More on new legislative solutions for flood and landslide recovery
Taking into account the fact that the amendment to the Natural Disaster Recovery Act (more information on the measures set out therein can be found here, hereinafter: ZOPPN-F) adopted on 9 August 2023 is insufficient to comprehensively address the problems and remediate the consequences of the floods and landslides that affected the Republic of Slovenia in August 2023, the National Assembly of the Republic of Slovenia adopted the Act Determining the Intervention Measures to Remedy the Consequences of the Floods and Landslides in August 2023[1] (hereinafter: ZIUOPZP) on 31 August 2023. This Act as well was adopted under the urgent procedure, which means that it entered into force on the day following its publication in the Official Gazette of the Republic of Slovenia, i.e., on 2 September 2023. The adopted solutions amend and supplement the existing laws, including ZOPPN-F,[2] and temporarily introduce special measures in a number of areas.
The measures included in ZIUOPZP are aimed at urgent reconstruction of damaged public infrastructure, simplification of permit issuance procedures, while the law also includes measures to assist municipalities, the economy and natural persons, both those directly affected by floods and landslides and those employed by employers affected thereby, who will be able to maintain their employment by virtue of the adopted measures. The range of measures to deal with the consequences of the floods and landslides in August 2023 is very broad and cuts across several areas, which is why only a selection of some of the key intervention measures primarily aimed at the legal entities is listed below.
In the area of public procurement, ZIUOPZP introduces the following temporary measures or, as the case may be, exemptions:
(i) public contracts for disaster recovery on items related to flood and landslide recovery and included in a disaster recovery programme shall be treated as below the threshold value, to which Article 21(2) of the Public Procurement Act[3] (hereinafter: ZJN-3) shall apply, provided: (a) that the value of the public contract does not exceed the values from which publication in the Official Journal of the European Union is required,[4] and (b) that the public procurement procedure is commenced before 31 March 2024,
(ii) the contracting authority may award public works contracts relating to flood and landslide recovery, for which the procedure shall commence no later than on 31 March 2024, for individual excluded lots without using the procedures laid down in ZJN-3, provided that the estimated value of the excluded lots, excluding VAT, is less than EUR 1,000,000 and that the aggregate value of the lots awarded without using the procedures laid down in ZJN-3 does not exceed 20 % of the aggregate value of all lots into which the proposed works have been subdivided,
(iii) the contracting authority may, until 31 March 2024, withdraw from a public procurement contract already concluded if the consequences of floods and landslides render the performance of the public procurement impossible or the subject-matter of the public procurement unnecessary; in addition, the contracting authority may, in order to ensure the budget for the public procurement procedures for the elimination of the consequences of floods and landslides with a view to preventing the occurrence of any further imminent damage, withdraw from contracts for those public procurement contracts which are no longer a priority in the light of the circumstances,
(iv) for public procurement relating to flood and landslide recovery, which will be commenced by 31 March 2024, Article 100(3) of ZJN-3 relating to the obligation to carry out a design competition, shall not apply,
(v) an exception to the general rule that the contracting authority may not conclude a public contract until the decision on the award of the contract has become final (the so-called standstill period) shall also apply, subject to the following conditions: (a) the public procurement is of a small value, (b) its subject-matter relates to the recovery from floods and landslides, but is not the subject of a public procurement for the recovery from natural disasters of items included in the disaster recovery programme, and (c) the procedure commences no later than on 31 March 2024,
(vi) the exception regarding contractual penalties and extension of time limits in contracts for the supply of goods and services set out in ZOPPN-F (more information in this respect can be found here) shall not apply to projects the implementation of which is directly linked to, or co-financed by the 2014-2020 Financial Perspective.
ZIUOPZP also abolished the limitation on the permitted duration of the so-called temporary and occasional work set out in the Labour Market Regulation Act,[5] as well as the limitation on the gross income of the beneficiary for such work. Accordingly, the duration of temporary and occasional work is not limited in the period between 1 September 2023 until 31 December 2023, provided that the respective work is performed for the purpose of flood and landslide recovery.
