Amendments to Labour Act to prevent consecutive fixed-term contracts

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The government on Thursday formulated amendments to the Labor Act (ZOR) to prevent unjustified consecutive fixed-term employment contracts, limiting the duration of those contracts to a maximum of three years for the same worker.

The amendments to ZOR that the government sent to the Sabor during a cabinet meeting are an integral part of the government's program and are included in the National Recovery and Resilience Plan (NPOO).

Two EU directives to be incorporated in Croatian legislation

The amendments will transpose two EU directives into Croatia's legislation - on the balance between private life and work and on transparent and predictable working conditions.

The proposed amendments introduce a new way of performing permanent seasonal jobs, including work for an open-ended period and the possibility of working outside the season, Minister of Labour, Pension System, Family and Social Policy Marin Piletić said.

Fieldwork, work from home or remote work is regulated in more detail, as is the additional protection of certain categories of workers, primarily parents of children up to eight years of age in case of unequal working hours and overtime work.

Also regulated is additional work for another employer without the consent of the parent employer and with a greater number of permitted hours of this type of work (eight hours per week or longer, but no more than 16 hours per week).

The right to an unpaid leave of five days a year to provide personal care to a family or household member and the right to be absent from work for one day due to urgent family reasons are also being introduced, the minister underscored.

New form of work - via digital platforms

The bill also regulates the obligation to contract salaries in gross amounts and their payment into an employee's transaction account.

The bill regulates a new form of work, through digital work platforms (e.g. Glovo, Bolt, Uber, etc.), in order to protect people employed in this way, but also to promote this new form of work, which already exists on the market.

The abolishment of the right to a notice period and severance pay is being introduced for workers who qualify for old-age pensions in order to encourage employers to retain older workers.

The new labour act would enter into force on 1 January, while provisions related to digital work platforms would enter into force on 1 January 2024.

Bill to suppress undeclared work

The Bill on Suppression of Undeclared Work, which was also sent to parliament today, is expected to enter into force at the beginning of next year as well.

It defines undeclared work and defines procedures for bodies involved in combatting undeclared work, as well as the procedure for the transition of workers from illegal to legal frameworks.

The law regulates the obligation to pay a worker's salary and all public levies and compensation for each undeclared worker, as well as the establishment of a single electronic register for workers and the self-employed and other persons who work through digital work platforms.

It establishes a legal framework for the introduction of the responsibility of the contractor for the payment of wages to subcontracted workers, including all mandatory benefits.

"The law introduces a so-called black list of violators, but also a white list of employers who operate in accordance with the law," Piletić underscored.

The law also provides for the establishment of a register of inactive persons.

Lowered excise taxes on unleaded petrol and diesel to continue for another month

The amount of excise tax on unleaded petrol and diesel fuel was reduced by HRK 800 and HRK 400 per 1,000 litres respectively, or by HRK 0.80 per litre of unleaded petrol and by HRK 0.40 per litre of diesel, Finance Minister Marko Primorac said at the cabinet meeting.

The amounts of the excise taxes remain aligned with the minimum excise taxes set by the relevant EU directive, he added.

Since 7 March this year, the government has amended the decree on excise taxes on unleaded petrol and diesel fuel six times as part of its measures to mitigate rising energy prices.

Over the next 30 days the government expects HRK 108.4 million less in budget revenues from excise taxes on energy products.

Nontaxable allowance for dependents to be increased to HRK 24,000 annually

Also sent to the parliament were amendments to the law on administrative cooperation in the field of taxation requiring digital platforms to report to the Tax Authority on activities in their users' accounts.

The amendments to the Income Tax Act raise the amount up to which a physical person may be considered a dependent person from the current HRK 15,000 to HRK 24,000 annually, which is equivalent to six prescribed basic personal allowances.

Finance Minister Marko Primorac said this regulation would be applied when making an annual income tax calculation for 2022 and onwards.

Dependent family members and dependent children are currently physical persons whose taxable allowances, allowances for which no taxes are paid and other allowances that are not considered income do not exceed HRK 15,000 annually, so consequently no income tax is levied on money earned by students who work via student associations up to that amount.

The government now proposes increasing the amount of non-taxable allowances to HRK 24,000 annually.

Explaining its proposal, the government says that it is aimed primarily at encouraging young people who are trying to gain work experience during their studies to become more active in the labour market.

Since in the past few years demand was noticed for workers in the domestic labour market, notably the tourism sector during the peak tourist season, student work would help temporarily and partially deal with that increasingly present problem.

Greater seasonal employment of students in the tourism sector would reduce the need for foreign labour as well.

In the context of the government's efforts to help citizens in the energy transition, Minister Primorac said that an amount would be set for physical persons installing solar panels up to which their income from the sale of electricity generated by solar panels would not be taxed and they will have to pay income tax only if that way they earn more than HRK 10,000 annually.

Digital platforms will be obliged to provide information on user activities

Adoption of the amended EU directive on administrative cooperation in the field of taxation in relation to cross-border arrangements also expands the scope of the mandatory automatic exchange of information between EU members regarding activities carried out via digital platforms.

The amendments will oblige operators of digital platforms to provide information about commodity retailers and service providers who market their services and goods through these platforms.

The reporting obligations would apply to any platform operator who is resident for tax purposes in an EU member state and to those who are not resident but enable the relevant activity to be carried out by the reportable sellers or relevant activities, which includes the rental of real estate located in an EU member state. In future, platform operators will be obliged to provide the Tax Administration with information on the sale of goods, the rental of any type of transport, personal services and the rental of real estate via digital platforms.

According to the government's explanation, the goal is to include receipts generated by performing activities via digital platforms in multiple jurisdictions in order to prevent tax evasion and increase tax transparency.

The proposed amendments also take into account the introduction of the euro currency from the beginning of next year.