Net Pay Correction ST |
|
Initial condition When employees are absent for the reasons like illness, accident, military service, etc., salary-replacement benefits are normally provided by third parties (insurance companies) in the form of daily allowances.
If the employer pays the "usual" salary during the absence, wage-replacement benefits are to be accounted for in the payroll.
If salary-replacement benefits are not subject to accounting in case of social insurance, the deduction base for contributions reduces so that these wage-replacement benefits and the net wage are therefore higher than if no such benefit had been processed.
Guidelines for net wage compensation (NW Compensation) ❑The employer is obligated to carry out daily allowance adjustments ❑The higher net salary after an absence meets with incomprehension ❑Therefore, there is a possibility to carry out a net salary compensation, provided that it complies with labor legislation (collective employment agreement, individual employment agreement, OG, etc.) ❑For this reason, the salary processing software permits daily allowance adjustments with or without net wage compensation
(Source: Guidelines for Wage Data Processing 20091204, December 18, 2009 edition – swissdec)
SwissSalary calculates net salary compensation automatically using an iteration. First, the net salary is calculated without daily allowance adjustments. After the acquisition of daily allowance adjustments, social security and income tax bases are upscaled and downscaled +/- until the net salary is back to 1:1, the same as without daily allowance adjustment.
Please be sure to follow the instructions of swissdec that net salary compensation may only be used under the conditions described above. The process of net salary compensation has neither particular juridical basis, nor detailed professional manuals. It is important that net wage compensation is implemented not only for individual employees, but also for a clearly defined group (GAV) or for the whole company. If you want to manage company personnel with and without net wage compensation, you have to duplicate the corresponding daily allowance wage types (with/without NW compensation).
Settings It is very easy to set up net salary compensation in SwissSalary.
New salary type Net Wage Compensation First of all, you need a new salary type Net Salary Compensation. It can be a copy of the Monthly Salary or Monthly Salary Correction salary types. Copy one of these salary types and assign number 1160 (default Payroll Setup) to the new salary type. Please note that the calculation type is set to negative. Edit the translations. As a rule, obligations and account assignments remain as in the output salary type Monthly salary.
The new salary type assignment in the Payroll Setup In order that SwissSalary detects which salary type is responsible for net salary compensation, you will need to record this new salary type once in the Payroll Setup in tab Base -> field Net Pay Correction ST.
Marking Daily Allowance Salary Types Now you have to set the checkmark in the Net salary compensation field for Daily allowance adjustment and the corresponding Daily allowance salary type. Again, we would like to point out that need to duplicate the daily allowances salary types, as long as you have different considerations in the same client (with/without NW compensation).
Net salary Compensation Calculation You are ready for the calculation of net salary compensation now. SwissSalary calculates the compensation in a usual billing process automatically. Despite greater computing power required for iteration, we could not determine in our tests any noticeable loss of performance during the process of salary accounting.
How can the calculation be controlled? Create a test billing for employees without daily allowance adjustments. Note down the net salary amount. Finally, record the daily allowance adjustment and create a test billing again. Now, salary type 1160 will be displayed automatically in the area of Gross salary with a minus amount. The net amount of wages again should be the same as without daily allowance adjustment.
Our calculation is carried out by means of iteration of social and private insurance bases, and the income tax base. The bases along with the exemption of daily allowance adjustments are additionally eliminated again by means of salary adjustment. Of course, this calculation equally applies both to the employer and the employee. With this additional salary cut and the associated reduction of wage bases, the employee receives the same net wage as if he had received no daily allowances. Through this additional discharge of wage bases the net wage compensation in case of some social security funds is not entirely noncontroversial. Important insurance contributions to social insurance companies are avoided, and additional reduction in the employee's social security base can lead to the situation when, for example, s/he is no longer sufficiently covered by the AHV insurance and therefore must register as an inactive person.
Our support has been instructed not to provide legal information to customers and/or partners, whether net salary compensation should be carried out in particular cases. Individual companies must settle it themselves. Since there is no legal basis for net salary compensation, it may lead to refunds and back payments in case of dispute (no legal protection of the employer against employees stipulated in agreements). Of course, if you have questions about calculation logic, we will provide you with necessary information.
We have now combined the calculation logic for “Net salary compensation” and “Gross for net (BfN)” in the “Net salary compensation” function. This calculation method can be used in practice for insurance daily allowances and special payments (long-service bonus, bonus).
The following settings can be made in the “Net wage compensation” field for each individual salary type: •Deactivated: No net wage adjustment is made for this salary type. •Activated with Income tax: If this option is selected, the employer pays the employee's social security contributions and withholding tax deductions. Our calculation is carried out by iterating the social security bases and the withholding tax base. Note: In most cases, this option is selected for insurance daily allowances. This is because the employee should not receive a higher payment as a result of the daily allowance processing than if no daily allowance is processed. To achieve this result, the withholding tax base must be taken into account for persons subject to QST. •Activated without Income tax: If this option is selected, the employer only pays the employee's social security contributions. This calculation is made by iterating the social security bases.
How can the calculation be checked? •You can proceed as follows for insurance daily allowances: Create a test payroll for the employee without daily allowance corrections or make a note of the net wage amount. Then enter the daily allowance correction and the daily allowance salary type and create another test payroll run. Salarye type 1160 is now automatically displayed in the gross wage area with a minus amount. The net wage amount should be the same as without the daily allowance correction. Please note that this net wage adjustment only makes sense if the daily allowances remain in the company and are therefore processed via a daily allowance wage type and a correction daily allowance wage type. If daily allowances are forwarded, a separate daily allowance wage type without net wage adjustment should be used.
•Special payments (e.g. long-service award or bonus). The employer pays the social security contributions and income tax. 1.Create a test statement without a special payment and note the amount paid out. 2.For example, report CHF 1'000.00 with a salary type in which the option “Activated with income tax” is selected in the “Net wage compensation” field. 3.Create a test payroll again. The payout amount must now match the payout amount noted in step 1 plus the special payment amount.
•Special payments (e.g. long-service award or bonus). The employer only pays the social security contributions 1.Use a salary type in which the “Net wage compensation” field is deactivated. Create a test payroll run for a person subject to QST with which, for example, a total of CHF 1'000.00 is settled and make a note of the amount of all social insurance contributions. 2.For example, report CHF 1'000.00 with a salary type in which the option “Activated without withholding tax” is selected in the “Net wage compensation” field. 3.Create a test payroll again. The amount paid out now differs by approximately the amount of social security contributions noted in step 1.
Note: The higher the special payment, the greater the difference between the amounts from steps 1 and 3 may be. This is because the amount of the net salary compensation is itself also subject to social security and withholding tax. This increases the IT rate-determining income and the tax progression, which in turn influences the percentage of withholding tax rates.
Up to update 5064.000, the offset amount (net wage compensation) was only shown when processing insurance daily allowances. As of update 5064.000, the offset amount for special payments (BfN) is also shown with the same salary type and included in the social security/ |