KPMG issues 2017 European minimum wage survey
KPMG issues 2017 European minimum wage survey
KPMG in Romania has issued a survey on minimum wage requirements in all EU and EEA member states and Switzerland. The survey is in its second edition, and this year it brings extra information on the status of the transposition of Directive 67/2014 / EU into the local legislation of each Member State
The study’s aim is to provide employers with valuable information on the legal requirements of the countries to which they intend to post their employees. This information will help employers to effectively plan international assignments and to ensure compliance with applicable laws in the countries where their employees operate.
The survey presents a general overview of minimum wage systems across Europe, as well as information on the main provisions of the Posting Directive. It also discusses the need for a new Directive. The Main Findings section of the survey includes visual representations of the minimum requirements across Europe, how these have changed during the past few years, the structure of costs incurred by employers in order to grant the minimum wage to their employees as well as effective tax rates applicable to the minimum wage per country. The Country by Country section includes information specific to each Member State on minimum wage requirements, administrative procedures as well as the status of implementing the New Directive.
As Mădălina Racovițan, Partner and Head of People Services at KPMG in Romania, explains: “Businesses recognize the advantages brought by a more flexible and mobile workforce, and they encourage movement of staff, especially within the European Community. The profile of employees is also changing and, in the context of globalization and digitalization, flexibility, in terms of time, location and the nature of the activity undertaken are becoming increasingly important for employers and employees alike. However, international mobility also raises challenges both for employees and employers and meeting the minimum wage requirements in the host country is only one of them.”
As Racovițan continues: “Determining the applicable minimum wage may be more difficult than it seems as not all Member States have a single national minimum wage. In many countries the applicable minimum wage depends on various factors such as the industry of the employer, the position of the employee or his/her age. Moreover, in certain sectors or industries, the minimum wage may be set through collective bargaining agreements, in which case the minimum national wage may no longer be relevant. If determining the amount of the applicable minimum wage sounds complicated, determining the remuneration items which may be included in the minimum wage is even more difficult. Certain Member States include all other remuneration items in the minimum wage, including per diems. In the opposite corner, there are those Member States where only the base salary can be taken into consideration.”
Compliance with minimum wage requirements is one of the rules imposed under the so-called “Posting Directive” (Directive 96/71/CE). Member States are in the process of implementing Directive 67/2014/EU, whose objective is to establish a common framework comprising a set of appropriate provisions, measures and control mechanisms, which will allow better and more uniform implementation, application and enforcement in practice of the Posting Directive, in order to prevent, avoid and combat abuse. Once the new Directive is transposed we expect the authorities in all member states to exercise more careful scrutiny when it comes to international posting of workers.
As Racovițan concludes: “The KPMG survey provides a starting point in planning an international assignment, helping employers gain an overview of potential costs and obligations. Nevertheless, given the complexity and the multitude of these issues, and the severity of the penalties for non-compliance, it is highly recommended that employers in this position should seek expert guidance on minimum wage legislation, to establish not only the amount which needs to be paid and the forms of income which this can include, but also to clarify the most appropriate legal framework.”
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