With respect to the possibility to pay a higher amount of the one-off solidarity grant which was regulated already in ZOPPN-F (more information in this respect can be found here), the requirement for an exclusively one-off payment has been omitted in ZIUOPZP, whereas the other conditions laid down in ZOPPN-F remain unchanged. The latter include the limitation of the total amount of tax-free solidarity grant at EUR 10,000, the permitted period of payments between 4 August 2023 and 31 December 2023, and the conditionality of the aid on severe damage suffered by the employee as a result of the floods and landslides in August 2023.[6]
Furthermore, to remedy and prevent the consequences of floods and landslides, ZIUOPZP provides for the acceleration of procedures related to the employment and work of foreigners in professions that are already in short supply on the labour market and are urgently needed to remedy the consequences of floods and landslides. However, foreign workers who obtain a permit or consent under ZIUOPZP will only be allowed to carry out work related to flood and landslide recovery, and only in the territory of the Republic of Slovenia. Fines are prescribed for the employers for violation of this restriction, which may also result in a 3-year restriction on the establishment of companies and entrepreneurs and on the acquisition of the status of a shareholder (mutatis mutandis application of Article 10a of the Companies Act[7]).
ZIUOPZP also introduces a temporary measure of a solidarity Saturday as a business day. Thus, the employer may designate one Saturday in 2023 and one Saturday in 2024 as a solidarity Saturday, after consultation with the trade union, workers' council or workers' representative, or, in the absence of the latter, with the workers themselves.[8]
Work on solidarity Saturday requires the worker's prior written consent, and the worker contributes the amount of the wage for such work to the Slovenian Reconstruction Fund. The worker's contribution shall be equal to the amount of the worker's salary for the work performed on the solidarity Saturday after taxes and compulsory social security contributions. The employer's contribution to the Slovenian Reconstruction Fund shall be equal to the amount contributed by the worker, whereas the employer’s contribution shall not be considered as a tax relief for donations or a deductible expense under the Corporate Income Tax Act[9] (hereinafter: "ZDDPO-2") and the Income Tax Act[10] (hereinafter: "ZDoh-2").
In addition to the above-mentioned contribution, ZIUOPZP introduces a compulsory solidarity contribution for the reconstruction of Slovenia for the years 2023 and 2024, which is payable by both natural persons (residents of the Republic of Slovenia who are liable for income tax for 2023 and 2024, with the exception of those with the lowest incomes) and legal entities (liable under ZDDPO-2 for 2023 and 2024, with the exception of those established to carry out a non-profit activity).
The basis for calculating the compulsory solidarity contribution for legal entities is the tax base under ZDDPO-2, before reduction for offsetting losses incurred and tax reliefs for the year 2023 / 2024, or for the tax period beginning in each of those years. The compulsory solidarity contribution of legal entities is payable at a rate of 0.8 % and is not considered as a deductible expense under ZDDPO-2. However, the compulsory solidarity contribution of a legal entity assessed or levied for a particular year shall be reduced by the employer's contribution to the Slovenian Reconstruction Fund based on the solidarity Saturday, up to a maximum of the amount of the compulsory solidarity contribution.
The intervention act also entitles employers established on 2 August 2023 at the latest that have ordered workers to carry out other work (being different from the work set out in their employment contracts) as a result of the consequences of floods and landslides[11] to reimbursement of wages paid to workers who remedy the consequences of floods and landslides at the employer's premises. In this respect the following restrictions apply:
(i) the order to carry out other work as a result of floods and landslides must be in writing and must contain the prescribed content,
(ii) the period of entitlement lasts as long as the circumstances justifying the other work exist, but no longer than from 3 August 2023 to 3 September 2023,
(iii) reimbursement is capped at the average monthly salary in the Republic of Slovenia for May 2023,
(iv) the right cannot be exercised by an employer who is bankrupt or being in liquidation proceedings,
(v) during the period of reimbursement, the employer must provide the workers with work in accordance with the provisions of the Employment Relations Act,[12] pay net wages and compulsory social security contributions, failing which the employer must reimburse the funds received in full,
(vi) the sum of the funds granted under ZIUOPZP, the funds received as payment of the insurance amount, the donations received, as well as the funds granted from the budget of the Republic of Slovenia and municipal budgets must not be higher than the actual damage, which may also affect the amount of salary reimbursements paid,
(vii) in the case of payments of profits, purchases of own shares, payments of management bonuses or performance-related salaries to management of the employer or its related parties[13] in the period from 2 September to 31 December 2023 or in subsequent years for the year 2023, the funds received must be repaid, together with statutory default interest.
