What Should an Employer Take into Account When Calculating the (Minimum) Wage for Work Carried out in 2020?
What Should an Employer Take into Account When Calculating the (Minimum) Wage for Work Carried out in 2020?
Author: Manuela Hervatich, SELIH & PARTNERJI Law Firm
The Slovenian Minimum Wage Act (hereinafter “ZMinP”) lays out the right to the minimum wage, its amount and the conditions under which a transitional amount of the minimum wage may be paid, as well as the manner in which it is determined and published.
An employee who works full time for an employer in the Republic of Slovenia is entitled to payment for performed work of at least the minimum wage stipulated in the ZMinP. In the case of part-time work, a proportionate part of the minimum wage must be paid to the employee. The minimum wage represents the lowest possible monthly gross salary to which the employee is entitled, even if a lower one is provided in any collective agreement or employment contract. In such a case, the employer must pay the employee the difference up to the minimum wage.
The Act Amending the Minimum Wage Act, adopted by the National Assembly of the Republic of Slovenia on 13 December 2018, introduced some important changes which raise a number of questions for employers. Some changes take effect as of 1 January 2020 and others as of 1 January 2021.
When calculating the wage for work performed on or after 1 January 2020, the employer must take into account:
- the new gross minimum wage of EUR 940.58 which will apply to work performed from 1 January 2020 to 31 December 2020; and
- that the following no longer count towards the minimum wage:
- any allowance provided by law, regulation or collective agreement (including seniority allowance);
- payment for work performance; and
- payment for business performance agreed by collective agreement or an employment contract.[1]
There follows a practical example to aid clarity:
| from 1 January 2019 to 31 December 2019 | from 1 January 2020 to 31 December 2020 | |
| Gross minimum monthly wage stipulated in law | 886.63 EUR | 940.58 EUR |
| Monthly Wage for the month given | December 2019 | January 2020 |
| Basic gross wage | 600 EUR | 600 EUR |
| Seniority allowance | 100 EUR | 100 EUR |
| Minimum wage supplement | 186.63 EUR | 340.58 EUR |
| Gross wage of the employee | 886.63 EUR | 1040.58 EUR |
In practice, most questions from employers relate to the payment of allowances and their amounts.
The Employment Relationships Act (hereinafter “ZDR-1”) provides the following allowances:
- a seniority allowance,
- allowances for work in special working conditions, arising from the allocation of working time (ZDR-1 explicitly provides the allowances for overtime work, night work, work on Sundays and work on holidays and days off, however, the collective agreements may provide others); and
- allowances for special working conditions arising from special workloads, adverse environmental effects and hazards at work (ZDR-1 stipulates that these allowances shall be determined by collective agreement, if they are not already contained in the complexity of work).
ZDR-1 does not specify the amount of any individual allowance, but refers to the detailing of such an amount in collective agreements. The amount may be given as a nominal amount or as a percentage of the basic full-time wage[2] or the corresponding hourly rate.
What happens in those cases where no collective agreement is binding on the employer? In the past, opinions within the legal profession differed. However, on 21 May 2019, the Supreme Court ruled in its Decision VIII Ips 191/2018 that, owing to the principle of equality, the employer should take into account (a) the amount given in the collective agreement for this particular business activity (and that would apply were the employer bound by it), or (b) the amount given in any comparable collective agreement at the business activity level.
In the case considered by the Supreme Court in the aforementioned decision, the employee performed overtime work exceeding full time work and there was no collective agreement binding on the employer. However, this did not mean that the employee lost their entitlement to the allowance for overtime work. According to the Supreme Court, if no collective agreement is binding on the employer, the employee has to consider the regulation of this right in other collective agreements. At the time of the Supreme Court’s decision, most existing collective agreements provided an allowance for overtime work of at least 30% of an employee’s hourly rate.
If the employer does not grant the allowance to the employee, it interferes with a legal right of the employee.
What will the minimum wage be from 1 January 2021 ?
The ZMinP stipulates that from 1 January 2021 the minimum wage will be set at the sum of the minimum cost of living, increased by 20%, plus the tax and compulsory social security contributions for an employee who, during the tax year, in which the amount of the minimum wage is determined, does not claim any relief for dependent family members nor, other than the minimum wage and holiday allowance provided by law, has any other taxable income that would affect the amount of general relief.
However, a higher minimum wage may be decided upon, once the growth of consumer prices, wage alterations, economic conditions, and economic growth and employment trends are taken into account. The ZMinP also determines a maximum minimum wage, such that the minimum wage may not exceed the calculated minimum cost of living by more than 40%. Subject to the above conditions, the annual minimum wage will be determined by the minister of labour.
[1] It should be remembered that before the amendment of the ZMinP, the only allowances which did not count towards the minimum wage were those paid for work undertaken in special working conditions which arose from the allocation of working time (allowances for overtime work, night work, work on Sundays, work on holidays and days off under the law).
