no: 011-00-68/2017-03 of 08 June 2018.

Acting within the framework of their legally prescribed competence to monitor the enforcement of laws regulating the prohibition of discrimination and recommend measures for achievement of equality to public authorities and other people, the Commissioner for Protection of Equality addresses to the Ministry of Finance the following:

 RECOMMENDATION ON MEASURES FOR ACHIEVING EQUALITY

 The Commissioner for Protection of Equality recommends to the Ministry of Finance as follows:

1. To comprehensively review, in collaboration with representatives of the Ministry of Labour, Employment, Veteran and Social Policy and representatives of enterprises for professional rehabilitation and employment of persons with disabilities, the compliance of legal provisions relating directly or indirectly to rights of persons with disabilities in the field of labour and employment (Individual Income Tax Law^[2], Labour Law[3], Law on Professional Rehabilitation and Employment of Persons with Disabilities[4], Law on Mandatory Social Security Insurance Contributions[5], Law on Pension and Disability Insurance[6] etc.), and the covers of the application of Article 21 of the Individual Income Tax Law, which prescribes that taxes shall not be paid for wages of persons with disabilities employed in an enterprise for professional rehabilitation and employment of persons with disabilities.
2. To, in line with their legally prescribed competence, in collaboration with representatives of the Ministry of Labour, Employment, Veteran and Social Policy and representatives of enterprises for professional rehabilitation and employment of persons with disabilities, undertake measures and activities with a view to eliminating any ambiguities relating to the application of Article 21 of the Individual Income Tax Law and enable consistency and uniformity with respect to the exercise of the rights arising from the employment of persons with disabilities (amount of wage, minimum wage, calculation of wages, wage allowances etc.), with a view to preventing any unequal treatment of persons with disabilities who are employed in various enterprises for professional rehabilitation and employment of persons with disabilities, as well as any unequal treatment of persons with disabilities who are employed in enterprises for professional rehabilitation and employment of persons with disabilities compared to persons with disabilities employed in open economy.

The Ministry of Finance shall inform the Commissioner for Protection of Equality on measures undertaken with a view to implementing this recommendation, within 30 days from the date of receipt of the recommendation on measures for achieving equality.

No appeal or any other judicial remedy is admissible against this recommendation on measures for achieving equality, as this recommendation does not decide on rights and obligations of legal entities.

Statement of the Reasons

Enterprise for Professional Rehabilitation and Employment of Persons with Disabilities “Goša Solkoˮ ltd. contacted the Commissioner for the Protection of Equality by letter dated December 20, 2017. The enterprise requested considering the application of Article 21 of the Individual Income Tax Law, bearing in mind that practical application of the said legal provision leads to unequal treatment of: 1) persons employed by enterprises for professional rehabilitation and employment of persons with disabilities, depending on whether the person is a disabled person or not; 2) persons with disabilities employed by various enterprises for professional rehabilitation and employment of persons with disabilities and 3) persons with disabilities who are not employed by enterprises for professional rehabilitation and employment of persons with disabilities in relation to persons with disabilities employed by these enterprises.

Namely, according to the allegations from the letter, inequality of treatment refers to salary calculation of persons with disabilities employed by enterprises for professional rehabilitation and employment of persons with disabilities, and which, by applying this legal provision, is practically increased by the amount of the salary tax and the amount of minimum salary, subsequent salary, rights to pension and disability insurance, and other rights of employees arising from the exercise of the right to a salary. Furthermore, it was pointed out that there were problems within practical application of the provisions from Article 21 of the Individual Income Tax Law as there is a violation of the principle established by the Labour Law within the process of salary calculation. According to this principle, employees are guaranteed equal salary for identical work or work of identical value performed for the employer (Article 104, paragraph 2 of the Labour Law). Namely, according to the allegations from the enterprise, the aforementioned legal provision made it possible for persons without disabilities employed by such enterprises to have net minimum salaries in the amount prescribed by the decision of the Social and Economic Council, while persons with disabilities receive a minimum salary increased by the value of income tax. As further stated, “if the coefficient for grossing up a salary of a person with disabilities does not include income tax, contributions are lower, and persons with disabilities are injured in terms of pension (PIO) contribution”. It is particularly pointed out that the above provision also leads to an unequal position of persons with disabilities who are not employed by enterprises for professional rehabilitation and employment of persons with disabilities in relation to persons employed by these enterprises, and that different amounts of salary are calculated for identical work or work of identical value.

