Eliminating the economic consequences of coronavirus (COVID-19) and the differences between the Antivirus Programme, the COVID Loan Programme, and the state compensation under the Crisis Act

Mgr. Tomáš Vavro 20.03.2020

Czech entrepreneurs affected by the government measures against the spread of coronavirus (COVID-19) already have several options how to seek compensation for the damage they have incurred. In the following article, we will focus on the Antivirus Programme, the COVID Loan Programme, and the potential claim for damages under the No. 240/2000 Coll, the Crisis Act.

1. The Antivirus Programme

On March 19, 2020 the Government of the Czech Republic approved a proposal of the Ministry of Labour and Social Affairs of the Czech Republic (MLSA) according to which the state should provide entrepreneurs with compensation of some of the expenses – wage compensation that entrepreneurs had to pay to their employees who stayed at home due to the government measures (The Antivirus Programme).

The contribution under the Antivirus Programme is to be provided through the Labour Office of the Czech Republic in the following modes according to the MLSA’s press release of 19 March 2020:

*“Scheme A – Quarantine employees (obstacles to work on the employee’s part). Compensation of wages will be paid to employees in the amount of 60% of the average assessment base. The employer will be provided with the full compensation of wage compensation on the employer’s part.

Scheme B – Inability to assign work to employees due to government measures (obstacles to work on the employer’s part). The employers who have been ordered to close their premises due to the government measures shall be provided with 80 % of compensation of wage compensation on the employer’s part.”*

It can therefore be concluded that the maximum amount of compensation to entrepreneurs who had to close their premises as a result of government measures (scheme B) is only 80% of compensation of wage compensation on the employer’s part and it does not cover any related damages or the loss of profit. Full wage compensation will only be granted to employers whose employees had to remain in mandatory quarantine (scheme A).

In this article, we will also introduce other options that, unlike the Antivirus Programme, allow entrepreneurs to either obtain a larger amount of external funds by a special loan or even guarantee them 100% compensation for all damages.

2. The COVID Loan Programme

The COVID Loan Programme is a programme implemented by the Czech-Moravian Guarantee and Development Bank, the purpose of which is to facilitate the access of some entrepreneurs to operational financing, whose economic activities have been limited due to the implementation of the government measures against the spread of coronavirus.

The programme will guarantee provision of interest-free loans and bank guarantees which shall be provided to SMEs for operational financing, but not for investments, loan repayments, leases, etc.

According to currently available information, when concluding credit agreements, the economic data on applicants should be taken into account, with the provision of the loan being ensured by a blank bill (promissory note) with or without aval (depending on the applicant type).

The programme is not intended for large entrepreneurs, i.e. those who, alone or in conjunction with other related entrepreneurs, exceed the total of 250 employees or exceed sales and assets above a specific limit.

In this case, it can therefore be concluded that the COVIT Loan Programme is intended only for small and medium-sized enterprises for the purpose of operating financing linked to the fulfilment of specific conditions defined in the loan agreement, which will be secured by a blank bill (promissory note).

3. Compensation of damages under the Crisis Act provided by the state

In addition to the options described above, some entrepreneurs may also claim 100 % compensation for damages resulting from the implementation of the government measures, based on the Act No. 240/2000 Coll., On Crisis Management and on Amendments to Certain Acts (the Crisis Act).

Under this Act, the state is obliged to compensate for the damage caused to legal and natural persons in causal connection with the government crisis measures, provided that the damage was not caused by the affected subjects themselves.

Therefore, for some entrepreneurs, the Crisis Act is a possibility to achieve 100% compensation without having to use the Antivirus Programme or to draw a loan under the COVID Loan Programme.

More about this possibility can be found in our article: Compensation for Government Anti-Coronavirus Measures (COVID-19) under Crisis Act