17 June 2024
Minimum Wage Increase and New Tax Relief Measures Effective June 2024
Effective June 6, 2024, the government has enacted Decision 598/2024, raising the nationwide gross minimum basic salary. This excludes any allowances, bonuses, and other additions. On June 7, 2024, this was further supported by Government Emergency Ordinance 59/2024, which increases the non-taxable salary amount from 200 lei to 300 lei monthly. This means eligible employees will enjoy this tax relief until the end of 2024.
With these new measures, employees earning the gross minimum basic salary will see their net salary jump from 2,079 lei to 2,363 lei per month.
Enhanced Basic Deductions: Alongside the salary hike, basic deductions for employees earning up to 2,000 lei above the minimum salary will also rise. The maximum deductible amount from the net salary will increase from 660 lei to 740 lei, regardless of dependents. For those with dependents, personal basic deductions will rise accordingly, reaching up to 1,665 lei for employees with four or more dependents.
Employer Contributions: What You Need to Know Employers are required by law to pay social contributions (CAS and CASS) based on the gross minimum salary for all employees earning below this threshold. As the minimum wage increases to 3,700 lei per month, the base for these contributions also rises. This will impact operational costs for employers, especially those with a significant number of low-wage or part-time workers.
Increased Protection Against Garnishments: For employees earning below the net minimum wage, garnishments apply only to amounts exceeding half of this threshold.
With the nationwide increase in the minimum wage, the protected portion of earnings also increases, leaving employees with more take-home pay after garnishments.
24-Month Minimum Wage Rule: Under the Labor Code, the gross minimum basic salary can be applied to an employee for a maximum of 24 months from the start of their contract. After this period, the salary must exceed the minimum wage. Employers need to ensure compliance with this rule.
Higher Cap for Medical Leave Allowances: The maximum base for calculating medical leave allowances is set to 12 times the gross minimum salary per month. With the wage increase, this cap rises from 39,600 lei to 44,400 lei per month (gross).
No Extra Paperwork Required: The nationwide increase in the gross minimum basic salary is automatically enacted by law or applicable collective labor contracts, meaning no additional paperwork is needed for individual employment contracts. Employers should review if salary adjustments for minimum wage earners will necessitate raises for other employees at similar or higher pay levels.
These changes are set to increase employee earnings and improve financial security. Make sure your business is prepared for these updates to ensure compliance and take advantage of the benefits.
