Law 111 on the regulation of the activity of the domestic provider was published in the Official Gazette (Part I) no.402 of 27 April 2022, with applicability from 2024.
Even though this law has now been made official, household activity vouchers will only be available and received from 2024. These vouchers will be subject to income tax and pension contributions and, under certain conditions, will also allow health insurance.
We mention that the act, which legislates the work done by individuals in a household, passed the Parliament’s vote in April, after the Government announced the initiative in the summer of 2021.
Law 111/2022 also needs implementing rules. According to the provisions, within 60 days from the date of publication of this law in the Official Gazette of Romania, Part I, the Ministry of Labour and Social Solidarity will draw up the methodological rules for its implementation, which will be approved by Government decision.
Household work, according to the document, is in fact unqualified work. Specifically, the definition of domestic work states that it is “occasional, unqualified work carried out by a domestic provider in connection with the household(s) of a family or single person, as a domestic beneficiary”.
These household chores, done from time to time, and not repetitive in nature, include cleaning/hygiene services, laundry/ironing, tailoring services, food preparation services, personal care services, feeding or supervision of the dependent household beneficiary, according to the law.
It is important to underline that the household activity vouchers with which the providers will be paid will only be subject to income tax and pension contribution, not to health contribution, as initially intended.
In addition, the law provides for incentives to be given to those who use domestic work providers. Specifically, if they buy and use at least 600 domestic work vouchers in a calendar year, the beneficiaries of these activities will be able to receive an additional 75 vouchers from the state free of charge. These vouchers can be claimed in the following year.
We mention that Law no.111 gives the possibility to any employer to grant to its own employees, in the form of bonus or bonus, in addition to the established salary, household activity vouchers.
The number of household activity vouchers and the frequency of their granting will be decided by the employer together with the trade union organization or the employees’ representatives.
An important clarification is that the law stipulates that domestic activity providers will not be able to redirect part of the income tax on domestic activity vouchers to support non-governmental organisations or churches.
Law no.111/2022 provides for the establishment of a system of payment and registration of persons performing occasional household activities on the basis of household activity vouchers, which will have to be exchanged for cash and for which pension contributions and income tax will be due.
We mention that the beneficiary will not have all the rights and obligations of an employer, but rather, similar to the beneficiary of the daily activity, will have to ensure first of all that he pays the domestic worker properly, but also that he keeps his personal data confidential.
Specifically, an ordinary natural person will be a domestic worker and will carry out occasional domestic activities on behalf of another natural person – the beneficiary. The household is defined as “the totality of immovable property consisting of buildings used as dwellings, outbuildings, yards and gardens, as well as movable property used for domestic activities”. In addition, the domestic provider cannot be a member of the beneficiary’s family and must be at least 16 years old.
According to the new provisions, the daily working hours of a domestic provider may not exceed 12 hours and six hours for those aged between 16 and 18.
The domestic service provider will be paid exclusively in domestic activity vouchers, the value of which is set at 15 lei. This amount may be updated annually by the law on the state social security budget.
Beneficiaries, individuals, will purchase these vouchers from employment agencies, from the post office or from a special platform that does not exist at the moment, but which will be the electronic way to purchase them. The household provider and the beneficiary will agree verbally on the work and amounts paid.
Afterwards, the domestic worker will be able to redeem a voucher in cash within 12 months of receiving it. The money will have to reach the bank account indicated by the domestic provider within five days of the date of the request for the cashing-in.
The new law specifies that the vouchers will not be transferable, they can only be used by the domestic provider who actually did the work.
Providers of household activities will be obliged to pay income tax and pension contributions on the vouchers they receive. The tax (10% rate) will be applied to 50% of the voucher value, as will the pension contribution (25% rate).
Please note that when the vouchers received are redeemed for cash, the tax and contribution will be deducted and paid directly by the agencies.
In order for a household provider to benefit from pension insurance, the minimum monthly contribution to the state social security system must be that of a minimum of 85 household activity vouchers.
We stress that health insurance will also be possible for the household provider. More specifically, if the domestic provider is not insured under the health system, he/she becomes insured without paying contributions and is entitled to the basic health care package from the date on which he/she applied for the exchange of at least 85 household activity vouchers, i.e. 1,275 lei.
Maintaining health insurance status will be done by redeeming at least 85 household activity vouchers each month.
It is important to mention that the household activity vouchers will not generate tax obligations for the persons granting them to the providers.
According to the new provisions, there will be a special platform on which the data on beneficiaries and providers will be registered, the same platform from which beneficiaries will be able to buy vouchers electronically and where there will be a record of the payment of taxes and pension contributions.
It is important to know that domestic providers will also be able to take unemployment benefit from the state while working for one or more beneficiaries, because, according to the draft, “persons who earn income as domestic providers are considered as not earning income”.
In addition, people who have a guaranteed minimum income will also be able to be domestic providers, without their entitlement to the guaranteed minimum income being affected.
Legal basis:
– Law no. 111/2022 on the regulation of the activity of the household provider