Reintroduction of the compensation bonus for entrepreneurs

Considering the renewed spread of the SARS-COV-2 virus and new restrictive measures that may negatively impact business operations, the chamber of deputies approved the Compensation Bonus Act for 2022 in a fast-track legislative procedure. The bill still needs to be approved by the senate and signed by the president.

The support is aimed at self-employed persons, natural persons who are members in limited liability companies, and persons working for these entrepreneurs under agreements outside employment relationships. The originally proposed limitation of the entitlement to the compensation bonus only for family businesses and small limited liability companies with no more than two members was considered discriminatory and deleted from the bill. The bonus is now intended for companies where all the members are natural persons and their interest in the company is not represented by an equity certificate.

The above categories will be able to receive the bonus if they experience a significant drop in sales as a result of the emergency measures, if they are unable to carry out their activities due to childcare (COVID-19 related quarantine or illness), or if they work under agreements outside employment relationships for reasons on their employer's side.

The bill provides for two bonus periods, the first from 22 November 2021 to the end of 2021 and the second from 1 January to 31 January 2022, also allowing the government to add additional monthly bonus periods until the end of 2022, depending on the course of the pandemic.

The maximum compensation bonus is CZK 1,000 per day for self-employed persons and limited liability company members if they meet the condition of a minimum 30% drop in sales. The fall in sales will be monitored for the calendar months of the bonus period, i.e., December 2021 and January 2022. The comparable period will be any three successive calendar months in the relevant period from June to October 2021.

The act provides specific rules for determining the comparable period in situations where the business activity started or the limited liability company was established later than on the first day of the comparable period. The specific rules also take into consideration seasonal entrepreneurs.

Entitled to the compensation bonus shall be entrepreneurs whose business is their main source of income and who have an active trade licence as of 22 November 2021. The bonus shall also go to those who have interrupted their licence for less than a year, which should particularly concern seasonal entrepreneurs. The act also allows the compensation bonus to coincide with other public support.

In the case of quarantine or self-isolation of self-employed persons or limited liability company members who contribute to the sickness insurance scheme, the compensation bonus shall amount to CZK 500 per day, without the need to prove that the specified decrease in sales has been met. In the case of workers under agreements outside the employment relationship who were unable to work because their employer's activities were significantly affected, the compensation bonus shall also amount to CZK 500 per day.

The act also defines other conditions that the natural person concerned must meet to be paid the compensation bonus. These are similar to the conditions applicable to the compensation bonuses paid previously.

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