Cyprus Government Support Measures to mitigate the effects of COVID-19 in the Cyprus economy Issue of Regulations by the Ministry of Labour, Welfare and Social Insurance

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Issue N-5-2020, 30 March 2020

Following the relevant legislative amendment voted by Parliament on 27 March 2020, the Minister of Labour, Welfare and Social Insurance exercised the powers granted to her by the Law and issued Regulations ΚΔΠ 5229-5233 governing the provision of Special Leave Benefit for the care of children, the Special Sickness Benefit, the Special Benefit for Self-Employed and the Special Unemployment Benefit under the Special Plans for the Complete or Partial Suspension of Businesses’ operations respectively. We outline below a summary of the key features of the above measures.

In brief

In detail

1. General Information

) The Special Leave Benefit is granted to working parents responsible for the care of children up to 15 years old or/and children with special needs irrespective of age. The Benefit is granted to persons who, given the nature of their work, cannot work from home, or work with flexible arrangements and have no help at home. The presence of grandparents is not considered, for the purposes of the Special Leave, as ‘help at home’.

) The Special Sickness Benefit is granted to employees of the private sector and self-employed falling under special categories not being able to attend their place of work for health related reasons (see Paragraph 3 below).

) The Special Benefit for the Self-Employed is provided to self-employed persons (with the exception of persons engaged in specific professions) who have suspended their operations, (on the basis of the Order issued by the Ministry of Health and relevant decisions of the Council of Ministers), or who have partially suspended their operations i.e. present a reduction of more than 25% in their turnover (as presented in Paragraph 4).

) The Special Unemployment Benefit is provided to employees of businesses falling under the Special Plan for the Suspension of Businesses’ Operations. Any business required to suspend its operations as per the Order issued by the Ministry of Health and the relevant decisions of the Council of Ministers, can fall within the provisions of the plan, so long as it does not perform any commercial activity (other than the administrative functions required from any entity).

) The Special Unemployment Benefit is also provided to employees of businesses falling under the Special Plan for the Partial Suspension of Businesses’ Operations. A business can participate in the plan so long it has partially suspended its operations, i.e. present a reduction of more than 25% in their turnover (as presented in Paragraph 6).

The application is made on-line via the Ministry’s special webpage www.coronavirus.mlsi.gov.cy. Applicants need also to submit online a statement for their personal banking details to allow for the direct transfer of the benefit.

) For the period which the Special Leave and Special Sickness Benefits are payable, the employer is not required to pay the salary of the (recipient) employee.

(a

(b

(c

(d

(e

(f)

(g

2. Regulation ΚΔΠ 5229 regarding the granting of Special Leave for the care of children

) The application is submitted by employed persons who were insured with the Social Insurance Fund in January 2020.

) The Special Leave Benefit is granted to employed parents whom their last gross monthly salary did not exceed €2.500. Applications of single parents whose last gross monthly salary exceeded €2.500 will be examined on a case by case basis.

) The Special Leave Benefit is calculated (on the basis of the applicant’s salary in January 2020 or the last salary per the records of Social Insurance Services within the last nine months) as follows:

(a

(b

(c

(h) For the period which the Special Benefit for Self-Employed will be payable, the Self-Employed person is exempt from the obligation to pay contributions to Social Insurance Services.

) For the period which the Special Unemployment Benefit is payable, the employer is not required to pay the salary of the employees who are recipients of the benefit. In the event the employer has made payment of the salary, the part of the salary relating to the period for which the benefit will be payable can be used as set-off by the employer.

More information on the aforementioned plans are noted in the paragraphs below.

(i

) The period of Special Leave can commence from 16 March 2020 and should not exceed 4 weeks in total for both parents. The above calculations will be applied pro-rata to the days of leave taken by each of the two parents.The Benefit cannot be provided to both parents for the same period.

) The consent of the employer is required for the provision of the Special Leave Benefit.

) The Benefit will not be provided for a period during which the applicant receives unemployment benefit, special unemployment benefit, sickness benefit or special sickness benefit. Similarly the benefit is not granted when one of the two parents is not working, if for example (s)he receives unemployment benefit, special unemployment benefit, sickness benefit or special sickness benefit, is unemployed or not working for other reason (unless the parent not working is infected by virus COVID-19, or is disabled or is under mandatory quarantine).

) Working parents eligible for the Minimum Guaranteed Income could also benefit from the Special Leave benefit (subject to conditions).

(d

(e

(g

(f

For part of salary < €1.000 €1.000 - €2.000

Maximum Amount of Special Leave Benefit for a full

month

Family with both parents

60% 40% €1.000

Single-parent family (as defined in the Regulations)

70% 50% €1.200

3. Regulation ΚΔΠ 5230 for the Special Sickness Benefit

) The Special Sickness Benefit is provided to employees of the private sector or self-employed falling under the below categories. (i) Persons falling under the list of requiring special attention (‘ευπαθή

ομάδες’) as published by the Ministry of Health dated 16/3/2020 (as it will be periodically amended) and have a relevant certificate from their personal doctor;

(ii) Persons under mandatory quarantine or self-isolation on the basis of instructions from the Ministry of Health who hold the relevant Medical Certificate issued by the Ministry of Health or as otherwise permitted by the Ministry of Health;

(iii) Persons infected with the virus COVID-19;(iv) Persons aged 63-65 who do not receive a pension and are included in

categories (i)-(iii) above and hold the relevant certificate.It is noted that in the case of persons falling under category (i) as well as people in self-isolation, the Special Sickness Benefit will be payable so long as they cannot work from home, or work under flexible arrangements.

