This article, authored by Veton Qoku, was originally published in the 2016 European Update Brochure published by Shepherd and Wedderburn LLP.
The Macedonian employment law has recently undergone several amendments, including termination of mandatory payment of contributions for social and health insurance, and amendments to employees' annual leave bonus (regress). Amendments to the country's minimum wage regulation have also been proposed. The new Law on Misdemeanours, enacted in 2015, is broad in scope and has had an impact on all Macedonian laws, including employment related legislation.
Termination of the obligation for mandatory payment of contributions for health and social insurance
As of 1 August 2015, service contracts, authorship contracts and all other contracts from which natural persons generate income by performing physical and/or intellectual services (Non-Employee Services Contracts) are no longer subject to mandatory social and health insurance contributions (Mandatory Contributions), but are subject to a fat personal income tax rate of 10%. The only exceptions are:
- of limited liability companies; and
- members of Boards of Directors and members of Managing Boards in joint stock companies, if such individuals are not employed in the respective company, where the obligation still applies.
These changes almost entirely repeal the current Mandatory Contribution payment system.
Labour Law and Collective Bargaining Agreement in the private sector
The Labour Law has been subject to several amendments mainly with respect to misdemeanour procedures conducted within an employer, as well as other amendments related to compensation paid to employees.
Law on Misdemeanours triggered amendments to the Labour Law
In July 2015 the Labour Law was harmonised with the new Law on Misdemeanours, which prescribes a new method for calculating ines imposed on legal entities. This method of calculation takes into consideration the offender's revenue, the number of employees and previous behaviour as relevant in determining the amount of the ine. Previously, misdemeanours were subject to predetermined monetary ines, or ranges of ines, which were often considered to be unfair to small and medium-sized enterprises which were ined on the same basis as large corporations. Following harmonisation, employers arenow subject to ines determined on a case-by-case basis in accordance with the above criteria.
General Collective Bargaining Agreement in the private sector
As of 2014, the Federation of Trade Unions and the Organisation of Employers of Macedonia agreed on the obligation for payment of an annual leave bonus to every employee in the private sector who has been working in a respective company for more than six months in the ongoing calendar year. This bonus is at least 40% of the national average net monthly salary.
In July 2015, both parties' representatives agreed to an exception to this obligation for companies facing inancial dificulty. Employers in inancial dificulty will now be able to negotiate and agree with their trade unions on a lower rate of the annual leave bonus than that prescribed by the General Collective Bargaining Agreement for the Private Sector.
Proposed amendments to law on minimum salary
New amendments to the national minimum monthly net salary are in the process of being adopted before the Macedonian Assembly. The currently proposed amendments, if adopted, would increase the national minimum wage from MKD 10,080 to MKD 11,000 (approx. €163 and €178).