Sickness benefit calculation basis for overtime and night allowance

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Bonuses for overtime and night work are wage components that must be properly accounted for in the calculation basis of wages and sickness allowance. Although the statutory regulations generally regulate these issues sufficiently, some doubts may arise in practice. In this article we will try to explain what the basis of the sickness benefit calculation looks like.

The sickness allowance calculation basis - general information

The rules for determining the basis for the calculation of sickness benefits due to insured employees are included in Chapter 8 of the Act of June 25, 1999 on cash benefits from social insurance in the event of sickness and maternity, hereinafter referred to as the "Benefit Act".

As a rule, the basis for the calculation of the sickness benefit due to an employee is the average monthly remuneration paid for the period of 12 calendar months preceding the month of the inability to work. If the incapacity for work occurred before the expiry of the 12-month period, the basis for the assessment is the average monthly remuneration for the full calendar months of insurance.

If the employee has not worked one full calendar month, then Art. 37 sec. 1 of the unemployment benefit act. This means that the basis of the Illness Benefit calculation is the salary that the employee would have earned if he had worked for a full calendar month. Pursuant to Art. 37 sec. 2 of the Benefit Act, in such a case, the basis for the calculation of the sickness allowance is:

  • the monthly remuneration specified in the employment contract or other act on the basis of which the employment relationship was established, if the remuneration is due in a fixed monthly amount;
  • monthly remuneration calculated by dividing the remuneration earned for working days by the number of days worked and multiplied by the number of days that the insured employee was obliged to work in that month, if he worked at least 1 day;
  • the amount of variable remuneration components in the average monthly amount - paid for the month in which the incapacity for work arose - to employees employed in the same or similar job position with an employer who is entitled to sickness benefit, if the insured employee has not earned any remuneration.

Wage components included in the sickness allowance calculation basis

Generally speaking, the way wages are taken into account in the sickness benefit basis depends on the nature of the wage component, i.e. the periods in which the payment is made.

Pursuant to Art. 42 sec. 1 of the Benefit Act, bonuses, bonuses and other remuneration components for monthly periods are included in the sickness benefit calculation base in the amount paid to the employee for the calendar months from which the remuneration is used to determine the benefit calculation base.

Certainly, this category of elements of remuneration includes bonuses for overtime work and allowances for night work, and it does not matter when they were actually paid (e.g. in the next month not included in the sickness benefit calculation basis).

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Determining the average monthly salary constituting the basis for the sickness benefit calculation

The average monthly salary constituting the basis for the sickness benefit calculation is determined by dividing:

  • remuneration earned by the employee for a period of 12 months or a shorter period, including full calendar months
  • for the number of months in which the remuneration has been achieved.

If, in a 12-month or shorter period, but covering full calendar months, the employee has not achieved remuneration as a result of absenteeism due to justified reasons (e.g. due to taking unpaid leave), when determining the basis for the calculation of sickness benefit:

  • the remuneration for the months in which the employee worked for less than half of the working time applicable to him is excluded;
  • shall be accepted - after supplementing according to the principles specified in Art. 37 sec. 2 of the Benefit Act - remuneration for the months in which the employee has worked at least half of the working time applicable to him.

If during a period of 12 months or shorter - covering full calendar months - the employee in each month for justified reasons performed work for less than half of the working time applicable to him, when determining the basis of the sickness benefit calculation, the remuneration for all months after supplementing according to the rules set out in in art. 37 sec. 2 of the Benefit Act (the above-mentioned rules are presented previously in this text). The above procedure is specified in Art. 38 of the Benefit Act.

Example 1.

The employee became incapable of work in May 2021. He has been employed by the employer continuously for several years, so the basis for the sickness benefit was determined 12 months before the employee's illness, i.e. the period from May 2020 to April 2021. In April 2020, the employee performed overtime work for which he received additional remuneration. The receivables in this regard were paid in May 2020. Despite the fact that the payment is made within this period, additional remuneration for overtime will not be included in the sickness benefit calculation basis, as this payment is due for April, i.e. for the month that is not covered by the 12-month period adopted as the basis for determining the sickness benefit. In this case, the payout in the next month does not matter, as previously mentioned.

Example 2.

The employee fell ill in May 2021. Due to the several years of work experience, the 12 months preceding the month of inability to work (May 2020 - April 2021) were used to determine the basis for the sickness allowance. From March 1 to March 19, 2021, the employee was on unpaid leave. At the same time, this month he completed several overtime hours. In March 2021, the employee worked less than half of his working time, which means that this month is not included in the basis of sickness benefit (including overtime remuneration).

Example 3.

The employee became incapable of work in May 2021. The basis for calculating the sickness benefit is the 12-month period from May 2020 to April 2021. In January 2021, the employee took 5 days of unpaid leave, then worked overtime, receiving additional remuneration on this account. In January 2021, the employee worked more than half of the working time set for him this month, therefore this month is included in the sickness benefit calculation basis. The employer includes the remuneration for January 2021 in the assessment base after the previous remuneration is supplemented in accordance with the principles set out in art. 37 sec. 2 of the Benefit Act. As for the overtime pay, the amount actually paid to the worker must be taken into account.

Summary - the basis for the sickness benefit calculation

In the light of the provisions of the Allowance Act, allowances for night work are analogous to additional remuneration for overtime work. The sickness allowance calculation basis must take into account all wage components for which a social security contribution is paid - this condition is met for both overtime pay and night work allowances.

Bonuses for overtime work and the so-called night allowances can certainly be treated as other components of remuneration within the meaning of Art. 42 sec. 1 of the Benefit Act, i.e. receivables due for monthly periods, and therefore included in the basis for the calculation of sickness benefit in the amounts actually paid to the employee for the calendar months.