The minimum wage for December payable in January - ZUS contributions
The minimum wage, commonly known as the "lowest national" wage, is the guaranteed amount of the minimum wage received for work performed by persons employed under an employment contract. This law was established for employees in 2002 and since then the amount of the minimum wage has been gradually increasing every year. However, many employers are wondering how the change in the minimum wage at the turn of the year will affect the amount of ZUS contributions.
The amount of the minimum wage
The minimum national amount is determined by negotiation with the Council of Ministers and the Tripartite Commission. The amount of this amount is influenced by:
- price index in the previous year and forecast prices for the following year;
- indicator of the share of income from contract work and the average number of dependents of a contracted person in the previous year;
- forecast average wage rate;
- the level of household expenditure in the previous year;
- average monthly wages and salaries in the previous year by type of activity;
- the standard of living of various social groups;
- economic conditions of the state.
Act on the minimum remuneration for work. Art. 6.1. The amount of remuneration of an employee employed on a full-time basis may not be lower than the amount of the minimum remuneration determined pursuant to art. 2 and art. 4.
Due to the fact that the Polish economy has been recording both economic growth and an increase in price indices for services and goods for several years, the minimum wage amounts are increasing year by year. Since 2002, the minimum wage has increased from PLN 760 to PLN 2,800 (in 2021).
Minimum wage for December payable in January
In a situation where the remuneration for work performed in December 2020 is paid to the employee in January 2021 in the amount of PLN 2,600, when determining whether his income will amount to at least as much as the minimum remuneration for work, the provisions in force in December 2020 are taken into account. . This is due to Art.80 of the Labor Code, which states that the remuneration is due for work performed. It should not depend on the date of payment. Art. 80 of the Labor CodeThe remuneration is due for the work performed. For the time of non-performance of work, the employee retains the right to remuneration only if the provisions of the labor law so provide.Until the last day of December 2020, the minimum wage is PLN 2,600.
Even though it will be paid in January 2021, it is assumed that the employee has earned income in the amount of the minimum wage.
The minimum wage for December is payable in January and social security contributions
Pursuant to § 2 para. 6 of the Regulation of the Council of Ministers of April 18, 2008 on detailed rules and procedures in matters of the settlement of contributions to which the Social Insurance Institution is obliged to collect, the reports to the Social Insurance Institution include due social insurance contributions from all made or made available of the insured person - payments - from the first to the last day of the calendar month to which the declaration relates - constituting the basis for the calculation of social security contributions. This means that contributions in ZUS declarations are shown in the month of their payment, regardless of the period for which they were due.
To sum up, the ZUS declaration for January includes contributions from the remuneration for work performed in December. In December, there was a minimum wage of PLN 2,600. Therefore, there is no obligation to pay remuneration for December in the amount of PLN 2,800.
Salary for December in January and tax obligation
The postponement of the date of payment of employees' wages also affects the tax liability. As in the case of ZUS contributions, the tax obligation arises when the employee's remuneration is paid or placed at his disposal. This solution has various consequences. First, for employees who earn high wages and exceed the first tax bracket at the end of the year, when their December wages are paid in January, they will be taxed again with the 1st tax bracket.
The Kowalski employee already exceeded the first tax threshold when he received the payment for September paid in October. The October wages paid in November and the November wages paid in December were fully taxed at 32%. On the other hand, the salary for December paid in January was taxed with the first, 17% income tax. When paying employees with a shift remuneration, special attention should be paid to the correct preparation of PIT-11 for the employee. December wages paid in January should appear on the annual declaration for the following year.
The minimum wage at the turn of the year and the amount free from deductions
Another consequence of the payment of the minimum wage at the turn of the year is the application of a different amount free of deductions. Namely, the regulations indicate the amounts of the employee's remuneration that must be guaranteed to him after possible deductions (forced or voluntary). The amount free from deductions is determined on the basis of the minimum net wage applicable in a given year. With the payment of the minimum wage with a shift for December in January, many questions arise and doubts as to which rates of non-deductible amounts should be applied. Here the answer was given by the Chief Labor Inspectorate in a letter of January 26, 2011, GPP-364-4560-3-1 / 11 / PE / RP, stating that: "[...] When making deductions from remuneration for work, the employer is obliged to apply the amount free from deductions in the amount of the minimum remuneration for work in force on the date of the deduction ”.
In practice, this means that although the employee received a lower minimum wage in January (in force from December), the employer should apply the amount free from deductions applicable in the month of making the deduction, i.e. in January.
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Change of the minimum wage and annexes for employees
The amount of remuneration received for the work performed is one of the most important elements contained in the employment contract. Thus, any change in this area should be documented with an annex to the contract. So what if the amount of remuneration changes every year? Not always the modification of the minimum wage will result in the obligation to prepare an annex. If the contract specifies the amount of remuneration in terms of amounts, the actual annual change in the minimum wage will be connected with the obligation to amend the contracts. However, if the amount of remuneration for work is specified in the contract as "the minimum wage", then the change in the minimum wage will not give rise to such an obligation. This is due to the fact that the amount of the minimum wage is the same for all employees, regardless of their position or length of service.
Paying the salary postponed to the 10th day of the following month is legal and very convenient for people who settle employee salaries, as it significantly minimizes the need to adjust settlement periods. However, paying the minimum wage at the turn of the year also has certain consequences. During this time, particular attention should be paid to the application of the relevant regulations.