Employers whose economic activities will be at risk due to the COVID-19 spread will be granted a contribution to fully or partially cover salaries, which the employees will be entitled to due to an impediment to work on the employee’s side (mandatory quarantine) or on the employer’s side (impediment – facility shutdown due to a government decree to shut down facilities), provided that it can be proved that the impediment to work was caused by COVID-19.
The government decided to subsidise super-gross salaries by Decree No. 353/2020 of 31 March 2020 under Section 120 of Act No. 435/2004 Coll., on employment, as amended.
Who pays the contribution and for how long?
The contribution is granted by the Labour Office of the Czech Republic. Its amount and duration of provision will depend on the reason for the impediment to work, it will also be necessary to define a particular reason for the impediment to work for each employee.
What specific measures are being implemented? What situations are they reacting to?
The contribution amount granted to employers is based on the average super-gross salary including compulsory contributions (i.e. CZK 48,400) and depends on the reasons for the impediment to work for an employee. Employers can apply for the contribution at the Labour Office under two regimes:
Regime A – impediment type:
- In case of quarantine – the employee receives a salary compensation amounting to 60% of reduced average earnings;
- In case of a facility shutdown due to a government decree – the employee receives a salary compensation amounting to 100% of salary;
Regime B – impediment type:
- Impediments to work on the employer’s side due to a mandatory quarantine or childcare by a significant share of employees (30% and more) – the employee receives a salary compensation amounting to 100% of average earnings
- Limited availability of inputs (raw materials, products, services) necessary for operations – the employee receives a salary compensation amounting to 80% of average earnings
- Limited demand for services, products and other company goods – the employee receives a salary compensation amounting to 60% of average earnings.
Based on the development of the situation, which cannot be predicted now, the above-mentioned conditions may change.
How to account for contributions from the Antivirus Programme?
Through the decree, the government released funds from state budget reserves to finance the dedicated employment support programme.
Funds drawn from the state budget are provided for by Act No. 218/2002 Coll., on budgetary rules and on an amendment to certain related laws, as amended (the “Budgetary Rules Act”). The Budgetary Rules Act provides in Section 3 (a) that state budget funds, funds from state financial assets or funds from the National Fund provided to natural or legal persons for a stipulated purpose are subsidies.
Contributions from the Antivirus Programme are drawn on the basis of a concluded written agreement between the Czech Republic (the Labour Office) and the employer. The agreement refers to the dedicated Antivirus programme and stipulates, inter alia, that the breach of its conditions is considered a breach of budgetary discipline.
We infer from the above stated that Antivirus Programme contributions have the character of subsidies, which is why the received funds should be accounted for in accordance with the provisions of Czech Accounting Standard No. 017 ‘Settlement relations’, item 3.7.:
The unquestionable entitlement to a subsidy is debited to the respective account of account group no. 37 – Other receivables and payables – and credited to the respective account of account group no. 34 – Settlement of tax and subsidies. The use of the subsidy to cover expenses or to cover other economic detriment is debited to the respective account of account group no. 34 – Settlement of tax and subsidies – and credited to other operating or financial income over the period necessary to match them with the expenses incurred for the stipulated purpose.
In case of any questions or in case you need to get evaluated specific conditions and their accounting in relation to the government aid, please do not hesitate to contact us at CE_Technicaldesk@deloittece.com.