in employees by 10%. This may be a situation where the employee starts drawing maternity allowance or parental allowance after the end of March, his absence due to illness exceeds 14 days, takes unpaid leave or benefits when caring for a family member and the like. Such employees cannot be counted for the purpose of meeting the above criteria, which may, especially for smaller companies, jeopardize the fulfilment of the above-mentioned condition of maintaining at least 90% of the number of employees compared to the end of March 2020.
Unlike the contribution to the compensation of wages paid under Category A or B of the Antivirus program, employers do not have to submit an application for the purpose of waiving the Premium, but only in the monthly statement the DSSA notifies the reduction of the assessment base and pays the reduced é Premiums. Support in Category C is thus implemented by reducing the employer's assessment base. If the employee's employment lasts until the last day of the calendar month, the employer will not include the employee's assessment basis in his assessment basis. Therefore, there may be a situation where the employer's assessment base will be reduced to zero and he will not pay any Premiums as a taxpayer. Fulfilment of all conditions for the application of the premium waiver will be retrospectively verified by the DSSA as part of the regular inspections of premium collection.
The law has already been signed by the President of the Republic and is now awaiting publication in the Collection of Laws.