Functional allowances for work are included among the components of wages. Although functional allowances are mandatory for employees of public sector organizations, they can also be applied in commercial organizations.

A functional allowance is an additional benefit provided to individuals in certain positions related to the functions they perform.

The Labor Code does not contain any provisions regarding functional allowances. The principles for their payment derive from the regulations of the relevant ministries on the remuneration of certain professional groups. Precise rules are also established by internal work regulations, remuneration regulations, or special standards for a specific group of employees.

Only public sector enterprises are required to pay allowances for the performance of job responsibilities; they are stipulated in the regulations on the remuneration of employees of state and municipal institutions, structural divisions, local government bodies, and healthcare institutions.

For some positions in the above-mentioned fields, a functional allowance is mandatory in the sense that it is paid after the conditions for its receipt have been met.

A functional allowance can also be applied in commercial organizations. In such situations, it is primarily available to employees in situations where the workload increases and the responsibilities are greater than those typically associated with the job. This allowance depends solely on the function performed, is permanent and compensates the employee for an excessive workload and greater responsibilities than previously assumed.

If the employer decides to introduce this allowance, the conditions for its receipt may be included in the remuneration regulations, collective bargaining agreement, or employment contract. The benefit amount can be determined individually by agreement with the employee: the parties agree on a specific amount, which is added monthly to the basic salary.

A detailed article with examples of the application of the functional allowance can be found at the following link.

You can also read about additional pay for overtime work and additional pay for hazardous working conditions in our articles.