The Ministry of Labour, Employment, Veteran and Social Affairs issued an official interpretation on 28 September 2026 addressing the calculation of increased wages for past work (uvećana zarada za minuli rad) when the employee’s base salary has already been increased due to other statutory supplements (e.g., night shift, hazardous conditions, or seniority bonuses). The question arose from Article 94 of the Labour Law and the Rulebook on Salary Calculation, which define “increased pay for past work” as a supplement paid when a salary increase is awarded retroactively. The interpretation confirms that the supplement must be calculated on the total enhanced base, including all permanent salary supplements that were in effect during the retroactive period. This means if an employee received a 10% base salary increase effective 1 January 2026, but the decision was formalized only in September 2026, the arrears for January–August must reflect the higher base plus any applicable supplements (night, weekend, hazard) for each month. The ruling applies to all employers, public and private, and is effective for calculations performed after 1 October 2026. Employers must adjust payroll systems to apply the supplement on the composite base, not just the basic salary.
Key Takeaways
- Composite Base for Retroactive Supplements: The increased pay for past work (zarada za minuli rad) is calculated on the full gross salary base applicable in each retroactive month, including all permanent supplements (night work, overtime premiums, seniority, field allowances). This increases the total arrears payable and the corresponding social security contributions.
- Immediate Payroll System Updates Required: Employers must reconfigure payroll software by 1 October 2026 to apply the correct base. Failure to do so will result in underpayment of wages and contributions, exposing the employer to labor inspectorate fines (up to RSD 2,000,000 per violation) and employee claims for back pay with statutory interest.
- Interaction with Tax Exemptions and Caps: The higher gross arrears may push certain employees above the annual cap for reduced pension contributions (for salaries above 3x average wage) or affect personal income tax progression. Employers should run parallel simulations for Q4 2026 to quantify the budget impact.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement