Introduction of 13th and 14th salary

Important news introduced from 1 May 2018 in the Labour Code (Section 118 paragraph 4 of LC) is so-called thirteenth and fourteenth salary. The following terms are used in the Labour Code: 

• Bonus salary that the employer may pay out to an employee for work on the occasion of summer holiday season (13th salary)

• Bonus salary that the employer may pay out an employee for work on the occasion of Christmas holidays (14th salary).

These payments represent a voluntary form of bonus paid out to an employee, therefore the following applies:

• The conditions of payment of the bonus (e.g. to whom the bonus shall be paid out, under what conditions and in what amount) are the matter of agreement between the employer and the employee or representatives of the employees;

• Pursuant to internal rules, some employees or group of employees may have the 13th and 14th salaries and other not. The amount of agreed 13th and 14th salaries may vary from case to case; however, nobody can be discriminated against.

This bonus is treated as salary; it is a part of the salary and shall be taken into account by the calculation of average earnings. 13^th and 14^th salary are determined as average earnings. The average hourly earnings are multiplied by the average number of working hours falling on one month of the year according to the weekly working time of the employee. The result is rounded to the nearest EUR cent upwards (Section 134 paragraph 4 of LC).

Exemption from tax and contributions

The total amount received from all employers, not exceeding EUR 500, is exempted from tax and contributions, providing the following conditions are fulfilled:

13th salary

Conditions of exemption from tax and contributions:

• The 13th salary must be paid out at least in the amount of the average monthly earnings of the employee.

• As at 30 April of the respective calendar year the employee must have worked for the employer at least 24 months in a row;

• The 13th salary is paid out in June (Section 130 paragraph 2 of LC).

14th salary

Conditions of exemption from tax and contributions:

• The 14th salary must be paid out at least in the amount of the average monthly earnings of the employee.

• As at 31 October of the respective calendar year the employee must have worked for the employer at least 48 months in a row,

• The 14th salary is paid out in December (Section 130 paragraph 2 of LC), and

• In June the employer paid out to the employee the 13th salary at least in the amount of the average monthly earnings