Amendments to the Minimum Wage Act
In 2018, there was a gross minimum wage increase of 4.7% in the Republic of Slovenia, amounting to EUR 842.70 gross. The amendments to the Minimum Wage Act (Official Gazette of the Republic of Slovenia, nos. 13/10, 92/15 in 83/18, hereinafter ZMinP) mean an additional increase in the minimum wage, as according to the new legislation the minimum wage for (i) the work performed from 1 January 2019 until 31 December 2019 amounts to EUR 886.63 gross, and (ii) for work performed from 1 January 2020 until 31 December 2020 the minimum wage will amount to EUR 940.58 gross.
The amendments to the minimum wage will be implemented gradually until 2020. The amendment to the ZMinP envisages further increase on 1 January 2020 when minimum wage will be increased to EUR 700 net. It is furthermore provided that as of 1 January 2020 seniority allowances, allowances for work in unfavourable conditions as well as work and business performance bonuses shall no longer form part of the minimum wage.
Probably the most significant amendment is planned from 1 January 2021 onwards, when the minimum wage will be determined as the sum of the (i) minimum costs of living (in Slovenia) increased for 20% and (ii) taxes and obligatory social security contributions for the worker. In this case, the minimum wage will be determined by the Minister of Labour.
Even though the minimum wage only increased by EUR 44 gross on 1 January 2019 the amendment to the ZMinP caused a great stir and adverse reactions among the employers and employers’ associations when the proposal was first introduced. At the end of November 2018, the employers addressed an open letter to the Government of the Republic of Slovenia in which they wished to draw attention to the main problems arising from the amendments to the ZMinP.
One of the employers’ main concerns was the fact that the new definition of the minimum wage will cause an enormous increase in wages because all the allowances as well as work and business performance bonuses etc. will no longer form part of the minimum wage. Similarly, the amendments could lead to the situation, in which some remuneration brackets in specific collective agreements will merge into one, and thus to the situation that some employees carrying out more demanding work would receive the same or lower payment for work than the employees carrying out less demanding work. In the employers’ opinion, the problem also arises from the circumstance that the governing political party will decide on the exact amount of the minimum wage from 2021 onwards.
Despite the employers’ open letter, the National Assembly nevertheless adopted the amendments to ZMinP, and they entered into force on 25 December 2018. It remains to be seen what the repercussions will be for the economy.
