Payroll calculation and payroll allowances during a state of emergency

In the current state of emergency in which we act and in order to determine the salary calculation and compensation paid during absence from work we would like to inform you of the following:

First of all, a clarification on the term "force majeure" and interruption of the work process due to “force majeure” versus interruption of the work process due to business reasons for companies that are unable to carry out their activities because of the government measures, on which the remuneration paid to employees who do not work for that reason depends as well.

Interruption of work due to “Force Majeure”

  • Force majeure or 'Vis Major' is a legal term that refers to an external event that could not have been foreseen, avoided or eliminated, that is an event that does not depend on the subject's will, which is outside the sphere of action of the entity and which the entity could not foresee, remove or avoid.
  • According to this definition, the interruption of the work process, imposed by the Decision on measures to prevent the spread of coronavirus and Decisions amending this decision adopted by the Government for the legal entities concerned by these Decisions, have the force majeure treatment, that is, an event that does not depend on the will of the employer who interrupted the work process.
  • The maximum payable period is not determined because it is an unpredictable event for which it cannot be assumed how long it will last.
  • Pursuant to Article 112, Paragraph 7 of the Law on Labor Relations, if the employee cannot perform the work due to force majeure, he is entitled to half the salary he would otherwise be entitled to if he worked.

So, an interruption of the work process due to force majeure is considered to apply to companies that have partially or fully closed their facilities because of the measures (recommendations) of the government, and the employees have no business engagement.

Interruption of the work process due to business reasons

  • Pursuant to Article 76, Paragraph 1, Point 3 of the Law on Labor Relations, the term "business reasons" is categorized as economic, organizational, technological, structural and similar reasons.
  • Since the Government measures do not fall into the abovementioned categories, and at the same time they do disable the operation of companies, they cannot be treated as interruption of the work process due to business reasons.
  • In case of an interruption of the work process due to business reasons, the employer is obliged to issue a Decision to the employee and pay him 70% of his salary for a period of up to three months in the current year.

We consider that this provision is not binding for employers due to the declaration of a state of emergency in the Republic of North Macedonia.

Since in March we have different categories that should be part of the salary calculation, they are set out below:

  • Employed persons who are released from work to take care of a minor up to the age of 10 years or coursing the fourth grade of primary school and over the age of 10 years for parents of children/persons with disabilities who need home care – item 8. In the Government's conclusions from 11.03.2020, a recommendation is given to companies (which are mandatory though they are recommendations) to release from work the employees, that will provide evidence, on a paid leave. The paid leave is treated as a calculation of 100% of the employee's average salary for the last 12 months.
  • Employees who are released due to chronic illnesses with a confirmation from a doctor – Pursuant to item 1 of the Minutes of the Government of the Republic of North Macedonia from 12.03.2020 - certain categories of persons with a doctor's confirmation are released from work and work activities. This absence has the treatment of calculating 100% of the employee's average salary for the last 12 months.
  • Employed persons who are quarantined or self-isolated – Since the employee cannot go to work, is not using sick leave, and if he cannot perform his work responsibilities from home, in that case for this kind of absence a calculation of half (50%) of the salary to which he would be entitled if he had worked is applicable, according to Article 112, paragraph 7 of the Law on Labor Relations on the inability to perform work responsibilities due to force majeure.
  • Employed persons in companies that are unable to carry out their activities because of the government measures – Companies that interrupted their work process because of the government measures that have force majeure treatment, and therefore the employees are unable to carry out their work activities, in this case, the calculation of half (50%) of the salary to which he would be entitled if he worked would be applied, pursuant to paragraph 7 of Article 112 of the Law on Labor Relations on the inability to perform the work due to force majeure.
  • Employed persons on sick leave - no changes; as until now, with a calculation of 70% or 90% as a sick leave allowance (for sick leaves up to 30 days depending on the length, while sick leaves over 30 days are covered by the Health Insurance Fund.
  • Employees who perform their work activities, whether at the workplace or remotely, without changes, regular payroll calculation is applied.

Having in mind that the laws and measures determine the minimum amounts to be paid, in this regard, an additional option that companies that are unable to carry out their activities due to the measures may consider is certainly using a collective leave where 100% of the average salary would be paid for those employees who are not on sick leave and who are not exempt from government measures.

We consider that the above guidelines are applicable to the calculation of salary for March 2020.

In addition, please keep in mind that in the current state of emergency the Government may enact decrees by force of law, which may have an impact on the way salary is calculated.

Action required

In case of interruption of the work process due to force majeure, the employer has to issue Decisions for each individual employee for stoppage of work by referring to the Government's decision on measures to prevent the spread of coronavirus and its amendments.

If the Employer decides to organize remote working for the employees, the employment contracts for the employees that will work remotely should be amended (because the working location is part of the employment contract) with an annex referring to the Government's decision on measures to prevent the spread of coronavirus and its amendments or a Decision for remote working on organizational level should be made.

 

Disclaimer Notice: The information contained in this document is provided “as is” without warranty of any kind, either express or implied, including without limitation warranties of merchantability, fitness for a particular purpose, and non-infringement. RSM Makedonija assumes no liability or responsibility for any errors or omissions in the content of this document. Your use of the information contained in this document is at your own risk. UNDER NO CIRCUMSTANCES SHALL RSM Makedonija BE LIABLE FOR ANY DAMAGES TO YOU, INCLUDING ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES THAT MAY RESULT FROM YOUR USE OF THE INFORMATION IN THIS DOCUMENT EVEN IF YOU WERE ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

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