Effective March 15, 2025, Greece will implement a new legislative measure aimed at reducing social security contributions by up to 43% for overtime, additional work hours, as well as work performed on Sundays and public holidays. This initiative seeks to alleviate non-wage labor costs, benefiting both employees and employers across all sectors of the economy.
Key Provisions of the New Legislation
- Reduction in Contributions: Under the new regulation, social security contributions for overtime, additional work hours, night shifts, and work on Sundays or public holidays will be calculated solely based on the standard hourly wage corresponding to regular eight-hour employment. The additional remuneration for these special working hours will no longer incur extra social security charges.
- Scope of Application: This adjustment applies exclusively to full-time employees across all sectors of the economy, aiming to increase their net income by reducing the deductions associated with extra working hours.
- Integration with the Digital Work Card: The reduction in contributions is linked to the implementation of the digital work card system, which will be activated in the catering and tourism sectors, covering approximately 50,000 businesses and over 500,000 employees. The accurate recording of overtime through the digital card is a prerequisite for applying the reduced contributions.
Benefits for Employees and Employers
- For Employees: The reduction in social security contributions leads to an increase in the net amount received for overtime, additional work hours, night shifts, and work on Sundays and public holidays, thereby enhancing their disposable income.
- For Employers: The decrease in employer contributions reduces the amount businesses are required to pay when employing staff for additional work hours, overtime, night shifts, and work on Sundays or public holidays, without affecting employees’ earnings. This reduction in non-wage labor costs aims to boost employment and increase investments.
Practical Example
Consider a full-time private sector employee with an average monthly salary of €1,342, who receives an additional €1,570 gross annually (€130.8 monthly) from overtime or additional work hours. Currently, the corresponding contributions amount to €552 annually, with €212 borne by the employee and €340 by the employer. Under the new regulation, these contributions will be reduced, resulting in increased net income for the employee and decreased costs for the employer.
Eurofast’s Perspective
At Eurofast, we recognize the significance of these legislative changes and their impact on both employees and businesses. Our comprehensive services are designed to assist clients in adapting to these developments effectively:
- Payroll Management: Ensuring accurate payroll processing in compliance with the updated regulations to maximize employee benefits and maintain employer compliance.
- HR Consulting: Advising businesses on optimizing workforce management strategies in light of the new measures, promoting both employee satisfaction and operational efficiency.
- Tax Advisory: Providing insights into the tax implications of reduced social security contributions and how they affect overall business finances.
By staying informed and proactive, businesses can effectively manage these changes, ensuring compliance and maintaining employee satisfaction.
For further information on how Eurofast can support your business in adapting to these changes, please contact us at [email protected].