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Amending Law and Regulations on Social Insurance

Amending Law and Regulations on Social Insurance

In June 2017, the House of Representatives voted on the Social Insurance (Amending) (No. 2) Law of 2017 and the Social Insurance (Contributions) Amending Regulations of 2017, according to Baker Tilly. The Law and the Regulations provide for the imposition of severe penalties in cases of undeclared work as well as differentiation in the process of commencement of employment.

The most important amendments to the Law and Regulations are the following:

1. Imposition of Administrative Sanctions on employers

When an inspector identifies an undeclared employment, he imposes to the employer €500 for each employee for the month of the infringement, increased by €500 for each calendar month or any part of the calendar month of employment prior to the month of the violation.

No fine is imposed for any calendar month of employment preceding the date of enforcement of the amending Law, i.e. before 2 June 2017.

When the inspector identifies a case of undeclared/understated remuneration, he imposes to the employer an administrative fine of €500 for each employee, including an illegally employed employee, in respect of whom the offense was committed.

There is no administrative fine for undeclared/understated remuneration prior the enforcement of the Amended Law.

The total administrative fine imposed on an employer employing up to 10 insured   persons   may   not   exceed €10,000 for each case.

The inspector, upon imposition of any identification of the offence and prior to administrative fine, draws up and gives to the employer notification of his findings and his intention to impose administrative fine. The employer has 5 days to present evidence that he has not committed the infringement.

In the event that the time limit expires or the employer failed to provide evidence that he has not committed the infringement, the inspector will draw up a Fee Imposition Act.

If the administrative fine is paid within 30 days, then it is reduced by 30%, and in case of late payment it is increased by 50% for each day of delay.

The above do not apply to households with regard to the employment of household workers or persons providing medical care services to members of the family.

 

2. Minimum period of employment

The employee in respect of whom the offense was committed is presumed to have been employed by the employer for the immediate preceding 6 months from the date of the identification of the offense, with salaries equal to one and a half times of the basic insurable earnings, unless the employer proves a shorter period Employment or lower remuneration.

Where it is established that the period of employment was longer than 6 months and / or the amount of the remuneration was greater than the presumed, then the actual period and / or the actual amount of remuneration shall be taken into account.

 

3. Suspension of Employer Work

If an employer is fined an administrative fine for a second time within two years, then the case is referred to a Committee composed of the Director of Social Insurance (as President) and two officers of the Ministry of Labour, Welfare and Social Insurance (as members). The Committee shall have the power, in a reasoned decision and with the agreement of the Minister, to order the temporary suspension of the operation of the undertaking or its divisions for a period not exceeding 48 hours.

 

4. Right of objection

A person who is not satisfied by any decision may, within 15 days of the notification of the decision, file an objection to the Protest Committee consisting of the Director General of the Ministry of Labor, Welfare and Social Security and 2 Officers of the same Ministry. The Minister and who are hierarchically superior to the inspector who imposed the administrative fine, stating in writing the reasons for the objection and providing the necessary supporting evidence funds and documents.

Submission of an objection does not inhibit the validity of the decision taken.

The Appeals Committee examines the objection and decides within a reasonable time and communicates its decision to the person who filed the complaint.

In dealing with the objection, the Protest Committee may instruct an officer of the Ministry of Labor, Welfare and Social Security or other persons in the Ministry or a committee of ministry officials to examine the issues raised in the complaint and to submit a report to  the  Protest  Committee  before issuing it.

The Complaints Commission has the right:
 
Reject all or part of the objection and validate the decision accordingly.
Endorse   all   or   part   of   the objection and cancel the decision accordingly.
Amend the decision.
Make a new decision to replace the first one.
Refer the case to the Director, instructed to take a specific action.
 

5. Transitional provisions

From the date of entry into force of the amendment (2 June 2017) and for   a   period   of   3   months   (2m September 2017), employers have the opportunity to initiate the necessary declaration of undeclared employees as well as to pay any overdue contributions by avoiding the imposition of any Administrative fine.

 

6. Regulations

The application for registration is submitted not later than 1 day before the day the applicant expect to become an employer.

Every employee, at least one day before hiring, informs his employer of his / her identity number and number of social insurance. If the employee is not registered with the Social Insurance Services, the employer must provide him / her with an application for registration, which the employee completes and delivers.

Employer submits the employee's application to   the   nearest   District Social Insurances Office within 7 days of the day of recruitment of the employee.

Regulation 4A has been abolished, so the issue of the triptych for the attestation of employment is abolished.

Each employer shall notify the competent District Social Insurance Office of any recruitment of an employee by filling in and submitting a declaration no later than 1 day prior to the recruitment of the employee. This statement is submitted only electronically.

 The employer keeps a recruitment register in which he records the following data for each newly recruited employee by order of recruitment date:

the  serial  number  of  his  /  her recruitment
his / her surname
the date of recruitment
the  date  of  commencement  of employment
The regulations will enter into force on a date to be determined by the Council of Ministers, which will be designated by the Council of Ministers, with a notice to be published in the Official Gazette of the Republic.

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