Legal Alerts / 12 Dec 2013

Legal Alert – Employers’ Share of Funding of the Unemployment Benefits to Increase

As of 1 January 2014, the maximum amount of liability component of the unemployment insurance contribution shall be increased. The aim is to promote the employment of seniors by increasing the costs related to the termination of an employment relationship.

If an employment relationship is terminated after an employee reaches the age of 56 and he/she does not find a new job before retiring, an employer may be obliged to pay as much as 90% of the employee’s unemployment benefit costs. The employer is obliged to pay the maximum amount of these costs if its total amount of salaries being paid reaches the threshold of EUR 31,848,000 for the year preceding the termination. However, this law reform does not concern small employers since if the total amount of salaries being paid does not exceed the threshold of EUR 1,990,500; the liability component is not collected.

Furthermore, the possible obligation to pay the liability component is extended to concern long-term lay-offs as well.

At the same time both the employer’s and employee’s unemployment insurance contribution is to decrease. As of 1 January 2014, the employer’s unemployment insurance contribution shall be 0.75% of the payroll amount up to EUR 1,990,500 and 2.95% of the payroll amount for the part exceeding this amount. The employee’s contribution shall be 0.50% of his/her salary.

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