How to calculate salaries for mobility within the EU

Employee mobility has become increasingly prevalent within the European Union (EU), offering valuable opportunities for individuals to gain international experience and contribute their expertise across borders. As part of this dynamic workforce landscape, transnational secondments present exciting prospects for employees from one EU country to work temporarily in another. Understanding the intricacies of mobility salaries, along with obtaining a visa and work permit is paramount to ensure a seamless and rewarding experience for both employers and employees.

The Significance of Mobility Salaries

A well-structured mobility salary is more than just a mere paycheck; it is a comprehensive compensation package designed to support employees during their assignments abroad. Beyond the base salary, mobility salaries include various allowances, benefits, and perks tailored to meet the unique needs of the host country and the employee’s well-being. Crafting an effective mobility salary is crucial for attracting and retaining top talent, ensuring their motivation, productivity, and satisfaction throughout the assignment.

In the context of the EU, where workers have the freedom to move across member states, mobility salaries play a crucial role in promoting cross-border workforce mobility. By providing competitive and attractive compensation packages, companies can entice employees to take up assignments in different EU countries, fostering a diverse and skilled workforce across borders.

Understanding the Components of Mobility Salaries

a) Base Salary

The base salary forms the foundation of an employee’s compensation and is determined based on their job role, experience, and qualifications. The base salary remains consistent regardless of the employee’s location, providing a sense of stability during the secondment. It serves as the benchmark for calculating other components of the mobility salary.

The base salary is an essential consideration for employees, as it not only reflects their qualifications and expertise but also determines their financial security during the assignment. It is vital for companies to offer a competitive base salary that aligns with industry standards in the host country to attract and retain the best talent.

b) Secondment Allowance

Secondment allowances are crucial in assisting employees with the additional costs of living and working in a foreign country. These allowances cover expenses such as accommodation, transportation, and other living costs, which may significantly differ from the employee’s home country. A well-calibrated secondment allowance ensures that employees can maintain a comparable standard of living while on assignment, reducing financial strain and promoting a positive experience.

Secondment allowances vary depending on the host country’s cost of living and may be adjusted to cater to specific needs, such as family support or special accommodations. This flexibility ensures that employees feel valued and supported, contributing to their overall job satisfaction and performance.

c) Housing Assistance

Finding suitable accommodation in a foreign country can be challenging and time-consuming. To alleviate this burden, companies often provide housing assistance, which may come in the form of financial support or even pre-arranged housing options. By offering housing assistance, employers ensure that employees have a comfortable and secure living environment, enhancing their overall satisfaction and focus on work-related responsibilities.

Housing assistance is not only beneficial for the employee but also reflects the company’s commitment to ensuring the well-being and success of their transnational workforce. Providing reliable housing support builds trust and loyalty, strengthening the employer-employee relationship during the assignment.

d) Health Insurance

Health insurance coverage is essential during any international assignment. Employees need assurance that they can access quality healthcare services while abroad, protecting them from unexpected medical expenses. Providing comprehensive health insurance not only safeguards the well-being of employees but also mitigates potential disruptions in work caused by health-related issues.

Health insurance is a critical consideration in mobility salaries, as it directly impacts the employee’s physical and mental well-being. Access to adequate healthcare contributes to a sense of security and peace of mind, enabling employees to focus on their roles and responsibilities with confidence.

e) Tax and Social Security Considerations

The tax and social security landscape can vary significantly between countries. Employees on transnational secondments must navigate these complexities to ensure compliance with tax regulations and avoid double taxation. Companies play a crucial role in providing tax guidance and handling the necessary paperwork to ensure employees’ earnings are handled correctly, contributing to a smooth and hassle-free experience during the assignment.

Tax and social security considerations are of paramount importance in mobility salaries, as they directly impact the employee’s take-home pay and financial planning. Proper tax planning ensures that employees can maximize their earnings and manage their finances effectively while working abroad.

Understanding the Importance of Complying with Minimum Wage Laws

Ensuring that posted drivers receive the minimum wage applicable in the countries they work in is a major priority for authorities in Western European countries. To facilitate this, the European Labor Agency developed the IMI platform, requiring transport operators to register and declare posted drivers before each trip. The IMI platform streamlines monitoring and verifying proper wage payments for drivers working across multiple EU member states.

Complying with minimum wage laws is a legal obligation that companies must adhere to when sending employees on transnational secondments. It ensures that employees are fairly compensated for their work and protects them from potential exploitation. By complying with minimum wage laws, companies demonstrate their commitment to ethical employment practices and uphold their reputation as responsible employers.

Defining Transnational Posting Allowances

Transnational posting allowances are a crucial component of individual employment contracts for drivers. These allowances are essential to calculate the minimum wage, and it is crucial to distinguish them from per diems, which cover accommodation, transport, and meal expenses. Clear definitions of these allowances in employment contracts are vital to ensure accurate and fair salary calculations.

Transnational posting allowances are designed to bridge the wage disparities between an employee’s home country and the host country. By providing additional financial support, companies aim to ensure that employees receive a competitive wage, reflecting the local market conditions in the host country. Defining these allowances explicitly in employment contracts protects both the employer and the employee, ensuring transparency and fairness in compensation.

Implications of the Mobility Package

The Mobility Package has far-reaching implications for all workers embarking on transnational secondment assignments from Romania. These new regulations and guidelines, aligned with EU laws, directly impact salary calculations and working conditions for posted workers.

While some measures may seem impractical, it is crucial for employers and employees alike to comprehend these changes to ensure fair remuneration and adherence to EU laws throughout the secondment process. Staying well-informed about the Mobility Package will facilitate a smooth work permit process and guarantee successful transnational assignments for all involved parties.

