The draft law on annual allowance (13th salary and pension) has entered the parliamentary procedure and stipulates that employees are entitled to an annual allowance in the amount of 50% of the minimum monthly net salary in Montenegro, calculated for employees with jobs up to the V level of educational qualification, while pensioners would receive 40% of the lowest monthly pension.
This means that all employees, regardless of their qualifications, if the law is adopted, will receive 300 euros, and pensioners will receive 180 euros.
This bill was prepared by the Albanian Forum and it is planned that this law will be applied for the first time for the annual allowance for the year starting in 2025.
The amount of the annual allowance is considered earnings and is taxed in accordance with the regulations governing taxation.
According to the proposal, which Vijesti has access to, employees who are employed by an employer based in Montenegro, regardless of the form of ownership and organizational form of the employer, and pensioners who are entitled to a pension from mandatory pension and disability insurance in Montenegro, are entitled to an annual allowance.
The draft law also defines the proportional right of employees to a supplement. It implies that an employee who has worked for less than 12 months in a calendar year with a particular employer is entitled to a proportional part of the annual supplement, according to the number of months spent in employment with that employer, with a month of work longer than 15 days being counted as a full month. The time during which the employee was temporarily unable to work is also included in this time, in accordance with the regulations governing employment relations and mandatory health insurance.
An employee who works part-time is entitled to an annual allowance in proportion to the contracted working hours, unless he/she works half of the full working hours for childcare or part-time, in accordance with the regulations governing employment relations, in which case he/she is entitled to the full amount of the annual allowance. An employed person with a disability is entitled to the full amount of the annual allowance, if he/she is employed under special working conditions, in accordance with the regulation governing the employment of persons with disabilities.
"An employee who has worked for multiple employers in the same calendar year is entitled to an annual allowance from each employer in proportion to the duration of employment with that employer, in accordance with this law," the draft law states.
When it comes to the payment of annual allowance to employees - the employer is obliged to pay the employee the annual allowance no later than December 31 of the current year, and in the event of temporary insolvency, the employer may postpone the payment of the annual allowance, but no later than March 31 of the following year, whereby he is obliged to pay at least 30% of the annual allowance no later than December 31 of the current year.
The annual allowance is paid in cash, to the same account to which the salary is paid.
"The annual allowance is paid to pensioners through the Pension and Disability Insurance Fund, no later than December 31 of the current year. Funds for the payment of the annual allowance to pensioners are provided from the Budget of Montenegro, through the budget of the Pension and Disability Insurance Fund. Funds for the payment of the annual allowance to employees in the public sector are provided in the Budget of Montenegro, the budgets of local governments and other legal entities in accordance with the law regulating the remuneration of employees in the public sector. Funds for the payment of the annual allowance to employees in the private sector are provided from the employer's funds," the draft Law defines.
The amount of the annual allowance is considered earnings and is taxed in accordance with the regulations governing the taxation of earnings.
A legal entity – employer shall be fined from 2.000 to 10.000 euros for a misdemeanor if it fails to pay the annual allowance to the employee within the time limit and in the amount prescribed by this Law or if it pays it in violation of Articles 5 and 6 of this Law, while the responsible person in the legal entity shall also be fined from 500 to 1.000 euros for the same actions.
In the explanation of the law, the Albanian Forum explained that by proposing and adopting this law, the institute of annual allowance is introduced for all employees in the public and private sectors, as well as for all pensioners in Montenegro, with the aim of improving their financial situation in conditions of increased living costs, seasonal price increases and continuous inflation.
"The existing system of calculating salaries and pensions in practice does not provide a sufficient level of living standards during periods of highest costs, especially during the winter months, which is why it is necessary to intervene normatively in order to strengthen the social and economic security of citizens. Taking into account these economic and social circumstances, this law proposes the introduction of a mandatory annual supplement as a specific instrument for protecting living standards. Such a solution provides a transparent, simple and fiscally predictable support model, which is at the same time fair, because it applies to all employees and pensioners regardless of the amount of their personal income, and the amount of the supplement is based on objective statistical indicators," the explanation reads.
It is further stated that the normative solution establishes a stable framework in which employees are provided with an annual allowance in the amount of 50% of the average net salary from the previous year, while pensioners receive an allowance in the amount of 50% of the average pension.
"It clearly regulates payment deadlines, proportional application of rights to employees who have not worked the entire year, as well as sources of financing for the public and private sectors and for pensioners. It is particularly important that a favorable tax treatment is proposed, which exempts the amount of the annual allowance from paying taxes and contributions up to the prescribed limit, which further reduces the burden on employers and increases the real income of citizens. The adoption of this law is expected to have significant social and economic effects, including improving the living standards of more than 200.000 employees and around 100.000 pensioners, reducing the risk of poverty in the winter months, increasing domestic consumption, as well as stimulating economic activity, especially in small and medium-sized enterprises. This contributes to the modernization of the labor and social system and gradual approximation to European practices in the field of protection of workers and pensioners. The introduction of the annual allowance represents an important step towards creating a long-term sustainable, socially fair and efficient support mechanism, and justifies the adoption of this law," the explanatory statement reads.
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