Support to restaurants for re-employment and compensation for imposed restrictions on activities

The Government has 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 changes caused by the statutory restrictions. The Government will submit the proposal to Parliament in the next few days.

To prevent the spread of the coronavirus, food service businesses’ operations have been severely restricted by legislation. Restaurants, cafés and licensed premises must be kept closed to customers throughout the country between 4 April and 31 May 2020. When approving the restrictions, 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 Parliament's requirements. For these reasons, we have prepared a support model for the restaurant sector,” Minister of Employment Tuula Haatainen explains.

“Our objective is to reasonably compensate 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,” Minister Haatainen says.

The amount of support and compensation depends on the company

The model prepared by the Ministry of Economic Affairs and Employment 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.

Support for re-employment:

• Supporting companies' ability to employ people when the business is resumed.
• 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 maximum amount of support is based on the number of full-time workers who worked in the company before the start of the crisis. The support may be granted to a company with a staff of a maximum of 800 persons.
• Any other support received by a company may affect the final amount of support.
• 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).

Compensation for the imposed restrictions on activities:

• 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 January–February. 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.
• 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 5%.
• Any financial support received from a Centre for Economic Development, Transport and the Environment or from Business Finland because of the coronavirus epidemic will be deducted from the amount of the compensation.
• The compensation is paid to companies mainly without the need for them to apply for it, in the form of a mass payment on the basis of company-specific VAT information received from the Tax Administration. For some companies, such as those that have applied for other forms of support, the compensation will be 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).
• The compensation is 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 on 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 is estimated at around EUR 83 million for two months.
• The Government's objective is that the act on supporting the re-employment of the food service sector and on compensation for the restrictions on their activities should enter into force as soon as possible. The entry into force of the act requires approval by the European Commission of the government support for businesses included in the bill. The government proposal is included in the third supplementary budget proposal for 2020.

The Ministry of Economic Affairs and Employment will provide information separately on the entry into force of the Act and on instructions for companies on how to apply for the support and receive compensation.

Inquiries:

Piia Rekilä, Special Adviser to the Minister of Employment, tel. + 358 50 396 3574

Timo Nevaranta, Special Adviser to the Minister of Employment, tel. +358 50 340 9483

Liisa Huhtala, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 047 062

Antti Neimala, Director General, Ministry of Economic Affairs and Employment, tel. +358 295 047 039

Jan Hjelt, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 048 940