According to an analysis by Smartree Romania, one of the leaders in Romania’s HR outsourcing market, 54% of the company’s clients will increase gross income for their employees so that they can maintain approximately the same net salaries as in 2017. Smartree processes payroll for 600,000 employees annually and has nearly 200 clients, primarily multinational companies but also some with entirely Romanian capital.

Starting in February, employee salaries in Romania will change due to recent legislative updates. These changes prompted companies to focus on salary budget planning at the end of last year. “To decide whether to adjust employees’ gross income, some Smartree clients used our forecasting services to determine the internal impact and make informed decisions. We provided them with several comparative salary calculation scenarios, based on the new situation, to arrive at the most accurate estimates,” said Adrian Stanciu, CEO of Smartree.

According to the company’s data, more than half of Smartree’s clients, specifically 54%, will increase gross income to maintain approximately the same net salaries as last year. Of these, 51% will adjust gross salaries through an addendum to the employment contract, 46% will compensate for the differences by granting gross bonuses, and 3% of clients will use two or more of these methods simultaneously. This means that some employees will have their salaries adjusted through an increase in gross pay, while others will receive bonuses.

The remaining 45% of Smartree’s clients have either chosen not to make salary adjustments at least for January or are expected to make a final decision soon. There is also one Smartree client whose employees will not be affected by this law, as their salaries are negotiated based on net income.

Smartree representatives noted that in many industries, there is a balance between those who have decided to increase gross salaries and those who have not yet taken any action in this direction. Companies in industries such as construction, construction materials, IT equipment and infrastructure, oil & gas, pharmaceuticals, services, IT consulting, and software development have chosen to raise employee salaries. Clients in fields like medical services, financial services, telecommunications, and the fashion industry have decided to maintain their current gross incomes for now or have not yet communicated their intentions.

All these measures follow the implementation of new legislative provisions on January 1, 2018, which amended and supplemented Law No. 227/2015 regarding the Fiscal Code. The changes include shifting social contributions from the employer to the employee. Additionally, the government has reduced income tax from 16% to 10%. Social and health contributions will still be withheld and paid to the state by the employer, so the money will only reach the employee on paper, as shown on the payroll.

Source: Zf.ro