Main work- and income-related changes in 2023
The year 2023 has been underway for a couple of months now. And this year, too, there have been quite a few changes in the fields of work and income. We have therefore set out details of some important changes for you below.
Higher minimum wage
The minimum wage has been increased by 10.15%. This change was announced on Budget Day and is primarily intended to limit loss of purchasing power. You can find details of the monthly, weekly and daily minimum wages applying from 1 January 2023 on the central government’s website.
Because many benefits are linked to the statutory minimum wage, these payments, too, are now higher. The benefits affected include benefits payable under the Participation Act, the Older and Partially Disabled Unemployed Workers Income Scheme (IOAW), the Older and Partially Disabled Former Self-Employed Persons Income Scheme (IOAZ), the Older Unemployed Persons Income Scheme (IOW) and the state old-age pension scheme (AOW), as well as surviving dependants’ benefit (ANW), benefits for young people with a disability (Wajong), unemployment benefit, benefit payable under the Work and Income (Capacity for Work) Act (WIA), disability benefit (WAO), sickness benefit and supplementary benefits.
Higher travel allowance
As an employer you can give employees using their own vehicle or public transport for work travel or who carpool a maximum tax-free reimbursement of €0.21 net per kilometre (previously: €0.19). Alternatively, employees using public transport for work travel can be reimbursed for the travel costs they actually incur.
Employment tax credit increase
The employment tax credit was increased on 1 January this year. This tax credit is granted to employees and taken into account when employers calculate payroll taxes due. Thanks to the employment tax credit, employees earning up to €115,301 will pay less tax this year, and so keep more of their earnings.
Transition payments on dismissal
The amount of any transition payment an employer has to pay when ending an employee’s contract (for whatever reason) depends on the monthly salary and on how long the employee worked for the employer. The maximum payable from 1 January 2023 is €89,000 gross. The maximum in the case of employees earning more than that amount is 1 year’s gross salary.
New rules for flexible contracts
This year, the government is going to issue new proposals for employees on flexible contracts. The plan is to:
- Introduce a basic contract for on-call/standby workers and ultimately end standby (‘zero hours’) contracts;
- Enable agency, seconded and payroll employees to undertake training;
- Give agency staff the same employment rights as employees;
- End ‘revolving door’ arrangements so that employers cannot keep offering employees one temporary contract after another.
Increase in tax-free home office allowance
Employers can pay the many people who are still working from home an extra allowance. From 1 January 2023, the maximum allowance is €2.15 net per day worked from home. Note, however, that you are not required by law to pay this allowance unless it is provided for in the collective labour agreement. For each day worked, employees can receive either a home office allowance if they work from home or a travel allowance.