When social contributions were transferred from employers to employees on 1 January 2018, many employees risked having to pay money out of pocket.
How could an employee end up with a negative net salary?
For employees working fewer than eight hours a day and earning a gross salary below 1,900 lei, the social insurance contribution and health insurance contribution were calculated using the national minimum gross salary of 1,900 lei.
Consider an employee with a two-hour-a-day individual employment contract and a minimum gross salary of 475 lei.
The contributions were:
- CAS at 25% of gross monthly income, but calculated on a minimum base of 1,900 lei: 475 lei
- CASS at 10% of gross monthly income, but calculated on a minimum base of 1,900 lei: 190 lei
- Total social contributions: 665 lei
- The employee's net salary: 475 - 665 = -190 lei
What did ANAF say?
At the end of the previous year, ANAF held an online guidance session on social contributions and income tax payable on salary income from 1 January 2018.
ANAF gave a striking answer to the following question:
Question: For a two-hour part-time contract with gross income of 500 lei, the net amount payable becomes negative. Was this intended, or is it an omission that needs to be regulated?
Answer: Under the legal provisions entering into force on 1 January 2018, namely Government Emergency Ordinance no. 79/2017, mandatory social contributions are borne by the individual employee. The employer is responsible only for calculating and withholding them, paying them to the state budget, and filing the return on social contribution liabilities, income tax and the nominal records of insured persons for each income recipient. Based on the legal provisions issued to date, we consider that the "negative net amount payable" should be resolved through negotiation between the employee and employer.
The law therefore did not regulate this situation. Employers were expected to address it by increasing the employee's gross salary to at least 666 lei, as shown below:
- CAS at 25% of gross monthly income, but calculated on a minimum base of 1,900 lei: 475 lei
- CASS at 10% of gross monthly income, but calculated on a minimum base of 1,900 lei: 190 lei
- Total social contributions: 665 lei
- The employee's net salary: 666 - 665 = 1 leu
An employee with a two-hour-a-day employment contract therefore needed a gross salary of 666 lei to receive 1 leu net.