Minhacienda: Modifications to the formal employment support program

The Ministry of Finance and Public Credit made a series of amendments to Legislative Decree 639 of 2020, which created the Formal Employment Support Program (Programa de Apoyo al Empleo Formal -Paef-).

In this editorial we offer you a parallel through which you may learn about the changes made to the Paef.

The Ministry of Finance and Public Credit issued Legislative Decree 639 of 2020, which created the Formal Employment Support Program -Paef-.

The purpose of said Paef is to grant a monetary contribution for the payment of the payroll of workers in small, medium and large companies that have suffered a decrease in their income due to the contingency that the country is currently going through due to COVID-19.

This subsidy will be equivalent to 40% of one legal monthly minimum salary in force -smmlv- ($351,121 for 2020) and will be granted up to three (3) times.

However, the Ministry of Finance issued Legislative Decree 677 of 2020, by means of which it modifies the aforementioned Legislative Decree 639 of 2020, including new beneficiaries of the Paef and, in turn, makes a series of modifications regarding the requirements to access it.

Amendments to Legislative Decree 639 of 2020

The following is a study of each of the articles and provisions that were modified in Legislative Decree 639 of 2020 through Legislative Decree 677 of 2020. This will be done by transcribing the articles, underlining the modifications.

Paef Beneficiaries

Through the new Legislative Decree 677 of 2020 a series of amendments are made to Article 2 of Legislative Decree 639 of 2020, among which is that the beneficiaries of Paef will no longer be only legal entities, but also natural persons, consortiums and temporary unions. In addition, modifications are made as to the requirements for the application to Paef.

Let’s see:

“It will be taken as a reference the date of registration of natural persons in the commercial registry, to comply with the requirement of incorporation provided for in numeral 1 of Article 2 of Legislative Decree 639 of 2020”

In addition to the above amendments, 4 paragraphs are added to this article, whereby the following is established:

–Thedate of registration of natural persons in the commercial registrywill betaken as a reference, to comply with the requirement of incorporation provided for in numeral 1 of Article 2 of Legislative Decree 639 of 2020.

– Natural persons willnotbe able to access Paef if they:

oHave less than three (3) workers reported in the integrated payroll for the settlement of contributions -Pila- for the February 2020 contribution period.

oAre politically exposed persons -PEP- or are spouses, permanent partners or relatives within the second degree of consanguinity, first degree of affinity or sole civil partner of the PEP.

– Individuals or legal entitiesthatform consortiums or temporary unions may not apply for the Paef in a particular manner with the workers that have applied through the consortium or temporary union. In the same sense, consortiums and temporary unions may not apply to Paef with workers who have applied individually as individuals or legal entities.

– Consortiums and temporary unions do not have to comply withtherequirement of registration or renewal of the commercial registry, instead they must provide a copy of the single tax registry -RUT-.

–Thechambers of commerce must allow the Pension and Parafiscal Management Unit -UGPP- and the financial entities to access the information systems containing the data of those who apply to Paef, in order to verify their identity.

Number of workers and amount of Paef’s contribution

Article 2 of Legislative Decree 677 of 2020 makes a series of amendments to Article 3 of Legislative Decree 639 of 2020, regarding the number or percentage of employees to be taken into account for purposes of determining the amount of the contribution:

In addition to the above, a paragraph is added to this article by which it is established that for the calculation of the monetary contribution each worker may be counted once. In the event that a worker has several employers, the contribution for the payment of his payroll will be granted to the first employer that has applied to Paef.

Procedure for applying to Paef

Article 3 of Legislative Decree 677 of 2020 makes a series of amendments to Article 4 of Legislative Decree 639 of 2020, regarding the documents and certifications that must be submitted by legal or natural persons and consortiums or temporary unions that are going to apply to Paef, the deadline for employers to pay what is owed to workers and the procedure that the entities in charge of the supervision and oversight of this program must follow regarding the handling of information. Let’s see:

In addition to the above modifications, paragraphs 6 and 7 of this article, which established the verification obligations by the UGPP of the requirements established through the modified paragraph 5, are eliminated.

Temporary nature of the Paef

Article 4 of Legislative Decree 677 of 2020 amends Article 5 of Legislative Decree 639 of 2020.

Through this modification, the exceptional term for the application to the Paef for beneficiaries who had the quality of debtors of guaranteed payroll credit lines, of the National Guarantee Fund, is eliminated. Let’s see:

Restitution of the monetary contribution

Through Article 5 of Legislative Decree 677 of 2020 an amendment is made to Article 8 of Legislative Decree 639 of 2020, by means of which the causes for which the beneficiaries of Paef must make the return of the contributions are reduced:

Unseizability of the resources granted to Paef beneficiaries.

Finally, through Article 6 of Legislative Decree 677 of 2020, an amendment is made to Article 8 of Legislative Decree 639 of 2020, whereby it is established that the monetary contribution granted through Paef may be seized once thirty (30) days have elapsed since the contribution has been delivered to the beneficiary through the financial entity. In addition, these resources may be paid to the financial entities in which the amount of the contribution is deposited and the beneficiary has obligations with them. Let’s see:

Source: Actualícese