09 Apr The Amendments in the State of Emergency Act
Author: Doychin Ivanov, attorney-at-law
On 09.04.2020 amendments in the Act on the Measures and Actions during the State of Emergency, introduced under Decision of the National Assembly on 13.03.2020, have been announced in the State Gazette issue 34/2020. (the State of Emergency Act)
More information on the initial version of the State of Emergency Act is accessible here.
You may find below some of the highlights of the amended State of Emergency Act, which are important for the business.
I. Regarding the scheme 60/40
Under the amendments in the State of Emergency Act the lawmakers supplemented the already introduced program of state aid aiming to help the employers also known as the scheme 60/40 by adding up state aid of 60 % of the social insurance contributions due by the employers for the employees, for which the state aid is requested, as well.
Under the initially provided conditions of the State of Emergency Act and subsequent legislation by the Council of Ministers the state aid was limited only to 60 % of the income of the employees, on the basis of which the relevant social insurance contributions are due.
II. Regarding the default for execution of payments within the agreed terms
Under the amendments of the State of Emergency Act the scope of the provision regarding the legal consequences attributed to the default for the timely execution of payments by private companies and natural persons is limited. Now the relevant rule applies only the default for execution of payments under loan agreements and all other forms of financing provided by banks and the other financial institutions as per Art. 3 of the Credit Institutions Act, including whereby the receivables are transferred by other banks, financial institutions or third persons, as well as receivables arising out of lease contracts. Thereunder in these cases no interests, nor default payments shall be accrued, nor will the creditors be entitled to declare the contracts as preterm enforceable. The creditors will not be entitled to cancel the contracts due to the default of the debtors, as well.
In the initial version of the above said rule it was applicable to all kinds of contractual relations established by private companies and natural persons. Since the adoption of the initial draft of the State of Emergency Act large debate was initiated emphasizing the dangers for the trade and civil turnover, which this rule may cause. The critics of this rule pointed out that it will lead to massive debts between the private companies and sole traders. Therefore, the amendment was introduced in the above said meaning.
III. Regarding the procedural terms
Under the amended State of Emergency Act the suspension of the procedural terms in a number of court, arbitration and enforcement proceedings is revoked and now the terms for these proceedings continue to run. The specific proceedings are enlisted exhaustively in an Annex to the State of Emergency Act and some examples are the following:
- The cases for exercising parental rights only in respect of interim measures;
- The cases under the Domestic Violence Protection Act only concerning an order for immediate protection or amendment thereof, as well as in cases where the request for protection is rejected;
- The cases regarding issuance of permits for withdrawal of funds from child deposits;
- The proceedings regarding the allowance of security measures on pending receivables;
- The cases regarding the securing of evidence;
- The cases under Art. 60 and Art. 166 of the Administrative Procedures Code, i. e. the cases in relation to administrative acts on which preliminary execution has been allowed and in relation to which suspension of such preliminary execution has been requested;
- The cases under Art. 75 (on disclosure of tax and social insurance information) and under Art. 157 (concerning requests for suspension of the execution of Tax Assessment Acts in cases where they have been appealed before the court) of the Tax and Social Insurance Procedures Code;
- The cases under the Public Procurement Act;
- The cases under the Concessions Act;
- The cases under the European Structural and Investment Funds Management Act;
- and others
IV. Regarding the terms for execution of instructions issued by administrative authorities
Under the amendments to the State of Emergency Act the provision for suspension of the terms for execution of instructions issued by administrative authorities to parties or participants in the administrative proceedings is now revoked.
Hence, all terms for execution of instructions, issued by administrative authorities continue to run.
V. Regarding the option of holding remote meetings and hearings
The new provision of Art. 6a of the State of Emergency Act provides for the option for collective administrative bodies (state and local), such as commissions, councils, etc., as well as for judicial panels, as well as the Commission for Protection of the Competition to hold meetings and hearings remotely.
VI. Regarding the tour operators
Under the amended State of Emergency Act an opportunity is being introduced for tour operators to offer vouchers as compensations for canceled travels to their clients. The vouchers will grant rights in respect of other travels and/or other tourist services. However, if no agreement is reached between the tour operators and their clients on the vouchers or on the other conditions, the tour operators shall reimburse the amounts due no later than one month from the date of the cancellation of the state of emergency.
VII. Introduction of inaccessible for enforcement procedings income in connection with the enforcement proceedings under the Tax and Social Insurance Procedures Code
Under the amendments of the State of Emergency Act in the enforcement proceedings under the Tax and Social Insurance Procedures Code an inaccessible for enforcement proceedings income of the debtors is now introduced at the amount of the minimum employment salary. For 2020, the minimum employment salary is BGN 610.
VIII. Regarding the employment contracts for short-term seasonal agricultural work
During the state of emergency the employment contracts under Art. 114a, Para. 1 of the Labor Code for short-term seasonal agricultural work may be concluded for more than one day, this time not being recognized as a period of employment service.
These employment contracts have a normal working time of up to 8 hours a day, with the parties to it being able to arrange work for 4 or 6 hours.
IX. Regarding the rental payments of real estate and other objects, owned by the state or municipalities
Under the amendments in the State of Emergency Act the state and the municipalities are entitled unilaterally to lower the rental payments for real estate or other objects in favour of the tenants or users – juridical or natural persons, which as a result of the state of emergency have ceased or substantially limited their business activity.
The important thing here is that the State of Emergency Act provides for an option not an obligation in this regard and the effective application thereof is entirely in the hands of the administration. The tenants will have to evidence the facts and circumstances of ceasing or limiting their business activity as well.
The team of Ivanov and Yonkova Law Firm remains at disposal for provision of legal opinion and answers to any supplementary questions regarding the present or any other topic, you may have.
The present article does not represent legal opinion or advice on specific case or situation.
Author: Doychin Ivanov, attorney-at-law
Managing Partner Ivanov and Yonkova Law Firm