Macedonia

Mandatory employee benefits in Macedonia include pension, health, paid time off (including maternity leave and benefits), professional disease, and employment insurance. Supplementary employee benefits in Macedonia include formal education and non-formal education benefits, retirement, managerial insurance, private health insurance, and sports and leisure activities.

Mandatory Employee Benefits in Macedonia

Pension Insurance

The pension insurance system of the Republic of North Macedonia is a multi-pillar pension system. It is structured this way:

• Mandatory State organized I (first) Pillar defined by the Law on Pension and disability pension insurance that requires all employed persons to be registered and designated as pension contributors. The State Fund leads the System for pension and disability insurance. The date of Funds’ entry is related to the date of the first employment, a record that is acquired and maintained by the Agency of Employment. The insurance type is a pay-as-you-go system and is determined by the Defined Benefit Scheme.
  1. The volume of the pension contribution
  2. Replacement rate, which is defined in relation to the employment period and the time of retirement, and amounts up to a maximum of 80% of the earnings in the total period of employment
  3. Length of the insurance period
  4. Type of working time(full/part-time job), namely 40 hours/20 hours (or less) per week

The pension benefit is related to the retirement age of 62 years for women and 64 years for men, while the Law offers the possibility for optional (upon employee request) late retirement at the age of 67 (both for women and men) and a minimum employment period of 15 years. Certain professionals have lower minimums, and those employees also retire earlier.

• The Mandatory II (second) Pillar, a defined contribution pension plan, is mandatory for all employees who have formally started their employment after January 1, 2003 and are registered by the Fund for pension and disability insurance and voluntary for the employees employed before January 1, 2003 (this category of insured persons had, in 2019, the right to redefine their status by remaining in the combined Pension System or to switch to the I Pillar, as a one-time irrevocable decision). The II Pillar is also mandatory for all new first-time employees after January 1, 2019, who, at the date of their first employment, are younger than 40 years of age. The retirement age is linked to the previously stated I Pillar, thus offering a combined pension for this category of pension-insured employees. The mandatory II Pillar is organized by the current three Pension Funds that operate as open investment funds, with one portfolio for all contributors and without particular guarantees for returns on investment (RoI). The System is supervised by the independent Regulatory Body (MAPAS), responsible to the National Assembly of the country. The number of members of the I+II Pillar is 87% of the integral total pension system contributors (as of 1.1.2020, MAPAS Annual 2019 Report)
• Voluntary III (third) Pillar, defined as a voluntary defined contribution plan, offers possibilities for additional individual pension savings accounts and professional pension savings schemes, predominantly for the Professional pension Schemes, currently used by medium and large size mainly foreign companies (FDI) as an instrument for managers and employees rewards, work stimulation as well as for their retention. Membership at the III Pillar is available to foreigners and is not contingent upon employment or membership at the mandatory I and II Pillars.
• Disability pension can be acquired by an employee who has a general working disability, as well as an employee who cannot overcome the disability throughout the professional rehabilitation, defined by the following criteria:
• The disability is caused by a professional disease or a work injury, regardless of the length of the pension contribution period
• The disability is caused by an injury or disease outside of the workplace if the employee, prior to the disability, is older than 45 years of age and has at least 12 years of pension contribution period or
• The disability is caused by an injury or disease outside of the workplace, and the employee has 30 to 37 years of age, has a pension contribution for at least 30% of the working period, or if the employee has 37 to 45 years of age and has pension contribution period covering 40% of its working period.
• According to the law, the legal contributor is the employed person. However, the calculation and the payment of the pensions at the integral pension system, namely for pension contributors for the I Pillar (mainly older employees) and for the contributors to the combined I+II Pillar System (majority of the employees), is done by the employer, on a gross wage, declared, confirmed and accepted by the Public Revenue Office (PRO). The same procedure applies to the remaining social contributions (described below). The gross wage must be paid to PRO by the 15^th of the month, while employees receive the net wage, and social contributions are transferred to the respective Funds by PRO.
• The pension contribution rate is defined by the Ministry of Finance and is set as a total of 18.8% of the gross wage. For I Pillar members, the total percentage of 18.8% is distributed to the State Pension Fund. For members of the combined pension system, the distribution is the same percentage, with a contribution proportion of 12.8% for the I Pillar and 6% for the II Pillar. However, the latter is distributed as a back-office process at PRO and MAPAS, while the employer calculates and pays a total of 18.8%
• Employees performing hazardous and arduous work receive an extended length of service status, which allows for early retirement in various categories and in relation to the complexity of the work. These employees are mandatory members of the I Pillar, regardless of their age and employment period.
• Within the system, two limits exist for calculating social contributions. The minimum base for the contribution calculation is set at 50% of the average salary paid in January for the current year (€ 448, January 2020, State Statistical Office). However, the maximum level exists, set at 16 times the average salary paid in January for the current year. Above the defined maximum level, the employer does not calculate and pay the social contributions (pension, health, professional illness, and employment insurance), however, the personal tax is payable at 10% of the gross wage.
• As a result, employees that are contributors to the I Pillar are awarded a mandatory pension ranging from a minimum of €150 (regardless of the contributions and the amount of the salaries), the average pension of all categories is almost €250 up to the maximum pension of roughly €700 for a marginal group of pensioners. The combined pension has yet to be delivered. It will consist of the defined benefit I Pillar part (up to a 40% replacement rate) and the remainder, depending on the time of capitalization and the return on investment (RoI) of the invested assets.