In addition, based on ZIUOPZP, companies established in the Republic of Slovenia that have suffered damage of at least EUR 100,000 as a result of floods or landslides are entitled to a 12-month deferral of payment obligation under credit facility agreement, concluded with a bank, savings bank or a branch of a bank of a Member State, in each case with its registered office in the Republic of Slovenia, if the obligation to which the deferral relates was not due by 31 July 2023. The foregoing also applies to an obligation that is the subject of a confirmed compulsory settlement or a confirmed financial restructuring agreement. The application for deferral of payment must be submitted by 31 December 2023 at the latest and an annex must be concluded between the bank and the borrower.[14] It should be noted that the deferral results not only in the suspension of the maturity of all obligations until the expiry of the deferral period, but also in the extension of the final maturity date of the facility agreement (and any related collateral) for the duration of the deferral period. Upon expiry of the deferral period, the next instalment shall become due and payable in accordance with the provisions of the facility agreement. The intervention legislation also stipulates a maximum interest rate during the deferral period: namely, interest on the deferred part of the principal may not exceed 12-month EURIBOR + 0 %, whereas the regular rate agreed at the time of conclusion of the facility agreement shall be charged if more favourable to the borrower. [15]
[1] Official Gazette of the Republic of Slovenia, No 95/23.
[2] For example, regarding the possibility of a 12-month deferral of payment obligations under credit agreements provided by a public fund founded by the Republic of Slovenia, ZIUOPZP specifies the conditions set out in ZOPPN-F in more detail, while also providing that interest and other expenses shall not be charged and paid to public funds during the period of such deferral. Further tightening of the provisions of ZOPPN-F by ZIUOPZP should also be taken into account: namely, employers that will take advantage of the measure of partial reimbursement of wage compensation for the period of temporary stand-by are obliged to maintain the employment of the employee after the measure ceases to apply, for a period equal to the period of receiving the reimbursement of the wage compensations. Furthermore, ZIUOPZP provides for fines for cases of false information provided for the purpose of claiming the rights of beneficiaries under ZOPPN-F, as well as for cases of unjustified payments of solidarity grant.
[3] Official Gazette of the Republic of Slovenia, No 91/15, Official Journal of the European Union, No 307/15, 337/17, Official Gazette of the Republic of Slovenia, No 14/18, 69/19 - dec. Constitutional Court, Official Journal of the European Union, No. 279/19, Official Gazette of the Republic of Slovenia, No. 49/20 - ZIUZEOP, 80/20 - ZIUOOPE, 152/20 - ZZUOOP, 175/20 - ZIUOPDVE, 15/21 - ZDUOP, 112/21 - ZNUPZ, 206/21 - ZDUPŠOP, 121/21, Official Journal of the European Union, No. 398/21, Official Gazette of the Republic of Slovenia, No 10/22, 74/22 - dec. Constitutional Court, 100/22 - ZNUZSZS, 141/22 - ZNUNBZ, 158/22 - ZNPOVCE, 28/23, 88/23 - ZOPNN-F.
[4] In the general area, EUR 140,000 for goods and services procured by public authorities, EUR 215,000 for goods and services procured by local authorities, EUR 5,382,000 for works, and in the infrastructure area, EUR 431,000 for goods and services and EUR 5,382,000 for works.
[5] Official Journal of the Republic of Slovenia, No. 80/10, 40/12 - ZUJF, 21/13, 63/13, 63/13 - ZIUPTDSV, 100/13, 32/14 - ZPDZC-1, 95/14 - ZIUPTDSV-A, 47/15 - ZZSDT, 90/15 - ZIUPTD, 55/17, 75/17 - ZIUPTD-A, 75/19, 11/20 - dec. Constitutional Court, 11/20, 61/20 - ZIUZEOP-A, 98/20 - ZIUPDV, 152/20 - ZZUOOP, 175/20 - ZIUOPDVE, 189/20 - ZFRO, 195/20, 28/21, 43/21, 54/21, 96/21, 172/21 - ZODPol-G, 17/22, 29/22 - ZIUPTD1, 59/22 - dec. Constitutional Court, 54/22.