The enterprise letter also raises question of whether all enterprises for professional rehabilitation and employment of persons with disabilities apply this provision in the same way, especially considering that, according to the allegations from the enterprise, such cases are differently interpreted in courts, since in some cases courts gave judgements in accordance with Article 21 of the Individual Income Tax Law, i.e. salary tax is to be paid to employees, while in other cases courts gave judgements stating that the amount of salary tax belongs to the enterprises, as a specific measure directed to the entire enterprise that mostly employs persons with disabilities. The enterprise states that several dozens of labour disputes are already being conducted on this occasion, that disputes have been announced by employees without disabilities, and that proceedings are pending before the Constitutional Court.

For the purpose of correct and complete analysis of the mentioned provision from Article 21 of the Individual Income Tax Law, the Commissioner for the Protection of Equality requested opinion from the Ministry of Finance by letter no. 011-00-68/2017-02 of January 15, 2018 and from the Ministry of Labour, Employment, Veteran and Social Policy by letter no. 011-00-68/2/2017-02 of February 21, 2018, as well as by urgent appeal number: 011-00-68/2017-02 of April 23, 2018.

The Ministry of Finance, in its letter no. 011-00-66/2018-04 of February 2, 2018, stated that a salary paid to a person with disabilities – an employee (who is a taxpayer based on employment income) in the enterprise for labour training and employment of persons with disabilities, contains the corresponding income tax and the employer is not obliged to calculate, suspend and pay individual income tax having in mind that, pursuant to Article 21 of the Individual Income Tax Law, no salary income tax is to be paid for those persons. The Ministry further stated that salaries paid to employees exercising the right under Article 21 of the said law include the amount of tax for which exemption is prescribed (the amount of tax that remains for the employee – a person with disabilities). Also, the tax exemption in question relates to tax treatment of a salary and it is not relevant to the contribution basis to which contributions based on employees’ salaries are calculated and paid in light of the Law on Mandatory Social Security Insurance Contributions. Also, the Ministry of Finance pointed out that the Individual Income Tax Law does not regulate the rights of employees in terms of salary amount that the employer is obliged to pay to the employee, and therefore does not regulate the issue of the amount of salaries for persons with disabilities who are employed by the enterprises for professional rehabilitation and the employment of persons with disabilities, and that issuing opinions in this context fall within the competence of the Ministry of Labour, Employment, Veteran and Social Policy.

Upon receiving the urgent appeal, the Commissioner for the Protection of Equality received the opinion of the Ministry of Labour, Employment, Veteran and Social Policy no. 011-00-00355/2018-05/2018-05 of May 31, 2018, citing the provisions of Art. 22, 104 and 105 of the Labour Law stating that this Ministry cannot submit observations on the purpose and aim of establishing the provision of Article 21 of the Individual Income Tax Law, and that in this regard, a declaration of the Ministry of Finance is required.

Also, on May 29, 2018, the Commissioner for the Protection of Equality held a meeting on the topic of implementation of the anti-discrimination policy in practice for representatives-members of the Association of Enterprises for Professional Rehabilitation and Employment of Disabled Persons of the Republic of Serbia (UIPS). At the meeting, among other things, it was pointed out that, besides the Enterprise for Professional Rehabilitation and Employment of Persons with Disabilities “Goša Solkoˮ ltd. other enterprises face the same problems within the application of Article 21 of the Individual Income Tax Law.

The Commissioner for the Protection of Equality primarily indicates that the Republic of Serbia has ratified the Convention on the Rights of Persons with Disabilities. ^[7] The purpose of the present Convention is to promote, protect and ensure the full and equal enjoyment of all human rights and fundamental freedoms by all persons with disabilities, and to promote respect for their inherent dignity^[8]. The said Convention devotes particular attention to the right to work and employment (Article 27) and stipulates that the States Parties recognize the right of persons with disabilities to work, on an equal basis with others; this includes the right to the opportunity to gain a living by work freely chosen or accepted in a labour market and work environment that is open, inclusive and accessible to persons with disabilities. States Parties shall safeguard and promote the realization of the right to work, including for those who acquire a disability during the course of employment, by taking appropriate steps, including through legislation, to, inter alia: prohibition of discrimination on the grounds of disability with regard to all matters concerning all forms of employment, including conditions of recruitment, hiring and employment, continuance of employment, career advancement and safe and healthy working conditions, including equal opportunities and equal remuneration for work of equal value, safe and healthy working conditions, including protection from harassment, and the redress of grievances, encouraging employment opportunities and career advancement for persons with disabilities in the labour market, as well as assistance in finding, obtaining, maintaining and returning to employment, promoting opportunities for self-employment, entrepreneurship, the development of cooperatives and starting one’s own business, promoting the employment of persons with disabilities in the private sector through appropriate policies and measures, which may include affirmative action programs, incentives and other measures, as well as promoting the acquisition by persons with disabilities of work experience in the open labour market.

Constitution of the Republic of Serbia^[9] prohibits any discrimination, whether direct or indirect, on any ground, and in particular on grounds of race, gender, nationality, social origin, birth, religion, political or other belief, property, culture, language, age, mental or physical disability.

