Employment Retention Incentives for May and June 2020

3.6.2020.

The Croatian Government has decided to continue with employment retention incentives for June 2020 for industries affected by the Coronavirus (COVID-19). The Croatian Government has amended the May 2020 employment retention incentive criteria for employers with 50 or more employees, regardless of whether they are existing or new users of these incentives.

In the event of continued adverse developments in the economy caused by the epidemic, further employment retention incentives will be adopted on a monthly basis.

EXISTING EMPLOYMENT RETENTION INCENTIVE FOR MAY 2020:

Application deadline

  • Until 7 June 2020.
  • Employers who were previously granted employment retention incentive for March, April and May 2020 do not have to submit a new application.

Amount of the grant

Amount of the grant:

  • HRK 4,000 per full-time employee.
  • Proportionally according to the number of part-time working hours per employee.

Basic eligibility criteria for this incentive

Employment retention incentive can be used by employers who meet the following criteria:

  • Revenue decrease of at least 20%.
  • Amendment criteria eligibility - applicable only for employers with 50 or more employees:

New applicants at time of application for May 2020 employment retention incentive / existing users prior to the payment of employment retention incentive for May must prove that in May 2020 they had a revenue decrease of at least 20% compared to May 2019 (or February 2020 if active less than 12 months) based on submitted VAT forms.

Employers who had a decrease in the number of employees in the period from March 20th, 2020 until the date of incentive payment will lose the right to employment retention incentive if the percentage of employment decline is greater than:

    • 40% with employers employing up to 10 employees;
    • 20% for small employers;
    • 15% for medium-sized employers;
    • 10% large employers.

Note: the above is not applicable to regular expiry of employment contracts, retirement and dismissal caused by employees conduct.

Target group of employees

Employees:

  • With limited and permanent employment;
  • Citizens of Croatia, EU or third countries;
  • Employed full-time or part-time;
  • That have some of the following status: assigned employee, single parent, Croatian war veteran, etc.

EXCLUDING:

  • Employees employed after 19 March 2020;
  • Co-owners with more than 25% share, founders, board members, directors, procurators, etc. (except in the case of employers with up to 10 employees, craft owners, regardless of the number of employees);
  • Pensioners;
  • Foreign employees whose work permit and residence expired.

Amended restrictions and grant repayment

Employer who applied for employment retention incentive for May 2020 for 50 or more employees will be obliged to repay the grant if in the period from the grant receipt until 31 December 2021:

  • Pays dividends or other equivalent receipt that is considered as distribution of profits realised in any tax period;
  • Provides stock options or own stocks or shares to members of the management board, executive directors, procurators, etc.;
  • Pays bonuses and rewards for work results above the non-taxable amount (HRK 5,000) and other similar receipts;
  • Acquires own stocks or own shares.

 

NEW EMPLOYMENT RETENTION INCENTIVE FOR JUNE 2020:

Application deadline

  • In the period from June 8 to June 30, 2020.

Amount of the grant

Amount of the grant:

  • HRK 4,000 per full-time employee.
  • Proportionally according to number of part-time working hours per employee.

Eligibility criteria for this incentive

Employment retention incentive can be used by employers who meet the following criteria:

  • Revenue decline (based on VAT forms) in May 2020 of at least 50% compared to May 2019 (or February 2020 if active less than 12 months).
  • Perform business activities in the following sectors:
    • Agriculture, forestry and fishing;
    • Transport (primarily passenger transport) and storage;
    • Accommodation services and preparing and serving food and drinks;
    • Leasing and travel agencies, tour operators and other reservation services and activities related to them;
    • Arts, entertainment and recreation;
    • Repair of computers and personal and household goods and other personal service activities;
    • Organization of cultural, business and sports events, fairs and weddings, and related activities that generate most of their income from events and public gatherings.

Employers who had a decrease in the number of employees in the period from March 20th, 2020 until the date of incentive payment will lose the right to employment retention incentive if the percentage of employment decline is greater than:

    • 40% with employers employing up to 10 employees;
    • 20% for small employers;
    • 15% for medium-sized employers;
    • 10% large employers.

Note: the above is not applicable to regular expiry of employment contracts, retirement and dismissal caused by employees conduct.

Target group of employees

Employees:

  • With limited and permanent employment;
  • Citizens of Croatia, EU or third countries;
  • Employed full-time or part-time;
  • That have some of the following status: assigned employee, single parent, Croatian war veteran, etc.

EXCLUDING:

  • Employees employed after 19 March 2020;
  • Co-owners with more than 25% share, founders, board members, directors, procurators, etc. (except in the case of employers with up to 10 employees, craft owners, regardless of the number of employees);
  • Pensioners;
  • Foreign employees whose work permit and residence expired.

Who has to repay the grant?

Employer who applied for employment retention incentive for June 2020 for 50 or more employees will be obliged to repay the grant if in the period from the grant receipt until 31 December 2021:

  • Pays dividends or other equivalent receipt that is considered as distribution of profits realised in any tax period;
  • Provides stock options or own stocks or shares to members of the management board, executive directors, procurators, etc.;
  • Pays bonuses and rewards for work results above the non-taxable amount (HRK 5,000) and other similar receipts;
  • Acquires own shocks or own shares.


For all employers whose business activities are non-eligible for employment retention incentive for June 2020 due to sectoral limitations, the Government is considering introduction of an additional incentive, i.e. grant for financing part-time employee work. The related decision should be brought during June 2020. The purpose of this Government grant is to retain the employment by financing part of the salary for working days on which employees work part-time or do not work at all.