Some Croatian Companies Return Aid, Others Refuse to Pay Employees

Lauren Simmonds

As Lucija Spiljak/Poslovni Dnevnik writes on the 13th of June, 2020, due to the ongoing coronavirus pandemic, a number of Croatian companies and employers have applied for government aid to preserve jobs in coronavirus-affected activities.

The aid, which comes as part of a special government measure, is intended for sectors whose business cannot be opened for objective reasons and for those which have experienced a (proven) decline of more than 50 percent, which relates to the terms of extended aid for June (it was previously intended solely for March, April and May, when it referred to a decline of more than 20 percent), given that the planned support was for three months – March in the amount of 3250 kuna and for April and May in the amount of 4000 kuna.

However, Croatian economic activity has been disrupted in the vast majority of industries, so the Croatian Employment Service’s Board of Directors introduced a form of job preservation support for the month of June this year and amended the criteria for May 2020. For June, Croatian companies and other beneficiaries must submit a new application via the online application by June the 30th, although they’ll have already used the aid, and the amount of the subsidy will be 4000 kuna.

According to the CES, the deadline for the payment of this support is the 20th of the month for the previous month, and in the case of Croatian employers having hired new employees in the meantime, no further government support can be requested for them.

According to the data received from the CES, by June the 6th this year, more than two billion kuna in support had been paid out for 98,432 employers and 526,876 workers in April. However, many Croatian companies complained that the requested funds, which were granted to them, arrived late, and out of a total of 113,396 received applications for support, a total of 6508 applications were rejected by the same date throughout the whole of Croatia.

The reason for the refusal is listed as the non-compliance with the defined conditions and criteria.

“Although the deadline for the payment of support to beneficiaries for the previous month is the 15th of the month, due to the large amount of data and delays in submitting documentation in some cases, the control process takes longer than what was originally planned and therefore the payments are arriving more slowly than we expected. Namely, given that the condition for the continuation of the payment of support is the delivery of proof of payment of employee salaries for the previous month for all workers for whom the support was paid out, the Institute conducts detailed controls by matching data with the Croatian Pension Insurance Institute and the Tax Administration,” they claim from the CES.

To briefly recall, the target groups of Croatian companies and employers eligible for the payment of this support are employers in the sectors of agriculture, forestry and fisheries, transport and storage, accommodation and food and beverage service activities, administrative and support service activities, organisers of various public events and ancillary activities such as companies who deal with equipment rental, audio and video recording, ticket sales, hall rental, along with other companies that generate most of their revenue from events and public gatherings.

The CES also lists Croatian companies, crafts, family farms and natural persons who are independent contractors and self employed individuals as eligible business entities. The CES also reports that they are continuously monitoring the situation on the domestic labour market along with the Ministry of Labour, on the basis of which the need to extend the implementation of this particular economic measure will be further considered.

Given the fact that Croatian companies have stabilised their operations with the easing of the formerly stringent anti-epidemic measures, some have decided to repay the financial aid they received from the government for three months – 973 Croatian companies have made that choice.

There is a brewing problem among Croatian companies and employers who have applied for benefits, had them granted, but have not paid their employees their salaries.

The list from the Tax Administration includes a total of 1237 Croatian companies/employers – of which 1185 are legal entities and the rest of 53 are obrtnici (owners of crafts), who haven’t paid out employee salaries for a total of 2310 workers they employ.

This concerning data on the literal non-payment of wages is based on submitted JOPPD forms in which employers reported the non-payment of wages for the period from January to March this year. The first list of non-payers of salaries was published by the Tax Administration way back on July the 15th, 2014, and it included 5,619 legal entities that hadn’t paid salaries to 19,449 workers during the first quarter of 2014.

The conclusion is that since 2014, since the lists of non-payers were published, the number of non-payers has decreased by almost five times, and the number of non-payers for only one worker (probably the owner of the entity paying themselves) has increased. Worryingly, tsix activities that are on the list of non-payers are also in the top eleven activities that received the largest payments of government aid for the month of March.

For more, follow our business page.


Subscribe to our newsletter

the fields marked with * are required
Email: *
First name:
Last name:
Gender: Male Female
Please don't insert text in the box below!

Leave a Comment