Constitutional prohibition of discrimination is further elaborated in the Law on the Prohibition of Discrimination, since discrimination is defined as any unwarranted discrimination or unequal treatment, that is to say, omission (exclusion, limitation or preferential treatment) in relation to individuals or groups as well as members of their families, or persons close to them, be it overt or covert, on the grounds of, inter alia, disability, as well as other actual or supposed personal qualities.^[10] Article 26, paragraph 1 of the said law stipulates that discrimination shall be considered to occur in the case of conduct contrary to the principle of observing the equal rights and freedoms of persons with disabilities in political, economic, cultural and other aspects of public, professional, private and family life.

Provisions of the Law on the Prevention of Discrimination against Persons with Disabilities^[11], specifically govern the issue of prohibition of discrimination in relation to employment and employment relationship in Article 21 stipulating that it is prohibited to discriminate against disability within an employment process and within exercising employment rights of a person with a disability who is seeking employment. It is also prohibited to discriminate an employed person with disabilities, as well as a disabled person’s companion who is seeking employment and a disabled person’s companion who is employed (paragraph 1).

In addition to the aforementioned regulations, the Law on Professional Rehabilitation and Employment of Persons with Disabilities^[12] is also important. It governs, among other things, employment incentives in order to create the conditions for equal participation of persons with disabilities on the labour market, professional rehabilitation, as well as the conditions for establishing and performing activities of professional rehabilitation and employment of persons with disabilities and other special forms of employment and work engagement of persons with disabilities. The said law attaches special attention to professional rehabilitation of persons with disabilities and stipulates (in Article 14) that main implementers of professional rehabilitation activities, in addition to the organisation in charge of employment issues, may be enterprises for professional rehabilitation and employment of persons with disabilities, educational institutions and other forms of organisations which meet the conditions, criteria and standards for implementation of professional rehabilitation measures and activities. The law governs special forms of employment and work engagement of persons with disabilities, including professional rehabilitation and employment of persons with disabilities as legal persons able to employ and perform professional rehabilitation of persons with disabilities, in accordance with this Law. This law also governs certain benefits in terms of enterprises for professional rehabilitation and employment of persons with disabilities. These enterprises are entitled to a monthly wage subsidy for each employed person with disability of up to 75% of the total wage costs with the compulsory social security contributions, but not more than 50% of the average salary per employee in the Republic of Serbia according to the latest published data of the state body in charge of statistical affairs, in accordance with the regulations on state aid for employment of persons with disabilities and other regulations on state aid which are necessary for the enforcement of rules on state aid for the employment of persons with disabilities (Article 40). Also, it is stipulated that the above mentioned enterprises may also be provided with funds from the budget of the Republic of Serbia or the Budget Fund for the improvement of working conditions and production programs, introduction of standards, improvement of product and service quality, adjustment of workplaces or other purposes, in accordance with state aid regulations on reimbursement of the additional costs in terms of employment of persons with disabilities and other state aid regulations that are necessary for the application of state aid regulations for the reimbursement of the additional costs in terms of employment of persons with disabilities (Article 41).

These laws have been adopted with the aim of promoting, protecting and ensuring full and equal enjoyment of all human rights and fundamental freedoms for all persons with disabilities in the Republic of Serbia and promoting respect for their inherent dignity as well as with the aim of fulfilling the obligations assumed by international treaties. In this regard, Article 21 of the Individual Income Tax Law stipulates that the tax on salaries/wages of persons with disabilities who are employed by the enterprise for vocational training and employment of persons with disabilities shall not be payable. However, the aforementioned legal solution, in the specific application, and in relation to the application of other relevant regulations, caused various doubts about the following: differences in salaries of persons with disabilities who are employed by different enterprises for professional rehabilitation and employment of persons with disabilities; differences in salaries of persons with disabilities and persons without disabilities employed by enterprises for professional rehabilitation and employment of persons with disabilities, as well as the difference in salaries of persons with disabilities who are employed by enterprises for professional rehabilitation and employment of persons with disabilities and persons with disabilities who are employed in open market economy. Non-compliance of the provisions of certain laws that directly or indirectly govern the rights of persons with disabilities in the field of labour and employment led to the conduct of a significant number of court proceedings.

