Uredba o fiskalnim pogodnostima

Terms of the Decree on fiscal benefits – number of employees

When presenting the program of economic measures for reducing the negative effects caused by the COVID-19 to the public, it was announced that the Government would adopt a Decree in April in order to regulate all issues relevant to economic support measures. In accordance to that, on April 10, 2020 Government adopted Decree on fiscal benefits and direct benefits to private sector entities and financial assistance to citizens to reduce the economic impact of COVID-19 (“RS Official Gazette”, No. 54/2020)-Decree.

The Decree entered into force on April 10, as soon as it was adopted and published in the RS Official Gazette.

Who has the right to be helped by the state?

The Decree issues what fiscal benefits and under what conditions business entities can have, and what behaviors qualify as misdemeanors within the meaning of the Decree. However, the primary question is who is entitled to direct benefits and to postponement of obligation to pay for certain public revenues. The answer to this question should be sought in the Article 3 of the Decree.

According to the Decree, the right to fiscal benefits and direct payments are granted to economic entities which in the period from the declaration of a state of emergency to the entry into force of the Decree, ie from 15 March to April 10, 2020, did not reduce the number of employees by more than 10%. So, this right have entities who did not lay off workers or who laid off 10% or fewer workers.

However, these 10% do not include part-time employees, if these two conditions are cumulatively fulfilled :

  1. the part-term employment contract between the entity (employer) and the employee was concluded before March 15, 2020
  2. the time period for which the contract has been concluded ends between 15 March and 10 April 2020

For example, if a business entity employs a total of 10 workers and dismisses 2, of whom one fulfills the above conditions, the business entity will be entitled to the benefits in the Decree.

Uredba o fiskalnim pogodnostima

What is considered as a reduction of the number of employees?

However, this seemingly clear provision may create problems in practice because the Decree does not answer this question: What exactly is considered as a reduction in the number of employees?

Specifically, does reduction means only the termination of employment by the employer or it also includes the termination of employment by employee? Also, what about the agreement between employer and employee about termination of employment? The answer to these questions we can’t find in the Decree and the Guidelines for the implementation of the Decree.

We believe that the reduction undoubtedly relates to the termination od employment by the employer. But, in case of termination of employment from the employee himself and agreement between employer and employee, we think that the reduction in terms of the Decree does not cover these situations.

The Decree speaks of a reduction by an economic entity as an employer, so it is an action taken by the employer himself, regardless of the will of the employee. On the other hand, if employee decide to quit the job, it is his/her choice and his/her unilateral declaration of will, while in the case of consensual termination of employment we talk about an agreement between the employer and the employee. So, in these cases, the employee expresses his or her will, and these actions are not a one-sided acts made by the employer himself.

This Decree is new, so we have no choice but to wait and see how judges, courts and administrative authorities understand this provision. So, it takes some time to see if theirs interpretation of reduction of the number of employees includes termination of employment by the employee and an agreement between employer and employee about termination of employment?

For all questions about this Decree, as well as other regulations, the law office Pavleski Law at your disposal.

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