Paef was extended until 2021

On October 22, 2020, Law 2060 was enacted, extending until March 2021 the validity of the Formal Employment Support Program and the Service Premium Payment Support Program.

Learn about the most important aspects of the extension of these programs.

The National Government, in order to extend the social measures of the Formal Employment Support Program -Paef- and the Support Program for the Payment of the Services Premium -PAP-, presented before the Congress of the Republic a bill seeking the extension of these programs. On Thursday, October 22, Law 2060 was enacted, extending the validity of Paef until March 2021 (from 4 months to 11 months) and of the PAP for the payment of the services premium for the second semester of the year.

Context of Paef and the PAP

It is important to remember that through legislative decrees 639, 677, 815 and 770 of 2020, Paef and PAP are born, two programs whose purpose is to protect formal employment, granting a state contribution or subsidy that helps companies and is a recognition to employers who kept workers active despite the crisis that COVID-19 provoked.

These programs consist of:

–Paef: grants a subsidy to the payroll corresponding to the number of employees multiplied by up to forty percent (40%) of the value of the current legal monthly minimum wage -smmlv-.

The validity of this program was initially foreseen for the months of May, June and July of this year (subsequently extended by Decree 815 of 2020 to August of this year).

–PAP: which grants employers an economic aid corresponding to $220,000 for each worker, destined to the payment of the legal service premium. Regarding such monetary contribution, according to Legislative Decree 770 of 2020, it was established that it was applicable for the payment of the service premium for the first semester of the year (January – June 2020).

As can be observed, the emergency decrees, due to their regulation, created these programs on a temporary basis, the PAP only for the June premium and the Paef until the month of August, which is why the presentation of the bill seeking the extension of the measures was promoted, which was finally approved by the Congress of the Republic and sanctioned by the President through the aforementioned Law 2060 of 2020.

Were modifications introduced regarding the employers who are beneficiaries of the Paef?

According to the referred Law 2060 of 2020, the beneficiaries will be the same as those established in Legislative Decrees 677 and 815 of 2020, including new companies, such as associated work cooperatives and autonomous patrimonies that are declarants of income tax and complementary tax, establishing that the latter must not comply with the requirement of registration in the commercial registry (chamber of commerce), providing instead the tax identification number -NIT-.

Regarding the requirements to access Paef, have there been any changes?

The requirements remain the same as those established in the decrees mentioned above; there were only the following variations:

–Decreasedthe number of specific employees that will be taken into account for the calculation of the state contribution from 80% to 50% of the employees individually considered, who have been reported in the integrated contribution liquidation spreadsheet -Pila- in the February 2020 contribution period.

–Conditionedthat the number of employees taken into account to determine the amount of the payroll subsidy is not higher than the number of workers reported in the Pila for February 2020.

Increase of the Paef to the tourism, hotel and gastronomic sector.

The new regulatory provision additionally brought good news for the sectors that have suffered a hard blow in this time of sanitary emergency, that is, the tourism, hotel and gastronomy sector, artistic, entertainment and recreation activities, given that the payroll subsidy was increased from 40% to 50% of one (1) smmlv.

An additional incentive was determined for female workers.

The extension of the PAPEF also brought a differential approach measure, which consists in the increase of the payroll subsidy to 50% of one smmlv with respect to female workers, that is, the beneficiaries will receive with respect to female employees individually considered the payroll subsidy of 50% of one smmlv, clarifying that this percentage will not be cumulative with the increase to which the tourism and hotel sector, among others mentioned above, is entitled.

PAP beneficiaries

As in the Paef, the beneficiaries of the premium subsidy will be the same as those established in the previous decrees (in the case of the PAP, Decree 770 of 2020). This law only added as beneficiaries the autonomous patrimonies, with the same conditions previously mentioned in the Paef.

It should be noted that the law did not include worker cooperatives as beneficiaries for the PAP, as it did in the Paef. This can be corroborated in Article 8 of the law under study.

With respect to the requirements to access the PAP, were there any modifications?

The requirements and procedures to access the PAP remain the same, since they were not modified in the mentioned law; the variation or addition that was included is the one that will be applied in the subsidy of the second payment of the service premium of the year with respect to the workers reported in the Pila in December 2020 and which must also have been reported in the Pila in the months of October and November of the current year.

When would the December bonus subsidy be paid?

This second premium subsidy of the year, in accordance with Article 9 of Law 2060 of 2020, will be paid in the first quarter of 2021.

Will the UGPP continue to monitor?

As established in the previous rules, the Pension and Parafiscal Management Unit -UGPP- will continue with its powers of oversight of the Paef and the PAP, for which it now has a term of four (4) years, in accordance with the provisions of Article 11 of Law 2060 of 2020….

“Law 2060 of 2020 not only expanded the granting of Paef and PAP subsidies, but also added beneficiaries and brought affirmative measures to support sectors that were hard hit by the sanitary emergency”.

For all of the above, Law 2060 of 2020 not only expanded the granting of Paef and PAP subsidies, but added beneficiaries and brought affirmative measures to support sectors that were hit hard by the sanitary emergency.

Source: Actualize