State to waive small firms’ social security contributions in summer

Photo: Cameron Adams, Flickr, CC BY-ND 2.0

The Czech state looks set to waive social security contributions from companies with 50 or fewer employees between June and August – on condition that they don’t let more than 10 percent of staff go, or cut wages by 10 percent or more of March levels. The measure has been approved by the Chamber of Deputies and must now go to the Senate.

Photo: Jon Kneller,  Flickr,  CC BY-NC-ND 2.0
The move is one of a series of measures to aid enterprises hit by restrictions imposed by the Czech government to contain the spread of Covid-19.

The temporary waiver of social contributions represents further support from the government’s Antivirus programme, variant B of which has been extended until the end of August.

Social insurance and unemployment contributions paid by the employer amount to some 24.8 percent of a Czech worker’s earnings.

Minister of Labor and Social Affairs Jana Maláčová says it will be possible to waive insurance premiums of up to 1.5 times the average wage, i.e., from the figure of roughly CZK 51,700 gross from last year.

The maximum forgiven levy would in this case amount to around CZK 12,700.

Minister Maláčová said the waiver would apply to 88 percent of companies in the Czech Republic, meaning around 233,000 in total.

Firms don’t need to apply for the remission of social security contributions. All they have to do is notify the district social security office of the reduction in the amount paid in their monthly statement.

Jana Maláčová,  photo: Archive of the Office of the Government of the Czech Republic
The state has thus far paid two types of contributions from the Antivirus programme.

Support A amounts to 80 percent of the compensation of wages of employees who have been in quarantine or whose place of work has been forced to pull down its shutters, reaching up to CZK 39,000 of what is referred to as “super-gross” wages.

Support B corresponds to 60 percent of wage compensation in the event of a reduction in operations due to a shortage of workers or raw materials and drop in demand. It reaches up to CZK 29,000 of super-gross wages.

The three-month waiver of levies represents what is referred to as the C regime of the Antivirus programme. Ms. Maláčová has said several times that small companies may choose between B and C. Large firms fall under B.

The Chamber of Commerce has questioned the government’s strategy, saying it will in fact lead to lay-offs and higher unemployment.

The business group was critical of the fact MPs had rejected opposition calls to extend the scheme to also include medium-sized enterprises.