With the publication of Decree-Law 82/2017, a regulation derogating from the Labor Code came into effect that also requires small businesses to negotiate collectively with employees for the purpose of implementing Decree 79/2017.

Why the new amendment

As a reminder, the previous Decree Law 79/2017 transferred part of the employer’s mandatory employee contribution to employees effective January 1, 2018.

Specifically, the government not only reduced the contribution level by 2 percentage points, from the current 39.25 percent to 37.25 percent in effect for 2018, but also decreed that 20 percent of the total employer contribution will be mandatorily transferred to the employee.

Consequently, as pointed out in the previous newsletter, in the absence of a gross wage adjustment by the employer, workers would have had their net wages cut as of Jan. 1.

Decree 82/2017 intervenes by establishing a new obligation for all companies (and thus regardless of the number of employees) to convene employees or their representatives (if more than 21 are employed), informing them of the new contribution regulations and negotiating a possible wage increase for the purpose of keeping the net wage unchanged.

Terms

The decree requires that in the interval between Nov. 20 and Dec. 20, 2017, negotiations regarding the negotiation of new gross wages in application of Decree 79/2017 be concluded by signing minutes.

In fact, the government wants mandatory employer-employee negotiations whose goal (assuming the employer agrees) is to adjust gross wages in order to maintain the same level of net wages.

Considerations

This latest decree imposes by obligation what some employers had already voluntarily planned to carry out, namely adjusting employees’ gross wages. In fact, the transfer of a portion of the contribution from the employer to the employee is a neutral transaction for the purpose of the employee’s business cost.

Instead, the perplexity is for the future i.e., whether this “maneuver” could be the prelude for a further (in 2018) increase in employer contributions (which “on paper” as of January 1 would be only 2.25 percent). It is appropriate for any further clarification to contact our HR department.

CM