As of October 1, prescribed forms for payroll calculation abolished

As of October 1, 2015, employers are no longer required to provide employees with a payroll calculation, salary compensation, and severance pay on prescribed forms, but can create their own layout of data and appearance of pay slips that they provide to the employee.

This practice is repeating for the second time, where the relevant minister prescribes a form for calculated salary and salary compensation as mandatory, only to abolish it a few months later and allow employers to design it themselves according to their needs. This happened in 2011, four years ago, and again this year, 2015. Initially, the Regulation on the content of salary calculation, salary compensation, or severance pay, effective from July 1, 2015, prescribed forms IP1 and IO1 (for paid salary and salary compensation, respectively for paid severance pay) and forms NP1 and IO2 (for unpaid salaries, salary compensations, and severance pays), and then from October 1, 2015, with amendments to the Regulation published in the Official Gazette No. 102/15, the prescription of the form for paid receipts was abandoned, but those that are provided to the employee if the salary, salary compensation, or severance pay has not been paid by the end of the month in which it became due are still prescribed.

Complete information

This news is welcome as it allows employers to once again, as they did before July 1, 2015, design the layout, structure, and somewhat the content of the data in the salary and salary compensation calculation that they provide to the employee after payment, no later than within 15 days. The payroll calculation must clearly show how the components of the salary and the amount of salary compensation to which the employee is entitled according to the contract, work regulations, and/or collective agreement have been determined. The data should enable the employee to verify the correctness of the determination of their rights.

If the employee has worked overtime or in circumstances for which they are entitled to salary supplements (at night, on holidays, Sundays, in shift work, etc.), the employee should be able to determine from the payroll calculation whether the employer has recognized the supplements and increases to which they are entitled. The same applies to the amount of salary compensation for hours of justified absences. The data must provide the employee with complete information on how the amount of these receipts has been determined. Since employers in Croatia have differently organized systems of salaries and salary supplements, unified lists of calculated and paid salaries could not objectively meet this requirement.

Expanded content of data

Therefore, the payroll calculation no longer needs to be compiled on the prescribed form IP1, but employers must carefully check whether their form contains all the prescribed elements. There are also novelties in this part. The content of mandatory data has been expanded to include data on contributions to salary. Until now, form IP1 had to contain only data on mandatory public contributions calculated from gross salary, i.e., on the amounts of contributions for pension insurance, income tax, and surtax, and from October 1, it must also contain data on the total amount of contributions for mandatory health insurance, for occupational health protection, and for employment that the employer calculates and pays on their behalf, for the benefit of the employee. The content of the payroll calculation has been supplemented to include a complete set of data on labor costs and is aligned with regulations on mandatory contributions. The employer does not need to sign IP1 and IO1; they only need to enter the name and surname of the responsible person of the employer to whom the employee can address if they have a complaint or seek clarification and additional information about the stated data. A technical relief is the omission of the date of delivery of the calculation to the employee; it no longer needs to be stated on the payroll list.

When two forms

Regarding the issuance of payroll lists for unpaid salary, salary compensation, or unpaid severance pay, new regulations have also been introduced as of October 1. An employer who does not pay the salary or does not pay it in full is obliged to provide the employee with two forms: IP1, which contains the calculation of the components of the salary/salary compensation to which the employee is entitled, and NP1 as an enforcement document that contains the amounts of the employer’s debts to the employee. The same applies in cases where severance pay has not been paid; the employee is provided with two forms: IO1, which lists the elements of the calculation of the severance pay amount, and NO1, which is issued as an enforcement document. Forms NP1 and NO1 are prescribed, must be issued on a form that is identical in appearance, form, and content to the forms published in the Official Gazette 102/15, and must be signed by the employer’s authorized person. NP1 no longer contains data on hours or components of the salary, but only the amounts to be paid to the employee into their regular and protected current account, deductions from net salary that settle the employee’s debts to third parties, amounts of contributions from salary, and amounts of income tax and surtax. Contributions to salary are not listed in form NP1 because the employee is not authorized to collect them in enforcement proceedings in which they forcibly collect their claims from the employer.