) The Special Sickness Benefit is granted to persons up to 65 years old who are under employment for the period of their application, are insured with the Social Insurance Fund and do not receive a pension.

) The Special Sickness Benefit is calculated as follows:(i) For employed and self-employed persons who meet the defined

insurable criteria as per the Social Insurance legislation - 60% of the value of their insurable units in line with the applicable legislation

(ii) For employed persons who do not meet the defined insurable criteria as per the Social Insurance legislation but were insured with the Social Insurance Fund in January 2020 - the benefit will be granted under special terms considering their insurable earnings of January 2020 or the latest available month (the amount will be determined via the issue of separate Regulations).

(iii) For self-employed persons who do not meet the defined insurable criteria - 60% of the amount of their weekly insurable earnings on the basis of the person’s insurable income during the fourth quarter of 2019.

(iv) The maximum amount that will be paid as Special Sickness Benefit for a period of one month will not exceed €1.214. The period of cover commences on 16 March 2020 and ends on 12 April 2020.

(a

(b

(c

) The Benefit is not provided for a period during which the eligible person receives unemployment benefit, special unemployment benefit, sickness benefit, special sickness benefit and Benefit of Special Leave for the care of children.Working parents eligible for the Minimum Guaranteed Income could also benefit from the Special Sickness benefit (subject to conditions).

(d

(e)

4. Regulation ΚΔΠ 5231 for the Special Benefit for the Self-Employed

) The Special Benefit for the Self-Employed is granted to self-employed persons who: (i) have suspended their operations, on the basis of Order issued by the

Ministry of Health and relevant decisions of the Council of Ministers, (ii) have partially suspended their operations, i.e. present a reduction of

more than 25% in their turnover for March 2020, expecting a similar reduction for April 2020, compared to the same months in 2019 due to the negative impact of COVID-19 pandemic. In the event the business did not operate in 2019, such comparison will be made against the months preceding March 2020.

(a

) Self-employed persons exercising the below professions are not eligible for the Special Benefit on the basis that their sectors have not been particularly affected by the pandemic:

• Pharmacologists, microbiologists and similar professions;• Doctors (excluding dentists);• Vets;• Pharmacists;• Operators of medical devices and equipment;• Insurance brokers and agents;• Owners of mini-markets, convenience stores and grocery shops; • Producers of dairy products;• Teachers in public institutes (their remuneration will be paid from the

Ministry of Education, Culture, Sport and Youth)

(b

(c

(d

(e

) The weekly benefit will be equal to 60% of the weekly mandatory amount of insurable earnings during the fourth quarter of 2019 and cannot be lower to €300 (for a 4-week period) or exceed €900 (for a 4-week period).

) The Benefit is not provided for a period during which the eligible person receives unemployment benefit, special unemployment benefit, sickness benefit, special sickness benefit and Benefit of Special Leave for the care of children.

) A key condition for granting the Benefit is for the self-employed not to have laid-off any of his/her employees since 1 March 2020 and in case of approval, not to proceed with the dismissal of any of his/her employees for the period (s)he receives the Special Benefit, and for an additional period equal to the period (s)he is to receive the Benefit plus one month (unless such dismissal is for reasons justifying the non-provision of notice).

) The Special Plan applies from 16 March 2020 to 12 April 2020, considering the dates of the Orders of the Ministry of Health or the decisions of the Council of Ministers and it may apply for a period preceding the 16 March 2020 so long as the decision for mandatory suspension of their business was taken before 16 March 2020.

) Self employed persons eligible for the Minimum Guaranteed Income could also benefit from the Special Benefit (subject to conditions).

(f

(g

5. Regulation ΚΔΠ 5232 - Special Plan for the Suspension of Businesses’ operations

) A key condition for businesses to participate in the above plan is for the business not to have laid-off any of its employees since 1 March 2020 and, in case of the application’s approval, not to proceed with the dismissal of any of its employees for the period it participates in the plan, and for an additional period equal to the period of participation to the plan plus one month (unless a dismissal is made for reasons justifying the non-provision of notice). Businesses will not be able to proceed with any employee lay-offs for financial reasons throughout the above period.

) For businesses with more than 9 employees, the Special Unemployment Benefit will be paid to 90% of their employees. The remaining 10% (i.e. relating to shareholders/directors, partners holding more than 20% of the shares, general managers and other managers) will not be eligible to the Special Unemployment Benefit. Nevertheless, where the number of the above positions exceeds 10%, the benefit may be payable to such employees subject to conditions.

) For businesses with less than 9 employees, the Special Unemployment Benefit can be payable to all employees.

(a

(b

(c

) Businesses with more than 9 employees, will need to submit a relevant application along with a list of employees who will remain in active service those who will be temporarily disengaged and for whom an application for the granting of the Special Unemployment Benefit is made.

