- The order published on 29 January sets a maximum contribution cap of €3,751.20 a month in the General Regime.
- Rates do not change: 28.30% for common contingencies, of which 23.60% is paid by the employer and 4.70% by the employee.
- Minimum bases for groups 4 to 7 follow the minimum wage and stand at €858.60; payroll should be reviewed with effect from January.
On 29 January 2018 the Official State Gazette published Order ESS/55/2018 of 26 January, which develops the rules on contributions to social security, unemployment, protection for the cessation of self-employed activity, the Wage Guarantee Fund and vocational training for 2018. Its effects run from 1 January.
Because the 2017 State Budget remained extended, the order brings few novelties. The maximum contribution cap stays at €3,751.20 a month and the General Regime rates are the same as the year before. What does move are the minimum bases, which depend on the newly approved minimum wage.
What base and rate mean
A contribution results from multiplying a base by a rate. The base is the employee’s monthly pay, including the pro rata share of the extra payments, bounded by a minimum and a maximum that depend on the professional group. The rate is the percentage applied to that base, and is split between employer and employee.
For common contingencies the rate is 28.30%: 23.60% paid by the employer and 4.70% by the employee. With pay at or above the cap, that means about €885 a month in employer cost and about €176 deducted from the payslip. Contributions for work accidents and occupational diseases are paid entirely by the employer, under the premium schedule. That calculation is repeated in every payslip, so an error in parameters is multiplied by the number of employees and months, and the differences end up requiring corrections that consume time.
What changes in 2018
Minimum bases are linked to the minimum wage in contribution groups 4 to 7, where they rise to €858.60 a month, equal to the minimum wage plus the pro rata share of extra payments. Higher groups, such as engineers and graduates (group 1) or technical engineers and surveyors (group 2), have higher minimums, of €1,199.10 and €994.20 respectively. Social security can later review the contributions paid and claim differences with surcharges, so it is worth checking the parameters from the start of the year and keeping the documentation of each calculation.
In addition, the minimum contribution for work accidents and occupational diseases is calculated from the minimum wage with the pro rata share of extra payments, and overtime has its own additional contribution. For companies with large workforces, a small change per employee can have a noticeable effect on annual cost. In companies with agreements that refer to the minimum wage, or with supplements linked to it, the combined effect of the minimum wage rise and the minimum bases may be larger than it first appears.
What to review
The first step is to check that the payroll software has the 2018 parameters loaded: minimum and maximum bases by group, rates and caps. If January payslips were issued with old values, they will have to be regularised, and the social security direct settlement system will calculate differences.
It is also useful to review people with pay close to the cap, such as executives or salespeople with high commissions, because each euro above the maximum does not attract contributions. Your payroll adviser can confirm which contribution group applies to each employee and simulate the annual cost. If there are doubts about the contribution group of any category, it is better to clarify them with the payroll adviser or the Treasury at the start of the year, rather than wait for a later review.
Contribution figures change little, but applying them correctly avoids later corrections.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
