Govt to support restaurants in re-employment

The government on Wednesday agreed on a model to support restaurants in employing workers and to compensate for costs that companies have not been able to find ways to adapt to due to the coronavirus situation.

The government will submit the proposal to the parliament in the next few days, said the economic affairs and employment ministry in a press release.

Food service businesses have been severely restricted by legislation to prevent the spread of the novel coronavirus.

It was mandatory for restaurants, cafés and licensed premises throughout the country to remain closed to customers between 4 April and 31 May 2020. When approving the restrictions, the parliament required compensation for reasonable costs and measures to mitigate the effects of the restrictions.

“The effects of the coronavirus crisis on the business of restaurant and café entrepreneurs have been remarkably severe, and the forms of support or other measures prepared to mitigate the effects so far are not sufficient to meet the parliament’s requirements. For these reasons, we have prepared a support model for the restaurant sector,” said Employment Minister Tuula Haatainen.

“Our objective is to compensate reasonably for the restrictive measures and encourage companies to employ workers. With this model we can support not only companies but also enable a return to work for as many people as possible who have been laid off or dismissed as a result of the coronavirus epidemic,” the minister added.

The model prepared by the economic affairs and employment ministry consists of two complementary elements – support for re-employment and compensation for imposed restrictions on activities. The amount of support and compensation depends on the company. The size of restaurants and the scope of business in the sector vary greatly.

The amount of support will be EUR 1,000 per employee. To receive the support, the amount of salary paid by the company to an employee after the expiry of the restriction for a period of three months must total at least EUR 2,500.

The support is granted on application. The compensation is granted by the KEHA Centre which provides development and administrative services for the Centres for Economic Development, Transport and the Environment (ELY Centres) and the Employment and Economic Development Offices (TE Offices).

Reasonable compensation will be paid to offset the effects of the Act restricting the possibilities of food service businesses to manage inflexible running costs.

The amount of the compensation is based on the decrease in the company’s sales in April compared to the average sales in the January–February period.

The amount of the compensation is determined by the change in the company’s sales in a single month – only the amount of inflexible running costs of the change will be compensated. Fifteen per cent is considered a reasonable compensation.

The compensation does not offset a decrease in sales, which is used in determining the compensation in computational terms. The maximum amount of compensation is EUR 500,000, which is based on the number of full-time workers who worked in the company before the onset of the crisis. The support may be granted to a company with a staff comprising a maximum of 800 persons.

For companies with an average sales volume of more than EUR one million in January–February, the amount of the compensation for the amount exceeding EUR one million is five per cent.

The compensation will be paid in two instalments to the companies that will receive it in the form of a mass payment. The first instalment will be paid as soon as possible.

The cost impact of the support for re-employment will be approximately EUR 40 million, if 40,000 employees are re-employed. The total cost impact of the compensation for the restrictions on activities in the sector has been estimated at around EUR 83 million for two months.