In the current situation of a national state of emergency, the number of companies whose activities have been partially or totally affected is on the rise. This includes firms in the construction sector. According to a press release issued by the Ministry of Labor, there are currently over 1 million individual labor contracts suspended and over 200,000 contracts terminated, with nearly 28,000 of these in the construction field.

In this context, while some construction companies are already resorting to layoffs due to the halt in activities, for others, the issue of technical unemployment is an option to consider. However, unlike other industries, the construction segment has been benefiting from certain tax incentives since last year, which raises specific questions: Can employees in the construction sector receive unemployment benefits? Under what conditions? Do the tax incentives still apply?

What Are the Tax Incentives for the Construction Sector and the Conditions Under Which They Are Granted?

On the other hand, the construction industry is one of the few fields where, currently, both employees and employers benefit from a series of incentives, provided that the requirements outlined in the Fiscal Code, Article 60, paragraph 5, letters a) – e), are met for the period from January 1, 2019, to December 31, 2028.

One of the most significant tax incentives is the exemption from income tax, which applies if the gross monthly income from salaries and salary-related income is calculated based on a gross salary for 8 hours of work per day, amounting to at least 3,000 lei per month and up to 30,000 lei.

Additionally, the employees’ social security contribution (CAS) has been reduced from 25% to 21.25%, and these individuals are exempt from paying contributions to the privately managed pension fund. This category of employees also benefits from the exemption from health insurance contributions (CASS).

During the aforementioned period, for employers conducting activities in the construction sector, the employer’s contribution for social security (CAM) is reduced to the rate allocated to the Guarantee Fund for the Payment of Salary Claims. Moreover, employers of individuals whose salary incomes are exempt from income tax are also exempt from paying the CAS owed for work performed under special or extraordinary conditions.

However, to benefit from all these incentives, employers must engage in construction activities, the CAEN codes of which are explicitly mentioned in the Fiscal Code, and must achieve a turnover from construction activities of at least 80% of their total turnover, calculated cumulatively from the beginning of the year, including the month in which they apply for the exemption.

Under What Conditions is Technical Unemployment Compensation Granted While Maintaining Tax Incentives?

If these companies are forced to place their employees on technical unemployment, the employees are entitled to unemployment benefits. For them to continue benefiting from the above-mentioned incentives, it is necessary to meet the same conditions included in the regulatory act, including the condition stated in Article 60, paragraph 5, letter a of the Fiscal Code: “employers engage in activities in the construction field…”

A specific characteristic for this industry is that to access both technical unemployment benefits and the specific tax incentives simultaneously, the activity must not be completely interrupted but only partially, and all conditions mentioned in Article 60, paragraph 5 of the Fiscal Code must continue to be fulfilled.