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Workforce Flexibility and Government Incentives in times of Covid-19 - Bosnia and Herzegovina

Short-term State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

Yes

If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

Please note that Bosnia and Herzegovina is consisting of two entities i.e. Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS) and one self-governed administrative unit Brčko District (BD). Each of these entities and BD has its own labor legislation.The matters mentioned in the point 1 above are subject to Labor Laws adopted in both entities and BD.

The rules of the respective Labor Laws foresee a legal possibility for redistribution of working hours as a possibility for flexible workforce planning or working on part time basis.

Furthermore, if the employee is prevented from conducting of his obligations from employment agreement due to force majeure, he is entitled to a 50% of salary in RS and BD or 100% respectively in FBiH which he would have received if he had worked. However, please note that the Labor Laws do not specifically define what the “force majeure” is and hence the definition of the same should be assessed on a case-by-case basis.

Also, in RS employer is allowed to send an employee to a paid leave in case of: unexpected temporary reduction of the amount of work, economic and financial reasons and technical and technological reasons. In such case, employee is entitled to at least 50% of average salary earned in the previous three months. However, sending an employee to this kind of paid leave must be done with consultation of the trade union or work council.

In addition, attached please find our newsletter regarding the employment relations and reccomendations of the competent authorities in Bosnia and Herzegovina during the state of emergency caused by COVID-19 pandemic.

if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

Generelly, according to the applicable Labor Laws, employees are allowed to organize the work council when the employer is hiring 15 or more employees.

In both Bosnian entities, the employer is obliged to consult work council in case of introduction of certain extraordinary measures such as sending an employee to a paid leave due to unexpected temporary reduction of the amount of work, economic and financial reasons and technical and technological reasons (RS) or before passing a decision regarding the measures related to health and safety at work (FBiH).

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

So far, the competent authorities have only adopted a proposal of measures for stabilization of the economy and remediation of the COVID-19 pandemic consequences (e.g. establishment of different funds the purpose of which is to provide assistance to the companies affected by the mentioned pandemic). Hence, please find all related information regarding the measures considered by the governments of the FBiH and RS in our attached newsletter. According to the publicly available information, the criteria for application of mentioned measures does not differentiate bankrupt companies and companies in need. However, the fact that the said measures are still being considered and as such are not yet applicable implies that it remains to be seen how the qualification and the process of application for the state aid in this case will be regulated. Currently, certain indications exist that the companies which decide on the termination of the employment agreements as a measure to cope with the decrease in operations caused by the COVID-19 pandemic are not likely to receive support in any form from the government, or will not be made a priority if such support is made available to them. However, this is only an indication and there is no explicit and legally binding act on this topic.

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

There is a State Aid Law of BiH that prescribes specific situations where a permitted state aid is allowed. However, the applicable regulation prescribes only in general manner what a state aid may be and in which cases the state aid can be applied for. Among others, it also includes a damage compensation in case of natural disaster and other extraordinary circumstances. However, since the applicable law on state aid does not prescribe explicitly this particular case (COVID-19) as legal basis for applying for state aid it is still open question how this particular situation will be treated by the competent authorities in term of granting of the state aid. Regardless of the State Aid Law of BiH, please reffer to the previous point for further information on proposed measures as a form of assistance to the companies affected by the COVID-19 pandemic.

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

Please refer to the points 2 and 3 of this questionnaire.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 27 March 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.