Employers Offer Year-End Leave Allowances Meeting Minimum Wage Requirements
Under the terms of the Employment Relations Act, employers are obligated to provide year-end leave allowances to employees who have completed a year of service. This year, the minimum guaranteed payment is 1,481.88 euros, representing the net minimum wage. Since 2019, these allowances have been exempt from both contributions and taxes, up to the average gross wage.
Several employers have again opted to fully utilize this exemption, with banks notably among the most generous. OTP Bank, formed through the merger of Nova KBM and SKB, recently distributed payments totaling 2,830 euros gross (equivalent to the average gross wage of 2,804 euros last year) in March. In December, the bank provided 2,791 euros net, aligning with the average gross wage at that time.
The maximum possible untaxed and unpaid leave allowance currently stands at 2,791 euros. These payments reflect a commitment to rewarding employee tenure and align with established legal requirements. The bank’s actions highlight a continued trend of generous compensation practices within the sector.
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