On Technical Unemployment (somaj tehnic) and the 75% Allowance During the State of Emergency

On Technical Unemployment (somaj tehnic) and the 75% Allowance During the State of Emergency

On March 21, 2020, Emergency Government Ordinance No. 30 came into effect, regulating the conditions under which employers, forced to suspend or reduce their activities due to the coronavirus pandemic, can benefit from the provisions of technical unemployment (somaj tehnic). This is designed to protect the interests of both employers and employees.

Companies that are forced to suspend or reduce their activities due to the pandemic can unilaterally suspend employee contracts based on Article 52, paragraph 1, point c of the Labor Code. In this case, during the state of emergency declared to combat the pandemic, employees are entitled to an allowance amounting to 75% of their salary, funded by the state from the unemployment insurance budget. The actual amount of this allowance cannot exceed 75% of the gross average salary set by Law No. 6/2020, which is 5,429 RON, meaning the maximum amount is 4,071.75 RON.

Employers can benefit from this provision if they meet one of the following conditions:

  1. They are forced to fully or partially suspend their activities due to an official decision during the state of emergency and possess a state of emergency certificate (e.g., state and private educational institutions, restaurants, hotels, travel agencies, gambling organizations, beauty salons, event organizing companies, etc.).

  2. They reduce their activities due to the coronavirus pandemic and lack the financial resources to pay all employees’ salaries. In this case, the state only covers the allowance for up to 75% of employees with active employment contracts. The employment contracts must have been active when the ordinance took effect, i.e., March 21, 2020. The allowance is granted based on a self-declaration, stating that the employer’s revenue in the previous month decreased by at least 25% compared to the average revenue of January-February, and the employer lacks the financial resources to pay all employee salaries.

In both cases, the allowance is subject to taxes and contributions, which the employer must withhold and pay by the 25th of the following month.

The steps to claim the allowance are as follows:

  • Suspension of the employment contract based on Article 52(1), point c of the Labor Code.
  • Electronic submission of the application to the relevant county or Bucharest employment agency, according to the company’s headquarters, including a list of affected employees as required by Annex No. 3.

The allowance is payable 30 days after submitting the documents.

The ordinance also includes provisions for other entrepreneurs without employer status, such as authorized self-employed persons (PFA) or individual enterprises. If they are forced to suspend their activities fully or partially due to an official decision, they are entitled to an allowance equal to the gross minimum wage for 2020 (2,230 RON), paid from the state budget and subject to taxes and contributions.

In the case of temporary suspension of sports contracts, athletes, coaches, doctors, medical assistants, masseurs, physiotherapists, and researchers are entitled to 75% of their income, but this amount cannot exceed 75% of the gross average salary, i.e., 4,071.75 RON per month, and is also subject to taxes and contributions.

The government ordinance is still unclear in several respects and requires further clarification, supplementation, or amendment. The procedure for issuing the state of emergency certificate is not yet known, and it is unclear who can apply for it and under what conditions. It is also unclear how companies with fewer than four employees will be affected, and whether they can benefit from the provisions of point 2, when the state covers up to 75% of employees’ wages. What does 75% mean for companies with 1, 2, or 3 employees? There may also be debates about the definition of “revenue reduction” and what constitutes “active” employment contracts. Finally, the law does not address self-employed professionals working under special laws, leaving it uncertain whether lawyers, pharmacists, financial advisors, and others can benefit from these provisions.