[6] Article 61 of ZIUOPZP also provides for the possibility of retrospective correction of the tax return for the recipients of solidarity grant who have paid withholding tax (income tax and contributions) on the amount of grant exceeding EUR 2,000, as well as for the recipients who have paid withholding tax on the multiple payments of the solidarity grant before ZIUOPZP entered into force.
[7] Official Gazette of the Republic of Slovenia, No 65/09 - official consolidated text, 33/11, 91/11, 100/11 - dec. Constitutional Court, 32/12, 57/12, 44/13 - dec. Constitutional Court, 82/13, 55/15, 15/17, 22/19 - ZPosS, 158/20 - ZIntPK-C, 175/20 - ZIUOPDVE, 18/21, 18/23 - ZDU-1O, 75/23.
[8] A day other than Saturday may also be designated as a solidarity Saturday (a business day) if the employer's work process is organised in such a way that regular work also takes place on Saturdays.
[9] Official Gazette of the Republic of Slovenia, No.117/06, 90/07, 76/08, 56/08, 92/08, 5/09, 96/09, 110/09 - ZDAVP-2B, 43/10, 59/11, 30/12, 24/12, 94/12, 81/13, 50/14, 23/15, 82/15, 68/16, 69/17, 79/18, 66/19, 172/21, 105/22 - ZZNŠPP, 117/22 - ZVNDN-C.
[10] Official Gazette of the Republic of Slovenia, No. 13/11 - official consolidated text, 103/10, 9/11 - ZUKD-1, 105/11, 9/12 - dec. Constitutional Court, 24/12, 30/12, 40/12 - ZUJF, 75/12, 94/12, 102/12, 52/13 - dec. Constitutional Court, 96/13, 108/13, 29/14 - dec. Constitutional Court, 50/14, 94/14, 23/15, 55/15, 102/15 - ZUJF-E, 104/15, 63/16, 69/17, 21/19, 28/19, 66/19, 49/20 - ZIUZEOP, 80/20 - ZIUOOPE, 152/20 - ZZUOOP, 175/20 - ZIUOPDVE, 203/20 - ZIUPOPDVE, 195/20, 15/21 - ZDUOP, 206/21 - ZDUUPŠOP, 172/21 - ZOFVI-M, 39/22, 41/22, 44/22 - ZKZ-G, 117/22 - ZVNDN-C, 132/22 - dec. Constitutional Court, 158/22 - ZNPOVCE, 158/22, 88/23 - ZOPNN-F.
[11] This measure is not available to (i) employers who are direct or indirect users of the budget of the Republic of Slovenia or the budget of a municipality, (ii) employers who carry out financial or insurance activities falling under group K according to the Standard Classification of Activities and who have more than ten employees as of 2 August 2023, and (iii) foreign diplomatic missions and consulates, international organisations, and the institutions, bodies and agencies of the European Union in the Republic of Slovenia.
[12] Official Gazette of the Republic of Slovenia, No.21/13, 78/13 – corr., 47/15 - ZZSDT, 33/16 - PZ-F, 52/16, 15/17 - dec. Constitutional Court, 22/19 - ZPosS, 81/19, 203/20 - ZIUPOPDVE, 119/21 - ZČmIS-A, 202/21 - dec. Constitutional Court, 15/22 and 54/22 - ZUPŠ-1.
[13] They are persons that, together with the beneficiary, act as a single entity with a common source of control within the meaning of Article 3(3) of Annex I to Regulation 651/2014/EU or Article 3(3) of Annex I to Regulation 2022/2472/EU.
[14] The lender is not entitled to charge the borrower any fees for granting the deferral. No further action by the lender, the borrower or its guarantors shall be required for the validity and effects of the deferral of payment, other than the conclusion of an annex, notwithstanding any other provisions in the facility agreement or in the regulations applicable in relation to the payment of the obligations under the facility agreement.
[15] The criterion for determining the more favourable interest rate shall be the value of the 12-month EURIBOR and the interest rate agreed in the facility agreement in force on the date of the application for deferral of payment and shall be taken into account for the entire period of such deferral.