Employers in the Slovak Republic will need to take account of some significant increases in employment related costs in 2017. The main changes can be summarised as follows:
Increase in the minimum wage
From 1st January 2017, the government approved an increase in the minimum wage from €405 to €435 and an increase in the hourly minimum wage to €2.50 (from €2.32).
Under the Labour Code, unless the remuneration of employees is prescribed by collective agreement, the employer is obliged to pay an employee at least the minimum wage set for type of work he/she performs.
After relevant deductions, the gross minimum wage of €435 will leave take home pay of €374.11 per month.
Increase in travel allowance for domestic business trips
Since 1st December 2016, the amount of reimbursement provided for travel costs incurred on domestic business trips has increased, as follows:
- to €4.50 within a time zone of 5 -12 hours (an increase from €4.20)
- to €6.70 within a time zone of 12 - 18 hours (an increase from €6.30)
- to €10.30 within a time zone of over 18 hours (an increase from €9.80)
The increases in travel reimbursement costs also affects the value of meal allowances pursuant to the employer's compulsory contribution to meal expenses for employees.
Since 1st December 2016, the minimum value of meal vouchers has risen to €3.38. The maximum contribution for an employer (which is accepted as a tax expense) is €2.48.
Lifting the cap on health and social insurance contributions
Compared to the level of contributions applicable in 2016, the calculation of social insurance and health insurance contributions has changed in 2017.
From 1st January 2017, the former ceiling on income which applied to the calculation of health insurance contributions has been removed. As a result, employees and employers will pay health insurance contributions based upon unlimited income. The calculation will be based upon annual accounts, as well as advances.
The abolition of a maximum ceiling on the income which can be taken into account for calculation purposes since 1st January 2017 will mean that all income from employment, income from business, capital gains and otherwise will provide the basis of calculation for health insurance contributions.
In addition to the changes to the calculation of health insurance calculations outlined above, the amount of income that can be taken into account for the calculation of social insurance contributions has been raised. The ceiling applied to such income has increased from five times average monthly salary to seven times salary. The maximum contribution has increased from 1st January 2017 to €6,181 compared with €4,290 as previously applicable. The minimum contribution is not fixed but is indirectly determined by the minimum wage.