Two of the reasons why North Macedonia – formerly simply known as Macedonia – is a promising destination for international businesses are the country’s low tax rates and its numerous free economic zones. North Macedonia’s close proximity to other European countries is another perk of conducting business in the Western Balkan state.
Hiring remote employees in North Macedonia is particularly attractive for foreign employers as wages are a lot lower than in Western Europe. In 2020 for instance, the average gross salary was around EUR 680 per month. What’s more, social security contributions are solely made by the employee.
Employment contracts in North Macedonia can either be concluded for an indefinite or a definite term. The length of the latter is not to exceed 5 years. In any case, the agreement must be in written form and should specify the following details:
- Identification of both parties
- Date of commencement (and employment duration for temporary contracts)
- Job description, duties and responsibilities
- Provisions concerning the employer’s obligation to provide information about job risks
- Basic salary as well as other allowances or benefits
- Working hours and their distribution
- Leave regulations
- Probation period if applicable
- Reference to other regulations linked to the employment conditions
Probation periods should not exceed 4 months.
A standard working week in North Macedonia comprises 40 hours, distributed over 5 workdays. Employees who work more than 6 hours per day must have a 30-minute lunch break.
Furthermore, workers must have at least 12 hours of uninterrupted rest between two working days. The weekly rest period must not be shorter than 24 hours.
Overtime work is limited to 8 hours per week – 190 hours per year. With regard to overtime pay, the law rules that employers must pay their employees an additional average salary if the latter has worked more than 150 additional hours over the course of the year and if absence times haven’t exceeded 21 days – annual leave excluded.
Payroll in North Macedonia is usually processed on a monthly basis.
The current minimum wage in North Macedonia is fixed at MKD 22,146 per month.
The first 30 days of sick leave are covered by the employer with remuneration rates being as follows:
- Up to 7 days: 70 percent of usual wages
- Up to 15 days: 80 percent of usual wages
- More than 15 days: 90 percent of usual wages
After 30 days, sick pay is provided by social security.
There are no legal provisions for annual bonuses unless the employee has worked an exceptional amount of overtime hours (see section on overtime work).
Taxes and Social Security Contribution
Employees and employers in North Macedonia are subject to the following tax and social security contribution rates (rates for 2021):
10% corporate tax rate
18% VAT (standard rate)
Individual income tax rates:
up to MKD 1,080,000: 10%; above MKD 1,080,000: 18%
0% of employee’s salary
28% of employee’s salary:
7.5% health insurance
0.5% additional health insurance
18.8% pension and disability fund
1.2% unemployment insurance
An employee’s annual leave entitlement depends on his or her service years and job performance. Paid vacation days vary between 20 and 26 days per year. New employees gain the right to take a holiday after 6 months of service. Unused leave can be carried over into the next year but must be used until June 30. The country’s 11 public holidays are added to the employee’s annual leave entitlement.
Maternity Leave and Paternity Leave
Maternity leave lasts 9 months – 12 months in case of multiple births – and can start up to 45 days prior to the expected delivery date. During this time, the mother receives payments from the State Fund for Health and Insurance.
Fathers of newborn children can take 7 days of paternity leave.
There is no further parental leave in North Macedonia.
Additional Leaves and Benefits
Under certain personal or family-related circumstances, employees are entitled to additional paid days off. These circumstances include:
- Own marriage or that of a close relative
- Birth or child adoption
- Death of partner or member of family
However, the number of extra days off is limited to 7 days in one single year.
In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, the employment relationship may be terminated due to one of the following reasons (non-exhaustive list):
- Summary dismissal due to gross misconduct, e.g. breach of contract
- Employee’s underperformance
- Unexcused absence from work
The minimum notice period for both employees and employers is 30 days. The employment termination has immediate effect in case of severe misconduct on the part of the employee.
If the employee is made redundant, the employer is obliged to provide severance pay. The amount depends on the employee’s years of service:
- Up to 5 years: 1 monthly salary
- 5 to 10 years: 2.5 monthly salaries
- 10 to 15 years: 3.5 monthly salaries
- 15 to 20 years: 4.5 monthly salaries
- 20 to 25 years: 6 monthly salaries
- Over 25 years: 7 monthly salaries
Hiring in North Macedonia?
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