Payroll Newsletter - Spring 2020

Carer’s allowance and changed rules relating to COVID-19

What is changed?

• Period of allowance receipt 
• Range of persons who may be granted the carer’s allowance
• Age of a child in respect of which the carer’s allowance may be received 
• Parents’ option to take unlimited turns in childcare
• Forms needed for the allowance payment 

The Government decided on a change in the rules governing carer’s allowance over the effective period of extraordinary measures relating to COVID-19. As a new feature, parents are entitled to the carer’s allowance over the entire period in which schools and other childcare facilities as well as certain social services for the disabled are closed.

In addition, the entitlement was expanded to include parents of children up to 13 years (the entitlement expires on the day before the 13th birthday) and parents of older disabled children attending a school. There is no age limit attributable to the disabled child care.

Equally, due to the closing of certain social services (such as day care centres), allowances will be provided to those taking care of a disabled person with dependence of at least level 1 and living in a common household with the carer.

The new rules also allow parents to take turns in childcare at their discretion. To date, parents were allowed to switch only once.

It still applies that the entitlement always relates to just one child per household, irrespective of the number of children being cared for due to schools and facilities being closed.

Carer’s allowance is paid for calendar days and amounts to 60% of the reduced daily assessment base starting from the first day. The basic requirement for being entitled to the carer’s allowance is participation of the parent asking for the allowance in the sickness insurance system. Carer’s allowance may not be provided to parents employed under an agreement to complete a job or an agreement to perform work.

The procedure of claiming allowances is also changed. Carer’s allowance will always be paid for a calendar month retrospectively, i.e. for the first time for March in April. To receive the allowance, a new form “Statement of Childcare due to Closure of Educational Facilities” should be submitted. The entitlement is always for all calendar days when a parent looks after a child; however, there is no entitlement for days worked, albeit just part-time, by an employee (this does not apply to the first and last day of the care).

As part of extraordinary measures, employees are no longer required to deliver hardcopies of forms to receive a payment from the District Social Security Administration (OSSZ); the forms may be sent in a secured way via email to OSSZ, i.e. with an electronic signature or through a data box (to the address of an electronic filing room).

For other supporting information and links to forms, go to the website of the Czech Social Security Administration or the Ministry of Labour and Social Affairs.

The Antivirus Programme

Based on the Antivirus programme, employers affected by the government’s restrictions relating to COVID-19 may request refund of their wage expenses. Below are scenarios that may occur according to the Ministry of Labour and Social Affairs and based on which the state will provide financial contributions:

Regime A (quarantine and closure or limited operation based on the Government’s regulation):

• In case of quarantine, an employee will receive wage compensation at 60% of his/her average earnings; 
• If an operation is closed due to the Government’s regulation, an employee will receive wage compensation at 100% of his/her average earnings;
• Contribution to employers at 80% of wage compensation paid including statutory contributions, up to CZK 39,000.

Regime B (economic difficulties relating to the coronavirus outbreak):

• Obstacles on the part of an employer affecting more than 30% of employees – an employee will receive wage compensation at 100% of his/her average earnings; 
• Limited availability of input – an employee will receive wage compensation at 80% of his/her average earnings; 
• Limited demand – an employee will receive wage compensation at 60% of his/her average earnings;
• Contribution to employers at 60% of the wage compensation paid including statutory contributions, up to CZK 29,000.

Compensation will be provided if the following conditions are met:

• Employer strictly complies with the Labour Code; 
• Employee may not be subject to a notice period or be given a notice; 
• It relates to companies engaged in business, employees must have an employment contract and participate in the sickness and pension insurance systems;
• Employer must pay wages and make statutory contributions.

Antivirus was launched on 6 April when the collection of applications started. All acts will be made remotely (through a web application, data boxes or an email with a recognised electronic signature).

The application will have to be supported by a document confirming that an account was open to which the financial contribution will be sent to the applicant, or a power of attorney if the applicant is represented in the proceedings. An agreement with the Labour Office will be generated automatically based on the application. After the payroll close, applicants will provide statements on wage compensation paid including statutory contributions on a defined form containing a list of employees and their birth numbers or registration numbers of the insured and, if wage compensation due to crisis or extraordinary measures is claimed, a reference to the relevant crisis measure and the business activity or operation.

Financial contributions should be paid to applicants without undue delay. The Labour Office will subsequently review their eligibility as part of its inspection activities.

Specific parameters, including the conditions for drawing and applications for the state’s financial support, are contained in the Employers’ Manual of the Antivirus programme available at the website of the Ministry of Labour and Social Affairs.

Increase in amounts exempt from garnishment for the purpose of judicial enforcement calculation

With effect from 1 April 2020, the wage amount exempt from garnishment for the purpose of calculation of judicial enforcement, insolvency, statutory and agreed deductions is increased to CZK 6,908. For any dependant, the obliged party’s exempt amount is increased by CZK 1,727. The threshold above which the obliged person’s wage is subject to sanctions without restrictions is CZK 20,724.

The reason for the exempt amount being increased is the Government’s new regulation no. 61/2020 Coll., by which individual subsistence income is increased from CZK 3,410 to CZK 3,860. The normative housing costs remain the same.

Overview of changes from 1 April 2020:

The increase in the amount exempt from garnishment is effective for payroll processing for April 2020 to be paid to employees in May 2020.

Change in the calculation of the amount exempt from garnishment

Another change to come in the middle of this year is the adjustment to the formula to calculate the amount exempt from garnishment. The formula is defined by the Government’s regulation to be effective as of 1 July 2020.

Starting from the above-specified date, the amount exempt from garnishment will be newly calculated as three quarters (two thirds until 30 June 2020) from the sum of individual subsistence income and the amount of normative costs per person. If the amount exempt from garnishment is further increased to include dependants, one third of this amount will be newly added (one quarter until 30 June 2020) per any dependant. As a result of the formula adjustment, the exempt amount will increase to CZK 7,771.50 and the amount by which the exempt amount is increased in respect of any dependant will grow to CZK 2,590.50.

It is just obvious that the amount exempt from garnishment will be significantly increased compared to previous changes; however, the period in which the obliged person is able to settle his/her debts will thus be extended.

It applies that the final exempt amount is rounded up to the nearest crown.

The threshold to determine the amount to be subject to garnishment in full will continue to the calculated as double the sum of individual subsistence income and the amount of normative housing costs per person, i.e. it will amount to CZK 20,724.

Overview of changes from 1 July 2020:

The change in the calculation of the amount exempt from garnishment is effective for payroll processing for July 2020 to be paid to employees in August 2020.

Approval of the first tax package

Within the first tax package, the Government has approved, inter alia, blanket remission of a penalty for the late filing of personal or corporate income tax returns and late interest until 1 July 2020. Please note that the deadline was not postponed as sometimes interpreted, which may have an impact on various other issues.

Remission of a penalty for delayed tax statement applies to all cases if a taxpayer asks for remission of late interest or tax deferment and provides evidence of the reasons connected in any manner to the coronavirus including remission of these sanctions under the General Financial Directorate’s Instruction D-44.