Businesses are encouraged to declare their employees’ overtime by the Ministry of Labor’s proposed regulation for a horizontal reduction in non-wage costs across the entire economy, not just in certain sectors.

The reduction concerns the additional contributions paid for overtime, night work and holidays, with the aim of increasing employees‘ net earnings and at the same time reducing the costs of businesses.

This regulation benefits employees as well, as the amount paid to them increases due to a reduction in their additional contributions and their disposable income increases, and employers, as additional employer contributions will henceforth be calculated only on the hourly wage.

Sundays and holidays

For example, if an employee receives an additional 200 euros per month as overtime pay, i.e. 120 euros net, the resulting benefit will be around 14%. That is, it will be approximately 28.4 euros, of which 9 euros are earned by the employee and 19.4 by the employer. The regulation promoted by the Ministry of Labor aims to reduce the cost of additional employment but also to facilitate its correct declaration and payment.

Specifically, as stipulated by the law, overtime, i.e. one additional hour of employment, is paid with a 20% increase, overtime is paid with a 40% increase, night work is paid with a 25% increase and employment on Sundays or holidays is paid with a 75% increase. Therefore, the insurance contributions corresponding to these hours of employment should be increased accordingly.

However, this provision provides for the reform of the contributions for overtime, overtime, night work and work on public holidays of full-time employees so that their calculation is based on the hourly wage corresponding to the normal eight-hour work, without taking into account the increase, which will continue to be paid normally

Obligation of employers

The key to the new relief lies in the obligation of employers to declare overtime by recording the actual working time through the digital work card. Therefore, a condition for the exemption from contributions will be to declare the overtime, because otherwise fines will be imposed.

It is no coincidence that with the implementation of the Digital Work Card, as the Minister of Labor Niki Kerameus has pointed out, there has been an increase in declared overtime, which in some sectors reaches 60%. This increase can be partly explained by the growth of the economy, but it also shows the extent of the gray and black economy, making it clear that many workers work overtime for which they are not paid at all or are underpaid, as they are declared to be working part-time.

According to the data of the “Ergani” system, in the sectors where the Digital Work Card is applied, overtime increased cumulatively by 815,509 hours compared to the years before the implementation of the measure.

Indicatively, recorded overtime hours increased:

– In supermarkets by 60% (216,731 hours in 2024 compared to 135,466 in 2021).
– In banks by 38.3% (82,236 hours in 2024 compared to 59,470 in 2021).
– In security companies by 27.8% (454,547 hours in 2024 compared to 355,584 hours in 2022).
– In industry by 34.3% (2,019,082 hours in 2024 compared to 1,503,813 in 2023).
– In retail by 28.1% (474,999 hours in 2024 compared to 370,883 in 2023).

An increase in declared overtime is expected to be recorded in tourism and catering, which have high rates of delinquency regarding undeclared and declared employment. An indication of the prevailing distortions is that in the catering sector – which, together with tourism, will be fully included in the Digital Employment Card from March 1st – approximately 2/3 of employees are declared as part-time.

Non-wage costs

On the other hand, the employers’ organizations that propose an increase in the minimum wage from 3.5% to 5% for 2025 point out in their reports the need to further reduce non-wage costs even though health insurance contributions have been reduced by one percentage point since 1/1/2025.

For the increases to be effective, they emphasize, they must be accompanied by tax changes and reductions, with the ultimate goal of increasing disposable income and avoiding additional tax burdens. The measure will be horizontal and will concern the entire economy and not just certain sectors, with the aim of:

– Strengthening the disposable income of employees

– Reducing the non-wage cost of labor in order to increase investment and boost employment. It is recalled that from 2019 to date, social security contributions have been reduced by 5.4 percentage points (one of the largest reductions in the European Union) with a planned reduction of half a further point in 2027. Correspondingly, 500,000 new jobs have been created in these years.

– Strengthening the transparency of overtime and the formation of a healthy labor market.

We recall that from 1/1/2025, health insurance contributions were reduced by one percentage point. This means that private sector employees, public sector employees (private law relationship) and working pensioners will see an increase in their net earnings from 46 to 387 euros per year.

For example, an employee who receives the minimum wage, which is currently 830 euros, and receives approximately 706 euros net, since January 1, with the reduction in contributions by half a unit, his salary has increased by 3.24 euros per month, reaching 709 euros.

The income

For the employer, the reduction that will be reaped will be in the order of 4.15 euros, as the insurance contributions he pays have fallen from 22.29% to 21.69%. On an annual basis, the profit for the low-wage earner amounts to 45.36 euros and for his employer 58.1 euros. Of course, the benefit is small for low-wage earners, but the higher the earnings, the greater the benefit for the employer and employee.

According to social security and EFKA experts, for each percentage point increase in the minimum wage, insurable earnings increase by approximately 140 million euros annually. The additional revenue from increased wages is estimated at 324.5 million euros annually.

However, despite recent reductions in social security contributions, the total mandatory contributions remain high and significantly higher than the average of OECD countries, a condition that is also recognized by the leadership of the ministry. In practice, the non-wage burden costs businesses dearly without the employee reaping the benefit. For example, the minimum wage of 830 euros costs the business 1,189.46 euros, while the net earnings for a single employee with no previous experience amount to 706 euros.