Subsidies to employers during periods of stoppages

Although the draft law amending Articles 51, 13, 24, 35, 37, 38, 39, 41, 42, 44, 49 and 50 of the Employment Law No XII-2470 (latest version of the draft No XIIIP-4658(2)) has not yet been adopted by the Seimas, the Employment Service has invited applications for subsidies under the draft law. This means that, strange as it may seem, applications are now open.

General information on how to apply can be found here: https://uzt.lt/subsidijos-darbdaviams-prastovu-laikotarpiu-2/

The two possible methods for calculating the subsidy are at the discretion of the company and different methods may apply to different employees:

  1. 70% of the imputed remuneration up to a maximum of EUR 910.50;
  2. 90 % of the imputed remuneration up to a maximum of EUR 607.

Accordingly, the dependence of the amount of the subsidy on the payroll can be illustrated by the following graph:

And the dependence of the company’s cost after subsidy (i.e. minus the receivable) on the payroll can be illustrated by the following graph:

As can be seen from the following diagrams:

  1. If a company wants to minimise its costs as much as possible, it is advisable to set a minimum payment for downtime and to opt for a 90 % subsidy method.
  2. If the company wants to maximise the subsidy it receives, it would be appropriate to pay a wage (before tax) of approximately EUR 1,300 for the downtime and to choose a subsidy method of 70 %, in which case the cost to the company will be only EUR 390.
  3. The break-even point for the methods is around EUR 900 before tax, i.e. if the payroll is up to EUR 900, it is appropriate to use the 90 % subsidy method, and above that the 70 % subsidy method.

The documents requested to be submitted to the Employment Service are very minimalist:

  • An application (‘proposal’) for support – basically just the details of the company;
  • The subsidy application is a very simple table to be filled in with the wages (before tax) and working time of the employees; the last column of this table should be filled in with “70” or “90”, depending on the subsidy percentage you choose; the amount of the subsidy does not need to be calculated, it will be calculated by the Employment Service;
  • Documentation (copies) of the declaration of the downtime – given that these documents are submitted to the budgetary authority, in order to avoid misunderstandings, it is suggested that, for the purposes of the subsidy, the ‘declaration of downtime’ be made in the form of an order, which is the most easily understood by civil servants; in this case, if the downtime actually started before 19 March, two orders should be drawn up, one for the period up to 19 March under Article 47 of the then Labour Code (without points) and one for the period from and including 19 March under Article 47(1)(2) of the current Labour Code. Of course, the application conditions do not specifically provide for the submission of orders, but ask for a copy of the “Documents proving the declaration of the standstill”, i.e. in legal terms, any documents are possible, including e-notifications to employees, but in practice, as is always the case with civil servants, they may ask you for further clarification on the form of the documents you are using. For this reason, it is recommended that the orders be made on the dates of 16 and 19 March. There is no requirement for staff to be familiar with these orders.

As of today, there is still no answer to these relevant questions:

  1. Whether a subsidy will be paid for downtime between 16 and 18 March, when the relevant amendment to the Employment Act was not yet in force;
  2. What will happen to companies where only the basic salary is stipulated in the employment contracts and the variable part is stipulated in the wage system (since the maximum amount of the subsidy is linked to the fixed salary in force on 16 March, and the Employment Service’s application form asks for the salary stipulated in the employment contract)
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