Health Insurance

Health insurance for employees consists of the mandatory health insurance mandated by law. As an integral part of social contributions, regardless of whether individual employees are defined as contributors, employers calculate and pay the health contribution on behalf of their employees. As is the case with the pension contribution, this is paid on the gross wage, respecting the minimum and maximum base for the social contribution calculation. Currently, it is set at 7,5% of the gross wage for the employee. The transfers are directed to the Fund for Health Insurance, which is the state-organized and led system of public health. The average monthly contribution for the Health Fund was €33 (Health Fund 2019 Annual Report). Health contributors can contribute and cover health insurance for family members (spouse), dependents until 18, or dependents in the process of higher education until 26.

Public health insurance covers all employees’ needs for primary, secondary, and tertiary healthcare, with individual participation in health services and selected pharmaceutical goods at 20%.

Voluntary and complementary private health insurance can provide individual or family health coverage within the non-life and life insurance industry. This product is offered by 10 non-life companies and 4 life companies (complementary to life insurance), which vary in terms of covered risks and insured sums.

Paid Time Off

Maternity / Paternity Pay – Maternity Benefits

According to the Law on Health Insurance, women have the right to benefits for pregnancy, delivery, and maternity. The integral benefits are payable to the biological mother (including the surrogate mother) for a continuous period of 9 months or 15 months if twins or more are delivered at once.

According to the Report of the Health Authority, women can decide to start using the benefit 45 days before the expected week of delivery, as the mandatory period begins 28 days before the expected delivery date. That time is calculated within the 9 months of maternity pay. The benefit is payable at 100% of the wage and is transferred by the Health Insurance Fund on behalf of the Ministry of Labor and Social Affairs. In addition, if there are objective reasons for early pregnancy absence of work, the period of maternity pay can start as early as the Health Fund Specialist Commission confirms the need thus the benefits of 100% of the wage are applied earlier as the 9 months of maternity pay starts with the delivery. In these cases, the benefits are again paid by the Health Insurance Fund on behalf of the Ministry of Labor and Social Affairs.

The women can apply for the same benefits in cases of adoption of one child (for nine months) or for more than one child (for a period of 15 months).

If the mother or woman decides to return to work earlier, it can be done after 45 days of delivery, in which case she is entitled to an additional benefit of 50% of her wage, excluding the initial wage.

The benefit for maternity can be transferred to paternity, if desired, in both cases of delivery and adoption of a child or children.

Parental Leave

As previously stated, parental leave is declared for up to 9 months (for a child) and up to 15 months (for more than one child). Benefits are payable monthly at 100% of the parent’s last wage, but not exceeding four times the national average wage for the respective year. Parental leave can be exercised as an unpaid benefit for a maximum of 3 months within a total time frame of 3 years, concerning the need for childcare and support for the child’s or children’s growth.

Leave (Relief) for sickness, Professional disease, and benefit for travel expenses related to health services

Employees have the right to benefits related to specific work-related leaves caused by disease, occupational disease, and the need for health services. The volume of the benefit is typically set at 75% of the worker’s monthly average wage before the start of the temporary leave. The exemptions are applied for cancer diseases when the benefit is 85% of the worker’s wage and 100% of the worker’s wage in cases of pregnancy/delivery/maternity/paternity cases, injuries at work, professional disease, and in periods of blood, tissue, and body part donation and transfer.

In cases of caring for a child 3 years and younger, cases of pregnancy/delivery/maternity/paternity cases, injuries at work, professional disease, and in cases of blood, tissue, and body part donation and transfer, the benefits are paid by the Health Fund as from the first day of the leave. In all other cases, the benefits for the first 30 days are paid by the employer, while for the rest of the time, the Health Fund undertakes the responsibility.

For short-term leave up to 21 days, there is a different percentage for salary compensation (benefit) paid by the employer, ranging from 70% to 90%. However, the exemptions defined above apply consequently in such cases, and the volume of benefits can increase.

For all cases, general and particular conditions apply:

• The need for continuity of health insurance status, at least 6 months
• The obligation for continuous payment of the health contribution (by the employer, or by other institutions according to the laws), or by the maximum delay time of 60 days
• Particular and defined health documentation must be provided

Professional Disease Insurance

In relation to the employee’s right to professional disease benefits, within the same procedure for calculation and payment of the gross salary, the employer pays a 0.5% contribution rate of the gross salary for professional disease, as mandatory insurance for the employee for acquiring potential benefit for professional disease confirmed by the procedure involving primary personal physician and doctors from the secondary and tertiary health sector (specialists) integrated into the State Pension Fund Commission for working ability evaluation.

