The National Government supports companies through the Formal Employment Support Program (PAEF)

The National Government issued Decree 639 of 2020, creating the Formal Employment Support Program (PAEF) to protect formal employment through a subsidy for the payroll of companies whose income has dropped during this situation.

The aim is to prevent layoffs and encourage companies that laid off employees to rehire them, all for the benefit of workers, companies and the economy in general.

Through this Program, the National Government will subsidize the equivalent of 40% of a minimum wage for employees of companies and non-profit organizations whose income has fallen by at least 20% and that apply for this support.

The Program will provide a monthly contribution to affected companies during May, June and July.

The subsidy will be channeled through the financial system. To this end, teams from the Ministry of Finance and Public Credit, the Pension and Payroll Tax Management Unit (UGPP) and the Financial Regulation Unit (URF) are working with financial institutions on the regulation and implementation of the Program.

The National Government expects to start receiving the corresponding documentation at financial institutions from the week beginning May 18. In this way, the funds will be delivered during the last week of that month.

Given the Program's objectives, the state contribution may be used solely and exclusively to pay the salaries of the beneficiaries' employees.

Companies and their legal representatives that use the funds for any other purpose will face the applicable tax and criminal penalties.

The entities in charge of implementing the PAEF will have a website where people can look up the names of the companies, the amount and the number of employees for whom the contribution has been received.

(With information from the Ministry of Finance, taken from the Presidency's website)