Compensation for Employees Whose Work is of a Mobile Nature is abolished

From 1st June 2023, the transition period ends and abolishes the compensation for employees whose work is of a mobile nature or carried out in outdoor conditions or relating to travel or driving, stipulated in the Labor Code.

Until 31st October 2022, the Labor Code defined that employees whose work is mobile in nature or carried out in outdoor conditions, or involves travel or driving, should get compensation for the related increased costs during the actually worked time of such nature. However, these compensations could not exceed 50 percent of the basic (tariff) salary and were paid if business trip expenses were not paid to the employee.

The compensations were not subject to personal income tax and state social insurance contributions.

The Labour Code was amended on 28th June 2022, and statements related to the payments of these compensations were cancelled. New legislation defined

  • transition period from 1st November 2022 up to 1st June 2023;
  • and reduced compensation size from 50 percent to 30 percent of the basic (tariff) salary.

The legislator approved above mentioned changes in the Labour Code based on such arguments:

  • trying to reduce identified cases of employer abuses when compensations were used to pay the employee’s salary and avoid applicable income taxes and social contributions. According to the State Tax Inspectorate, huge compensations were paid in such sectors as construction, quarrying and fieldwork. In order to allow these sectors to adapt to the termination of compensations, a transitional period was established;
  • compensations negatively affected the employee’s position:

– annual leave calculations didn’t involve the mentioned compensations;

– also, above mentioned calculations weren’t involved during the calculation of social guarantees (sickness leave, pensions and other payouts);

  • with the elimination of compensation, wage increases are expected. Wage increase also leads to payment of all related taxes and assurance of related employee guarantees.

For more information or advice regarding compensation cancellation, please get in touch with ECOVIS ProventusLaw’s lawyers.

Prepared by Inga Olifer, a lawyer from the Labor Law Group of ECOVIS ProventusLaw

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