) The Special Unemployment Benefit will be calculated as follows: (i) For employed persons who meet the defined insurable criteria as per the

Social Insurance legislation - 60% of the value of their insurable units in line with applicable legislation.

(ii) For employed persons who do not meet the defined insurable criteria as per the Social Insurance legislation but were insured with the Social Insurance Fund in January 2020 - the benefit will be granted under special terms on the basis of the employee’s insurable earnings in January 2020 (or the latest available salary as per the records of Social Insurance Services). The amount will be determined via the issue of separate Regulations

(iii) The amount of the Special Unemployment Benefit will not exceed €1.214 for an one month period.

(d

(e

(f

(g

(h

) The Benefit is not provided for a period during which the employee receives unemployment benefit, sickness benefit, special sickness benefit, Benefit of Special Leave for the care of children or any other similar benefits from the Social Insurance Fund.

) The Special Plan applies from 16 March 2020 to12 April 2020, considering the dates of the Orders of the Ministry of Health and the decisions of the Council of Ministers. The plan may apply for a period preceding the16 March 2020 so long as the decision for the mandatory suspension of the business was taken before 16 March 2020.

) Employed persons eligible for the Minimum Guaranteed Income could also benefit from the Special Unemployment Benefit (subject to conditions).

6. Regulation ΚΔΠ 5232 - Special Plan for the Partial Suspension of Businesses’ operations

) A business can participate the Special Plan for the Partial Suspension of Businesses’ operations, so long as it has has partially suspended its operations, i.e. presents a reduction of more than 25% in its turnover for March 2020 and expects similar reduction for April 2020, compared to the same months in 2019 due to the negative impact of COVID-19 pandemic.In the event the business did not operate in 2019, such comparison will be made against the months preceding March 2020.

) Businesses operating in the below sectors do not have the right of applying to the plan:

(a

(b

• Supermarkets;• Businesses engaged in the supply of foodstuff;• Trading of fruit, vegetables, meat and fish;• Satellite and other telecommunication services;• Production of electricity;• Waste collection and management;• Credit and insurance operations, including licensed financial

institutions;• Veterinary services;• Doctors (excluding dentists);• Hospitals;• Nursing homes;• Production of pharmaceutical supplies;• Wholesale trade in pharmaceutical products;• Pharmacies;• Trade in medical and orthopedic supplies

) As with the case of the Special Plan for the Complete Suspension of Businesses’ operations, businesses that participate in the above plan, should not have laid-off any of their employees since 1 March 2020 and, in case of their application’s approval, not to proceed with the dismissal of any of their employees for the period they participate in the plan and for an additional period equal to the period of participation to the plan plus one month (unless a dismissal is made for reasons justifying the non-provision of notice). Businesses will not be able to proceed with any employee lay-offs for financial reasons throughout the above period.

) Businesses employing up to 50 employees, can participate in the Special Plan and apply for the payment of the Special Unemployment Benefit to 75% of their employees (subject to the applicable conditions). For businesses employing more than 50 employees, the percentage of employees for whom the Special Unemployment Benefit can be granted is adjusted to 60%. Businesses employing up to two employees can apply for all their employees.

) The Special Unemployment Benefit will not be granted to shareholders/directors, partners holding more than 20% of the shares, general managers and other managers falling within the 25%/40% limits. Nevertheless, where the number of the above positions exceeds the aforementioned percentages, the benefit may be also payable to such employees subject to conditions.

) Businesses wishing to participate need to, along with their application form, submit a list of employees for which the granting of the Special Unemployment Benefit is requested as well as the list of employees for which the payment of the benefit is not required.

) When participating in the scheme, the employer has the right to continue employing staff receiving the Special Unemployment Benefit, by paying the part of the employees’ salary not ‘covered’ by the benefit along with the corresponding contributions to the Social Insurance related funds. It is worth noting that the part of the employee’s salary not ‘covered’ by the benefit could be adjusted (subject to the acceptance of the employee) with a corresponding adjustment to the employee’s working hours.

) The Special Unemployment Benefit is calculated as per Paragraph 5e. Paragraphs 5f-5h as noted above also apply in the Special Plan for the Partial Suspension of Businesses’ operations.

(c

(d

(f

(g

(h

(e

© 2020 PricewaterhouseCoopers Ltd. All rights reserved. PwC refers to the Cyprus member firm and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

Let’s talk

For a deeper discussion of how this issue might affect your business, please contact:

Theo C ParperisPartnerHead of Tax & Legal theo.parperis@pwc.com

Chrysilios PelekanosPartnerIn charge of Tax Reporting Strategychrysilios.pelekanos@pwc.com

Michalis StavridesPartnerTax Reporting Strategymichalis.stavrides@pwc.com

Martha LambrouDirectorTax Advisorymartha.lambrou@pwc.com

Marios S AndreouPartnerIn charge of Tax Advisorymarios.andreou@pwc.com

The takeawayThe measures taken by the Government signify the importance placed on the support of employees and businesses during these trying times. We, at PwC, are ready to support your business in availing of the benefits of the measures implemented.