Covid 19 - Government schemes in other key European jurisdictions
03 April 2020
Many other European governments have introduced schemes, similar to the furloughing scheme here in the UK, with the aim of supporting employers experiencing financial difficulties as a result of the Covid-19 pandemic and encouraging them to retain staff during the crisis. The below is a brief summary of the schemes in place in the key European jurisdictions.
The French government has implemented a ‘partial activity’ scheme, whereby eligible employers will pay compensation equal to 70% of gross salary to its employees (employees with a salary equal to or less than statutory minimum wage benefit from 100% compensation) and the French government will fully reimburse the eligible employer for 70% of salaries up to 6,927 EUR gross per month (i.e. 4.5 times the statutory minimum wage). A request for partial activity must be approved by the authorities and can be made online. When asking for a renewal of a request for partial activity, the authorities may impose conditions, including an obligation to maintain employees in employment for a period of 2x the period covered by the authorisation for partial activity.
The German government has introduced a scheme of ‘short time working’ to address temporary and unavoidable loss of working hours caused by the Covid-19 pandemic, which must affect at least 10% of the total workforce who would lose at least 10% of remuneration if working time was reduced. The short time working must be lawful (i.e. agreed collectively and in accordance with an existing term of, or an agreed amendment to, the employment contract) and the company must make certain filings with the appropriate authorities. If the requirements of the short time working scheme are met, the company can reduce working hours and salary with the government topping-up between 60-67% of the net pay difference, plus social security benefits. In order to obtain the agreement of unions/works councils to short time working it may well be necessary for the employer to agree not to make dismissals.
The Italian government has introduced a grant scheme which provides employees with 80% of their monthly salary capped at 1,200 EUR gross. This is paid by the National Social Security Body after a simplified “information and consultation” procedure with unions and an administrative request; employees’ consent is not required. However, the company is prevented from making redundancies during the period of the scheme.
The Irish government has introduced a Temporary Covid-19 Wage Subsidy Scheme. The scheme is aimed at employers who are experiencing significant negative economic disruption because of Covid-19 and has experienced a minimum 25% decline in turnover. The employer must be unable to pay normal wages and other outgoings and must retain employees on the payroll. If an employer meets these criteria, for employees earning up to 38,000 EUR gross, employers can receive a subsidy of up to 70% of the employee’s net income up to a maximum of 410 EUR a week. For employees earning between 38,000 EUR and 76,000 EUR, the employer can receive a subsidy up to a maximum of 350 EUR per week. Employees earning more than 76,000 EUR are not covered by the scheme. The Scheme is being administered by the Irish tax authorities with updated guidelines issuing frequently.
The Dutch government has introduced an emergency fund (“NOW”) for employers to cover wages. Employers will be compensated for up to 90% of their total wage bill (on a graduated scale) which will be provided in advance so that employers can continue to pay the salaries of the employees. The basis for eligibility for compensation is expected loss of turnover of at least 20% over a period of three calendar months (starting from 1 March, 1 April or 1 May, 2020). Applications must be submitted at the Employee Insurance Agency (“UWV”) although, it is not yet possible for employers to submit applications. Employers cannot make any dismissals for economic business reasons whilst compensation is granted under the NOW scheme.
There is no direct governmental support available for businesses affected by Covid-19 similar to our Job Retention Scheme. Instead, the government has put in place special procedures to enable employers to suspend work or reduce working hours, during which time employees would be entitled to claim unemployment benefits from the State of 70% of their salary.
For more information please contact those listed or your usual Lewis Silkin contact. Our UK guidance on furloughing is available here and further international guidance on COVID-19 can be viewed here.
Covid 19 - Coronavirus
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