Calculating Transnational Posting Allowances

The calculation of transnational posting allowances depends on the wage disparities between Romania and Western European countries. For drivers, the allowance is usually set at 50% of the average daily base salary. However, there is a limit to the amount that can be paid without being taxed, which is defined as 2.5 times the legal per diem value in Romania (e.g., 87.5 euros/day). Any amount exceeding this limit becomes taxable.

To calculate transnational posting allowances accurately, employers must consider the specific wage conditions of both the home country and the host country. By adhering to the legal limitations and guidelines, employers can avoid complications related to taxation and ensure that the posted workers receive a fair and competitive salary during their secondment.

Considering Variable Allowances

The transnational posting allowance can vary from one month to another based on the number of working days in each month. Operators need to carefully calculate and record the allowances to ensure compliance with wage regulations.

The variable nature of transnational posting allowances necessitates careful monitoring and record-keeping by employers. It ensures that posted workers receive the appropriate allowances based on their actual working days, preventing over or underpayment and maintaining compliance with wage regulations.

Examples of Romanian Employees on Transnational Secondments

Example 1: Romanian Employee on Transnational Secondment to Spain

Let’s consider the case of Andrei, a skilled software developer working for a leading IT company in Romania. The company decides to send Andrei on a transnational secondment to their branch office in Madrid, Spain, for a temporary assignment lasting 8 months, starting from July 1, 2023.

Local Registration Procedures

Before Andrei’s departure, the Romanian IT company ensures all the necessary paperwork is completed and submitted to the Spanish local authorities. 

Mobility Salary Components

• Base Salary: Andrei’s base salary in Romania is €45,000 per year.
• Secondment Allowance: To support Andrei during his temporary move, the company offers a secondment allowance of €800 per month, covering additional living expenses in Madrid.
• Housing Assistance: Andrei receives a housing stipend of €500 per month to help him secure accommodation in Madrid.
• Health Insurance: The company extends Andrei’s health insurance coverage to his time in Spain, ensuring he remains well-protected during the assignment.

• Travel Expenses: The company covers Andrei’s travel expenses for the initial journey to Madrid and the return trip to Romania once the secondment is completed.

Salary Calculation for 8 Months

• Base Salary: €45,000 per year / 12 months = €3,750 per month

Total Monthly Salary in Spain

• Base Salary + Secondment Allowance + Housing Assistance = €3,750 + €800 + €500 = €5,050 per month
• Total Salary for 8 Months: €5,050 per month * 8 months = €40,400

Tax and Social Security Considerations

During Andrei’s secondment, the Romanian IT company ensures compliance with tax regulations in both Romania and Spain, preventing any issues with double taxation. This meticulous approach safeguards Andrei’s earnings and ensures a smooth financial transition during his temporary assignment.

Example 2: Romanian Employee on Transnational Secondment to Germany

Next, let’s consider Maria, a marketing specialist employed by a Romanian multinational company. Maria’s company has an exciting opportunity for her to work on a marketing project at their branch in Berlin, Germany, for a duration of 12 months.

Local Registration Procedures

In preparation for her secondment, Maria’s employer takes care of obtaining the necessary local registration on her behalf. This ensures that Maria can legally work and reside in Germany during her assignment.

Mobility Salary Components

• Base Salary: Maria’s base salary in Romania is €36,000 per year.
• Secondment Allowance: The company offers a secondment allowance of €700 per month to cover the additional costs of living in Berlin.
• Housing Assistance: Maria receives a monthly housing stipend of €600 to assist her in finding suitable accommodation in Berlin.
• Health Insurance: The company extends Maria’s health insurance coverage to her time in Germany, ensuring she has access to medical services and support.

Salary Calculation for 12 Months

• Base Salary: €36,000 per year / 12 months = €3,000 per month

Total Monthly Salary in Germany:

• Base Salary + Secondment Allowance + Housing Assistance = €3,000 + €700 + €600 = €4,300 per month
• Total Salary for 12 Months: €4,300 per month * 12 months = €51,600

Please consider the amounts above as examples for the purpose of case studies. We strongly recommend checking the local laws and regulations for determining the correct remuneration for each soconded employee.

Inspection and Compliance

Inspections regarding the payment of the minimum wage are handled differently across EU member states. Romanian inspectors only have jurisdiction over matters within Romania, so they cannot sanction Romanian companies for non-compliance abroad. However, authorities can request information through the IMI platform, and companies must provide the required documentation within eight weeks.

To ensure compliance with wage regulations, employers must maintain accurate records and documentation related to salary calculations and payments. This information may be subject to inspection by relevant authorities to verify that posted workers receive fair remuneration and are not subject to any form of wage exploitation.

Relevance of A1 Certificates

A1 certificates are essential for proving relevant activity in Romania when dealing with posted workers. These certificates are particularly useful in the case of accidents at work. Obtaining and maintaining A1 certificates is crucial for ensuring compliance with social security regulations.

A1 certificates provide assurance that the posted worker’s social security contributions are paid in the home country, safeguarding their social benefits and rights. Employers must ensure that A1 certificates are obtained and maintained throughout the secondment period to avoid potential legal and financial consequences.

In conclusion, mobility salaries play a pivotal role in facilitating successful transnational secondment assignments within the EU, along with obtaining a visa, residence permit, and work permit. Each component of a mobility salary, including base salary, secondment allowance, housing assistance, health insurance, and tax considerations, contributes to the overall well-being and satisfaction of employees during their international assignments. By understanding and meticulously crafting mobility salaries, employers can attract and retain top talent and create a positive and rewarding experience for their globally mobile workforce.