The Commissioner for the Protection of Equality considers that, Ministry of Finance, which is in charge of carrying out public administration tasks related to the system and tax policy, in cooperation with the Ministry of Labour, Employment, Veteran and Social Affairs, which is in charge of carrying out public administration tasks related to system in the field of employment relationship and labour rights in all forms of employment, anti-discriminatory policy, employment of persons with disabilities and development and provision of social employment and social entrepreneurship, as well as in cooperation with representatives of enterprises for professional rehabilitation and employment of persons with disabilities as directly interested entities, should comprehensively observe the compliance of regulatory provisions that directly or indirectly relate to the rights of persons with disabilities in the field of labour and employment and resolve the uncertainties that have arisen in professional rehabilitation and employment of persons with disabilities in the course of practical application of Article 21 of the Individual Income Tax Law. Also, the Commissioner for the Protection of Equality considers that the Ministry of Finance, in cooperation with the Ministry of Labour, Employment, Veteran and Social Affairs and enterprises for Professional Rehabilitation and Employment of Persons with Disabilities, after comprehensive analysis of the consequences of the application of the said provision, with precise and unequivocal opinion, should eliminate all uncertainties regarding the application of Article 21 of the Law on Personal Income Tax. It is also necessary to consult and to co-operate with the above-mentioned entities in order to provide conditions for the uniform application of this legal provision or to approve its modification, in order to prevent possible unequal treatment of persons with disabilities in the field of work and employment, and in accordance with the provisions from The Convention on the Rights of Persons with Disabilities, the Law on the Prohibition of Discrimination and the Law on the Prevention of Discrimination against Persons with Disabilities.

Finally, the Commissioner for the Protection of Equality points out that social position of persons with disabilities, in particular their economic and social status, the position in the labour market and the education system, as well as limited access to exercising rights in the field of health, is not satisfactory and does not provide equal opportunities for achieving those rights^[13]. Also, in the survey of the Commissioner for the Protection of Equality “Citizens’ Attitudes on Discrimination in Serbia“^[14], persons with physical and sensory disabilities are recognized as the most discriminated group, and as many as 66% of citizens consider that society should pay more attention to improving the equality status of persons with disabilities in the forthcoming period. According to the Regular 2017 Annual Report of the Commissioner for the Protection of Equality, the highest number of complaints in which personal characteristics were mentioned relates to disability, and the field of social relations to which most of the complaints relate is directly related to the field of work and employment. The above data unambiguously indicate the obstacles people with disabilities face in everyday life and the necessity of their resolution, among other things at the normative level, in order to ensure a dignified life, on an equal footing.

Therefore, considering all the above mentioned circumstances, and starting from the importance and role of employment, work and professional development in the life of every citizen, including the right to adequate salary, the Commissioner for the Protection of Equality, acting in accordance with Article 33, paragraph 9 of the Law on the Prohibition of Discrimination, submitted this recommendation to the Ministry of Finance. The Ministry is obliged to inform the Commissioner of the measures undertaken in order to implement this recommendation, within 30 days from the date of receiving the recommendation.

[1] Law on the Prohibition of Discrimination (“Official Gazette of the Republic of Serbia”, No. 22/09), Article 33, paragraph 1, point 9.

[2] “Official Gazette of the RS”, no. 24/01, 80/02, 80/02 – as amended, 135/04, 62/06, 65/06 – correction, 31/09, 44/09, 18/10, 50/11, 91/11 – US, 93/12, 114/12 – US, 47 / 13, 48/13 – correction, 108/13, 57/14, 68/14 – as amended, 112/15 and 113/17.

[3] “Official Gazette of the RS”, no. 24/05, 61/05, 54/09, 32/13, 75/14, 13/17 – US and 113/17.

[4] “Official Gazette of the RS”, no. 36/09 and 32/13.

[5] “Official Gazette of the RS”, no. 84/04, 61/05, 62/06, 5/09, 52/11, 101/11, 47/13, 108/13, 57/14, 68/14 – as amended, 112/15 and 113/17.

[6] “Official Gazette of the RS”, no. 34/03, 64/04 – decision of the the Constitutional Court of the RS, 84/04 – as amended, 85/05, 101/05 – as amended, 63/06 – decision of the Constitutional Court of the RS, 5/09, 107/09, 101/10, 93/12, 62/13, 108/13, 75/14 and 142/14.

[7] Law on the Ratification of the UN Convention on the Rights of Persons with Disability (“Official Gazette of the RS – International Agreements”, No. 42/09)

[8] Article 1, paragraph 1 of the UN Convention on the Rights of Persons with Disability

[9] “Official Gazette of the RS”, no. 98/06

[10] Law on the Prohibition of Discrimination (“Official Gazette of the RS”, no. 22/09), article 2, paragraph 2.

[11] Law on the Prevention of Discrimination against Persons with Disabilities (“Official Gazette of the RS”, no. 33/06 and 13/16)

[12] “Official Gazette of the RS”, no. 36/09 and 32/13

[13] Regular annual report of the Commissioner for the Protection of Equality for 2016, Belgrade, March 2017

[14] Report On Public Opinion Research “Citizens’ Attitudes on Discrimination in Serbia”, Belgrade, December 2016