Employment Insurance

All employees are mandatorily insured against unemployment following the applicable legal provisions. For this purpose, within the same procedure, the employer calculates and pays the mandatory employment insurance, which is 1.2% of the gross salary. The employee benefits in case of unemployment consist of:

• Financial benefit
• Support for employment, such as training, requalification, and subqualification
• Health insurance
• Pension insurance for a period of 18 months for a person missing such a period for obtaining a minimum of 15 years of employment period as a precondition for acquiring an age pension

The unemployed person can apply for a benefit if they were employed (in different capacities) continuously for 9 months or discontinuously for at least 12 months in a total employment period of 18 months. The volume of the benefit depends on the calculated and paid salaries by the employer i.e. 50% of the average monthly net employees’ salary in the last 24 months if the person is eligible for benefits up to a period of 12 months, as well as for the person that is eligible for the benefit for a period more than 12 months, the benefit for the first year is set on 50% of the average monthly net employees’ salary and 40% for the rest of allowed period. In all cases, the maximum amount of the benefit must not exceed 80% of the national wage average, declared for the last available month.

The duration of the benefit can range from 1 month to 12 months, depending on the continuity or discontinuity of the employment status, except for insured persons who are eligible for the age pension, for which the duration can be extended to 18 months.

The Agency of Employment transfers the benefit, and the person receives full benefits and rights to healthcare, including the benefits defined above.

Rights for annual vacation and vacation benefit

Employees have the mandatory right to vacation, specifically a minimum of 20 working days and a maximum of 26 working days for full-time employees. For part-time employees, the vacation period is 10 days.  Additionally, employees are entitled to up to 7 days of mandatory leave for unforeseen, planned, or sudden events and family matters, as well as for educational purposes and defined circumstances. A legally defined benefit for vacation is defined as 40% of the average net salary for the last three months, thus ranging the benefit between 160 and 200 Euros.

Health Exams

According to the Law for Work Security and Health, all employers are mandatorily obliged to undertake several categories of employees’ health exams at accredited health institutions, public or private. The particular bylaws determine the health exams and vary from:

• Previous exams
• Periodical exams
• Targeted (focused) exams and
• Systematic exams

The health exams must be done at least once every 24 months, and all the costs are covered by the employer, including the exams for:

• General and detailed anamnesis
• Exams of the various body indices
• Basic blood laboratory exams
• Eye exams
• Audiometric exams
• Spyrometric exams and
• ECG

Additional payment for overtime

Employees have a legal right to additional payment for overtime work.

• Overtime = 35%
• Night work = 35%
• Triple shift = 5%
• Sundays and national holidays = 50%

Supplementary Employee Benefits

Formal education and non-formal education benefits

Following the growing demand for skilled and professional human capital, medium and larger domestic and foreign companies offer Programs for employees’ formal education continuation at the Master’s and Doctoral Levels, both nationally and abroad. Moreover, the demand for skilled and profiled employees is met by enrolling them in short- to medium-term non-formal specialist training and courses, sponsored by employers. This is not a common practice among employers, despite being defined by the Law on Labor Relations.

Retirement

Retirement benefits are not yet in place or developed. The only option for this is voluntary retirement savings within the III Pillar, offered by professional pension schemes organized by large domestic or foreign companies, such as those in the ICT industry, the financial corporate sector, or larger production companies. However, these options are primarily focused on employees in medium- to top-level management positions.

Managerial Insurance and Private Health Insurance

Medium and predominantly larger domestic and foreign corporations, within the ICT, financial, and production industry, offer particular managerial insurance as well as health insurance, from the non-life insurance industry or very limited offerings from individual and group life insurers. VHI is starting to be almost very common at foreign production companies located in the Technological Industrial Development Zones (TIDZ), as well in management in each more solid company in Macedonia.

Sports and Leisure Activities

Very few large domestic and foreign companies are offering employees incentives or sponsored activities for sports and leisure activities within the concepts of organizational health. The existence of internal gymnasiums is nonexistent, and support for employees’ healthy behavior is extremely limited, mainly achieved by few examples of gym centers in the companies or partial involvement in the CSR and humanitarian-orientated sports events such as skiing events, marathons, etc.

Workplace Canteens

Employees’ financial benefit for food and travel expenses was abolished in 2008 and such transfers were included in the employee’s gross salary. However, foreign production companies located in the Technological Industrial Development Zones (TIDZ) and larger domestic and foreign financial and ICT companies, offer employees either free catering or discounted price canteens and food/beverages corners. This practice has also become standard for employers with factory production and 200+ employees.

Transport Services

For companies that require distant travel, the employees are mandatorily offered and organized transport or additional wage benefit should be arranged if the transport is not arranged.

Voluntary Employee Benefits

In practice, the major companies used accident and disability insurance for their employee, which is not mandatory, but it’s most often applicable, covering the following perils:

• Accidental death
• Death from disease
• Permanent disability
• Daily allowance costs
• Treatment costs

Employee Perks

Common perks offered in Europe are not typical in Macedonia.  However, there are current incentives for designing, developing, and starting programs for improving the country’s human capital and in particular employees’ benefits and perks. The presence of such innovative, sustainable, and effective models could be seen as a strong competitive advantage for multinational employers.

This information about mandatory and supplemental employee benefits in Macedonia comes from Asinta’s Central and Eastern European Partner, the GrECo Group.