[2] The allowances are therefore calculated from the employee’s basic wage and not from the minimum wage.
Author: Manuela Hervatich, SELIH & PARTNERJI Law Firm
The Slovenian Minimum Wage Act (hereinafter “ZMinP”) lays out the right to the minimum wage, its amount and the conditions under which a transitional amount of the minimum wage may be paid, as well as the manner in which it is determined and published.
An employee who works full time for an employer in the Republic of Slovenia is entitled to payment for performed work of at least the minimum wage stipulated in the ZMinP. In the case of part-time work, a proportionate part of the minimum wage must be paid to the employee. The minimum wage represents the lowest possible monthly gross salary to which the employee is entitled, even if a lower one is provided in any collective agreement or employment contract. In such a case, the employer must pay the employee the difference up to the minimum wage.
The Act Amending the Minimum Wage Act, adopted by the National Assembly of the Republic of Slovenia on 13 December 2018, introduced some important changes which raise a number of questions for employers. Some changes take effect as of 1 January 2020 and others as of 1 January 2021.
When calculating the wage for work performed on or after 1 January 2020, the employer must take into account:
- the new gross minimum wage of EUR 940.58 which will apply to work performed from 1 January 2020 to 31 December 2020; and
- that the following no longer count towards the minimum wage:
- any allowance provided by law, regulation or collective agreement (including seniority allowance);
- payment for work performance; and
- payment for business performance agreed by collective agreement or an employment contract.[1]
There follows a practical example to aid clarity:
| from 1 January 2019 to 31 December 2019 | from 1 January 2020 to 31 December 2020 | |
| Gross minimum monthly wage stipulated in law | 886.63 EUR | 940.58 EUR |
| Monthly Wage for the month given | December 2019 | January 2020 |
| Basic gross wage | 600 EUR | 600 EUR |
| Seniority allowance | 100 EUR | 100 EUR |
| Minimum wage supplement | 186.63 EUR | 340.58 EUR |
| Gross wage of the employee | 886.63 EUR | 1040.58 EUR |
In practice, most questions from employers relate to the payment of allowances and their amounts.
The Employment Relationships Act (hereinafter “ZDR-1”) provides the following allowances:
- a seniority allowance,
- allowances for work in special working conditions, arising from the allocation of working time (ZDR-1 explicitly provides the allowances for overtime work, night work, work on Sundays and work on holidays and days off, however, the collective agreements may provide others); and
- allowances for special working conditions arising from special workloads, adverse environmental effects and hazards at work (ZDR-1 stipulates that these allowances shall be determined by collective agreement, if they are not already contained in the complexity of work).
ZDR-1 does not specify the amount of any individual allowance, but refers to the detailing of such an amount in collective agreements. The amount may be given as a nominal amount or as a percentage of the basic full-time wage[2] or the corresponding hourly rate.
What happens in those cases where no collective agreement is binding on the employer? In the past, opinions within the legal profession differed. However, on 21 May 2019, the Supreme Court ruled in its Decision VIII Ips 191/2018 that, owing to the principle of equality, the employer should take into account (a) the amount given in the collective agreement for this particular business activity (and that would apply were the employer bound by it), or (b) the amount given in any comparable collective agreement at the business activity level.
In the case considered by the Supreme Court in the aforementioned decision, the employee performed overtime work exceeding full time work and there was no collective agreement binding on the employer. However, this did not mean that the employee lost their entitlement to the allowance for overtime work. According to the Supreme Court, if no collective agreement is binding on the employer, the employee has to consider the regulation of this right in other collective agreements. At the time of the Supreme Court’s decision, most existing collective agreements provided an allowance for overtime work of at least 30% of an employee’s hourly rate.
If the employer does not grant the allowance to the employee, it interferes with a legal right of the employee.
What will the minimum wage be from 1 January 2021 ?
The ZMinP stipulates that from 1 January 2021 the minimum wage will be set at the sum of the minimum cost of living, increased by 20%, plus the tax and compulsory social security contributions for an employee who, during the tax year, in which the amount of the minimum wage is determined, does not claim any relief for dependent family members nor, other than the minimum wage and holiday allowance provided by law, has any other taxable income that would affect the amount of general relief.
However, a higher minimum wage may be decided upon, once the growth of consumer prices, wage alterations, economic conditions, and economic growth and employment trends are taken into account. The ZMinP also determines a maximum minimum wage, such that the minimum wage may not exceed the calculated minimum cost of living by more than 40%. Subject to the above conditions, the annual minimum wage will be determined by the minister of labour.
[1] It should be remembered that before the amendment of the ZMinP, the only allowances which did not count towards the minimum wage were those paid for work undertaken in special working conditions which arose from the allocation of working time (allowances for overtime work, night work, work on Sundays, work on holidays and days off under the law).
[2] The allowances are therefore calculated from the employee’s basic wage and not from the minimum wage.
