Leveraging of the Epidemics Act through the Covid-19 Measures Act

Epidemic Act

Section 20 of the Epidemic Act contains, under the heading “Restriction of Operations or Closure of Commercial Enterprises,” a list of certain diseases and, in paragraph 4, the authority to expand this list by regulation. In fact, the Federal Minister of Social Affairs, Health Care, and Consumer Protection issued this regulation on February 28, 2020 (Federal Law Gazette II 74/2020) and decreed that the measures specified in § 20(1) to (3) of the Epidemic Act may also be taken in the event of an infection with SARS-CoV-2 ("2019 novel coronavirus"). This constituted a clear preparatory measure as early as February 28, 2020, for a regulation under the Epidemic Act.

Section 32 of the Epidemic Act, under the heading “Compensation for Loss of Earnings,” provides affected individuals with unlimited claims for compensation for loss of earnings against the federal government if they are “employed by a business that has been restricted or closed in accordance with Section 20” (Z 4) or “operate a business that has been restricted or closed in accordance with § 20.” Regarding the calculation of loss of earnings, § 32(4) of the Epidemic Act provides: “For self-employed persons and businesses, compensation shall be calculated based on comparable projected economic income.” This compensation does not distinguish between large and small businesses and recognizes that such “general burdens” must be shared among all taxpayers.

Under Section 33 of the Epidemic Act, claims for compensation must be filed with the relevant district administrative authority within 6 weeks of the lifting of the official measures.

COVID-19 Act

The COVID-19 Act(Federal Law Gazette I 12/2020) established certain support funds and enacted a federal law concerning provisional measures to prevent the spread of COVID-19 (COVID-19 Measures Act) was enacted. This law now serves as the basis for the relevant regulations.

The provisions on entry into force in § 4—where one would not normally expect to find such relevant regulatory content—include the following provision: “If the Federal Minister has issued a regulation pursuant to § 1 (Note: of this COVID-19 Measures Act), the provisions of the Epidemic Act concerning the closure of business premises shall not apply.” This completely nullifies claims for compensation for loss of earnings under the Epidemic Act, because actions are now taken not based on regulations under the Epidemic Act, but rather on regulations under the COVID-19 Measures Act.

Summary

• The regulation of February 28, 2020, initially established the requirements for regulations under Section 20 of the Epidemic Act, with the effect of providing compensation in accordance with Section 32 of the Epidemic Act. Claims under the Epidemic Act are unlimited in amount and apply to both employees and businesses.
• Contrary to this apparent plan, the regulations enacted as COVID-19 measures were not issued under the Epidemic Act, but rather under the new COVID-19 Measures Act, which precludes compensation for any loss of earnings resulting from these measures. This exclusion of compensation is not immediately apparent in the text of the law, but is “hidden” in the section on its entry into force.

Statement

If the legislature had intended to issue more far-reaching regulations, a simple amendment to § 20 of the Epidemic Act would have sufficed to specify the corresponding regulatory powers. The fact that the federal government originally believed § 20 of the Epidemic Act to be a sufficient legal basis for regulations is evident from the regulation dated February 28, 2020. This provision in the COVID-19 Measures Act would not have been necessary if the legislature had not specifically intended to preclude claims for compensation. Whether this approach by the legislature is constitutional—because an existing possibility for compensation was precluded after the outbreak of the epidemic —will be for the Constitutional Court ( VfGH) to determine. In its assessment, the Constitutional Court would, of course, have to take into account the extent to which a full liability for compensation on the part of the federal government would lead to an overburdening of the state budget, potentially resulting in “state bankruptcy.”

Our constitutional law experts are available to answer any questions or concern this regard and will be happy to examine the legal remedies available to affected individuals and companies.