Regulation of domestic activities. New category of employees’ benefits

√     Domestic activities can be performed without a written individual employment agreement, but they can only be remunerated with domestic activities tickets
√     Lower taxation – 17.5% versus around 42% previously
√     The domestic worker becomes insured under the pensions and health care systems
√     Employers can grant employees domestic activities tickets as bonuses

Law No. 111/2022 (the Law) regarding the regulation of domestic worker’s activity has recently been published in the official gazette and establishes the legal framework for the performance of remunerated domestic activities. The Law will enter into force on 1st January 2024.

According to the Law, a “domestic activity” is an occasional, unskilled activity (cleaning/hygienic services, laundry/ironing services, tailoring services, food preparation services, personal care services, feeding, supervision of the dependent individual, babysitting) carried out by a domestic provider, with a minimum age of 16 years old, for the benefit of a household beneficiary. The domestic worker cannot be a family member of the household beneficiary.

Most relevant provisions of the Law include:

  • Domestic activities can be performed without an individual employment agreement. The parties will determine the specific activities and their duration, however, within a daily limit of 12 hours (6 hours for domestic workers under 18 years old).
  • The remuneration of the domestic worker is done exclusively with domestic activities tickets, issued electronically or on paper, valid for 12 months, having a value of 15 RON (the value may change annually). The income generated by the tickets does not interfere with the unemployment or minimum guaranteed income payments which the domestic worker can continue to receive.
  • The domestic activities tickets will be acquired by the householder beneficiary (and afterwards cashed in by the domestic worker) from the county/Bucharest employment agencies, from posting agencies or from the electronic platform for recording the performance of domestic activities (currently not set up). The tickets are not transferable, and they cannot be used to acquire goods or services. While the household beneficiaries will acquire the tickets at their nominal value, the domestic workers will receive the value of the tickets after the deduction of the income tax and the social security contribution (both calculated at the 50% of the actual nominal value of the tickets).
  • The domestic worker is covered by the public pensions system and if such worker requests the cash in of at least 85 domestic activities tickets each month, he/she will also be covered by the health insurance system.
  • Employers can grant domestic activities tickets as bonuses to be used by their employees as householder beneficiaries.

Currently, working without an individual employment agreement is an administrative offence and triggers fines of RON 20,000/individual as well as potential fiscal implications. Following the application of the Law, householder beneficiaries will be able to contract domestic work in a more flexible, less formalistic way, provided however that they use domestic activities tickets for payment (since the Law basically establishes an exception mechanism from the current legislation, if payment is not done, in line with the Law, with domestic activities tickets, the sanctions for work undertaken in the absence of an individual employment agreement should continue to apply).

 

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