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.  

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 10insured   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 has to be  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  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.

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 following records ( recruitment register)  has to be kept by the employer for each newly recruited employee by order of recruitment date:
  1. employee serial  number  of  his  /  her recruitment
  2. name
  3. date of recruitment/ commencement  of employment

 

The above 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.