Downtime under the Code and economic downtime - implementation

18.05.2020

The coronavirus epidemic in Poland has frozen some sectors of the economy. Therefore, many employers have been faced with the necessity to close their businesses and their employees have not been allowed to do their work for reasons that were not dependent on them.

Downtime under the Labour Code

Downtime is regulated by Art. 81 of the Labour Code. According to it, an employee is entitled to remuneration for the time when he/she does not perform work, if he/she is ready to perform it and has been prevented from doing so for reasons related to the employer. This remuneration results from his/her personal classification, determined by an hourly or monthly rate, and if such a remuneration component has not been separated when determining the terms of payment – it is 60% of the remuneration. However, this remuneration may not be lower than the minimum remuneration for work, determined on the basis of separate regulations. An employee is entitled to the remuneration for the time of a downtime not caused by him/her. This means that the employee receives the basic salary and possibly other fixed components of the salary, e.g. a duty allowance, but no additional bonuses.

The provisions of the Labour Code do not regulate the procedure for downtime implementation. There is no need to enter into agreements with employees' representatives or to individually determine these issues with employees. Employer is obliged to inform employees about the downtime (indicate the beginning of the downtime and announce how the employees will be informed about the obligation to take up work), but the information does not have to be provided in writing.

Remuneration for the downtime under the Code

Remuneration for downtime will only be payable if the following conditions are jointly met:

  1. employees have been ready for work,
  2. the downtime was due to reasons not attributable to the employees.

Economic downtime

This type of downtime was introduced by the provisions of the Act of 2 March 2020 on special arrangements for the prevention, counteraction and combating of COVID-19, other infectious diseases and the crisis situations caused by them and certain other acts. The provisions of the Act were later amended by the Act of 31 March 2020 (Journal of Laws of 2020, item 374 with later amendments).

The introduction of economic downtime requires prior conclusion of an agreement with trade unions or with the representatives of employees, chosen in accordance with the procedure adopted by employer. The lack of such an agreement makes economic downtime impossible to be implemented. The aforementioned Anti-Crisis Act refers to the definitions set out in the Act on Special Solutions Relating to the Protection of Work Places (Journal of Laws of 2019, item 669), specifying (similarly to the Labour Code) that economic downtime is a period during which employees do not perform work for reasons not related to them and they have been ready for work.

In such a case, the causes for the economic downtime must be linked to COVID-19 and may therefore be either on the employer's side (e.g. lack of orders, lack of parts for production) or independent of the employer (e.g. closure of shopping centres or hotels under the Regulation).

Economic downtime does not have to cover the entire plant and all staff. Only certain groups of employees or even individuals may be subject to economic downtime.

Remuneration for the time of economic downtime

An important difference from the downtime specified in the Code is that as a result of economic downtime an employer may reduce employees' remunerations. The reduction cannot be higher than 50%, and the reduced remuneration cannot be lower than the minimum remuneration for work (2600 PLN gross), taking into account the employee's actual working dimension. Reduced remuneration is not connected with the reduction of the employee's working time.

Economic downtime - conditions for obtaining subsidies

If an employer does not reduce employees' remunerations during economic downtime, he will not receive any subsidy. The amount of the subsidy that the employer may apply for is 50% of the minimum remuneration for work (i.e. 1300 PLN), taking into account the employee's full-time employment.

It is also worth noting that in order to obtain financial support, an entrepreneur cannot be in arrears in paying his obligations concerning taxes and social and health insurance contributions, as well as those which are payable to the Labour Fund, the Guaranteed Employee Benefits Fund and the Solidarity Fund until the end of the third quarter of 2019. The entrepreneur must also demonstrate the decrease in economic turnover specified in the Act.

Downtime under the Code or economic downtime? Which solution to choose?

It seems that there is a much more interesting solution for employers. It is the possibility to implement economic downtime because of subsidies and also because of the possibility to significantly reduce payroll costs, including the basic salary of employees, without changing the employee's working time. However, it should be remembered that in order to take advantage of the institution of economic downtime, an entrepreneur (within the meaning of the relevant provisions of law) must demonstrate the absence of arrears by the end of the third quarter of 2019, the absence of grounds for declaring bankruptcy and the decrease in turnover specified by the regulations. It is also necessary to conclude an agreement with the social party acting on behalf of employees at a given company.

An entrepreneur who, on the basis of a grant agreement, has received funds from the Fund aimed at protecting workplaces is obliged to maintain the employment of employees covered by the agreement for the period for which the grant was awarded.

Author:

Monika Roman
Director of Human Resources Department
Contact Administation

 

See also: Anti-crisis shield and financing the PPK contributions

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