It's an eternal question and the most common dilemma of young workers encountering the labor market for the first time: My friends say they got a salary of "a grand KM" and only discuss net, but in modern business, the only fair legal norm is - absolutely GROSS negotiation.
The Labor Law most often very directly, for absolutely all tax residents, prescribes the obligation to define the salary exclusively in the corresponding GROSS amount on the Employment Contract itself. Although you can informally "agree on net" in an oral conversation, the paper, the court, and the law recognize only black-on-white Gross.
The psychology here is clear: the worker negotiates with the bank "a fixed 1000 KM available every 15th of the month" for mortgage and housing costs. They are not bothered by any state calculations. However, this path of comfort hides large and significant legal and economic traps that go extremely and exclusively in favor of the employer!
Imagine that the state decides, due to a crisis, to cut income tax from 20% to, say, a generous 10%.
- If you have a contracted gross: Since taxes are now charged less, the employer is obliged to pay you a drastically higher net into your account - the relief reform flows directly into your pocket and yours alone.
- If you have a "contracted" fixed net: The employer satisfies the clause "Ivkica has a 1,000 KM salary" and continues to pay her those 1,000 KM net month after month... But now the employer does not have to give the state huge taxes on those 1,000 KM like last month... So, who feels the state's tax relief? The employer! The employer keeps huge amounts of money for the company's costs (profits from the difference), and you receive no benefit from the state's tax changes because you "fixedly requested 1000 per contract".
It would be very foolish of you to address taxes with two registered children while you have a net fixed agreement. Children and disabilities make you more susceptible to higher quotas of so-called "Personal Deductions" which would, in the gross option, drastically cut your tax, contributions and bring a fantastic salary installment.
If you agree on a fixed net with a bad employer in the amount of 1,500 KM net. The employer will contract with you a miserable and criminally low Gross (which corresponds to a payment of, for example, 900 KM net), and "add" the difference of those 600 KM through columns like "Home Work Allowance", "Rewards", "Deductions", "Costs", "Per Diems".
You will end up with a perfect 1,500 KM on your account for that month. Where is the catch? All these "additions" of 600 KM are absolutely exempt from state investments in Pension and Sick Leave! This means that for creditworthiness, you ask the bank for 1,500 KM, but the system claims you have a miserable 900 credit-worthy amount and the bank regularly rejects you, while your potential pension is crippled by the lowest calculation scope.
Demanding clearly defined gross contracting shows management that they are dealing with a highly aware person conscious of the laws of labor and business. By contracting exclusively gross amounts, you protect exclusively and undoubtedly yourself and your pension. Don't forget to use our Calculator to very elegantly convert the offered gross system into the clean amount of your expected net target number.