The Childcare Allowance is Changing Again!

Poor population indicators and population decline have become European trends. Both Romania and Hungary have some of the worst demographic indicators in Europe, even though the situation is bleak in other countries as well.

Population growth and encouraging more confident family planning are influenced by many factors beyond just political issues. However, numerous examples demonstrate that a comprehensive, favorable family policy can help improve the situation and increase birth rates.

This is the aim of Act No. 66 of 2016, published in the Official Gazette on April 20, which will take effect on July 1, 2016, amending the provisions on parental leave and the childcare allowance as set out in Government Emergency Ordinance No. 111 of 2010.

Under current regulations, parents must choose between one year (or three years for a child with a disability) and two years of parental leave. The GYES is valued at 85% of the average net income over the last 12 months, with a monthly minimum of 600 lei and a maximum of 3,400 lei for one year of leave, and between 600 lei and 1,200 lei for two years of leave.

Under the new regulation, the duration of parental leave is two years. Parents will no longer have to choose between the two options, and unlike the previous regulation, the new law only sets a lower limit for the monthly childcare allowance, removing the upper limit.

Any biological parent, adoptive parent, guardian, or person responsible for raising the child who has had taxable income for at least 12 months in the two years prior to the child’s birth is eligible for two years (or three years for a child with a disability) of parental leave and childcare allowance.

Under the law effective from July 1, the childcare allowance will be 85% of the parent’s average net income over the last 12 months but not less than 85% of the gross minimum wage. From May 1, the gross minimum wage in our country will increase to 1,250 lei, so the minimum amount of the childcare allowance will be 1,062.5 lei, compared to the current 600 lei.

In the case of a multiple pregnancy, the GYES amount will increase by 85% of the gross minimum wage (1,062.5 lei) for the second child born from the multiple pregnancy. An additional 1,062.5 lei in support will also be granted if another child is born during the period of GYES payments.

If a parent entitled to parental leave returns to work and earns taxable income before the end of the two-year leave period, they will be entitled to a “reintegration incentive” of 531.25 lei per month, which is 50% of the minimum childcare allowance, to support and encourage employment.

The new regulation also applies to those who are already on parental leave when the law comes into effect on July 1, 2016. For parents who have chosen two years of leave, the childcare allowance amount will be increased automatically. Those on one-year leave may apply to the relevant authority with the necessary documents.

During the period of parental leave, the employee’s contract cannot be terminated by the employer. This prohibition also protects those who interrupt their leave to receive the reintegration incentive, up to the child’s second birthday—a period that can be extended once by another six months.