What does the salary package include

Wages & salaries - differentiation, amount & framework conditions

In the vernacular it is said succinctly: “You don't talk about money!” But why is that actually the case?

After all, everyday life depends on how much salary is transferred to the account by the employer at the end of the month. It is a very complex topic and often uncomfortable because one person may earn significantly more or less than another.

While some people try to distinguish themselves through their money, others simply seek justice in the payment of their salaries. But what is fair? When it comes to earnings, there are many factors that have an impact on both the amount and the structure. Good salary management and a focus on performance-based pay are essential for satisfied and therefore motivated employees.

Definition: what is wage?

In Germany, wages are often used as a synonym for wages. In fact, there is a subtle difference to note here.

Because the wages of every employee are calculated based on the hours they have worked. It can be paid daily, weekly or monthly to the employee by the employer. The employment contract regulates the frequency and the type of payment. With the payment of wages, the employer compensates the employee for the services he has provided.

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Definition: what is salary?

The salary is a monthly payment that is independent of the hours actually worked. The salary is paid to the employee on a regular monthly basis. The recipients are civil servants or employees in permanent employment. Already knew? Salaries in human resources, for example, play a complex issue.

Accordingly, the salary at the end of the month is always the same, fluctuations are excluded, unless bonuses are possible within the company.

What is the difference between wages and salaries?

salary usually describes that Pay in the form of the monthly salary. There is neither a dependency on the number of working days nor on the service rendered in the end. Accordingly, the employee receives the same amount every month. This amount remains unchanged even on public holidays or vacation days. Therefore, the term of the Base salary used.

The whole thing is different with wages. The work actually performed is used as the basis for calculation. This is calculated, for example, based on the number of items produced. As a result, wages often fluctuate. Another reason for the fluctuations is that public holidays or vacation days, unlike wages, are relevant for wage payments. The more holidays or vacation days, the less work is done and the lower the wages at the end of the month. Correct payroll accounting is often complicated and not easy to create due to a wide variety of legal provisions. A problem that frequently arises for the HR manager is, for example, the new statutory regulations on phantom wages.

Overview: Terms for pay

The remuneration describes in every form a Consideration from the employer for the work performed by the employee in Form of payment.

The conventional terms for this are income, earnings, wages and salaries for employees. In the case of legal persons, one speaks of a profit or surplus. Freelancers receive a fee.

How do you set wages and salaries?

The work salary is from the contracting partiesfreely negotiable, as long as it's not through Collective agreements or minimum wage regulations is fixed. Either way, you have to do it under all circumstances written hold in a contract. For employees it is a Employment or employment contract.

Even if there is a collective agreement, there may be changes in salary. This is achieved through negotiations between the union and the employer. As a rule, such negotiations take place at regular intervals. If the negotiations fail, strikes are not infrequently the result. Specialized personnel also has the option of a Salary payment via tariff to be agreed separately with the employer.

Which factors do wages and salaries depend on?

Wages and salaries depend on various factors. These affect not only the performance of the employee, but also the employer and its economic situation.

Factors for wages and salaries:

  • The economic situation
  • The degree of responsibility
  • The qualification of the employee
  • The stress or danger at work
  • The skills of the worker

Collective agreement: regulation of wages and salaries

Since the founding of the Federal Republic In 1949 the law on collective bargaining was introduced, through which the collective agreements are regulated. Despite this law there is different collective agreements. The reason for this is that not every company has the same good representatives Negotiating strengths vary accordingly. Collective agreements are usually between the employer and a labor union agreed. If collective bargaining is unsuccessful, it can Strikes come.

In smaller companies it is often the case that the capacities are too small to be able to pay according to the collective agreement. In such cases, individual negotiations take place with the employees.

Definition: what is a collective agreement?

Be through a collective agreement Wages and salaries of workers In companies regulated. It is negotiated between the employer and the union. The collective agreement lists the rights and obligations of both the employer and the employee. Not only does she play Amount of wages matter because details too working conditions play a role in a collective agreement and are the basis of many negotiations.

What does the collective agreement include?

Different provisions are anchored in the collective agreement. Among other things will be Legal norms recordedthat to Regulation of legal relationships serve by employers and employees. Accordingly they apply equally to both parties. Particular attention is paid to the working conditions. The normative provisions are legally founded and they must not be changed under any circumstances.

The normative provisions can be divided into temporal, spatial, factual and personal areas of application.

Normative provisions:

  • Temporal scope:

Usually limited to the duration of the contract.

  • Spatial scope:

Limits the area for which the collective agreement applies. The limitation is to be carried out by the employer in coordination with the employee.

  • Material scope:

Basically applies to an economic sector and is determined operationally or professionally.

  • Personal scope:

Describes the demarcation with a view to personal characteristics. For example, a distinction is made between employees and workers.

In addition to the scope one takes in the collective agreement obligations under the law of obligations in front. On the one hand, the Peace obligation noted. The point here is that both parties commit to the Maintain peace at work.

The second determination is that Obligation to act. Due to this circumstance, the parties to the collective bargaining agreement undertake to act on their association members in the event of behavior contrary to the collective agreement.

What types of collective agreements are there?

What is the 2019 minimum wage?

When the statutory minimum wage was introduced in 2015, it was € 8.50 per hour. Due to the fact that it is recalculated every two years, it became on 01/01/2019 to € 9.19 per hour elevated.

Refusal by the employer to pay the minimum wage can result in a fine of up to € 500,000.

Due to the increase in the minimum wage, the number of hours that mini-jobbers are allowed to work has continued to decrease. It is still included 48.9 hours per month, while at the beginning of the minimum wage it was still 50 hours. So the increase in the minimum wage has Consequences for the employer, but also for the employee.However, there are some groups to which the minimum wage does not apply.

No minimum wage applies to:

  • Minors without completed vocational training
  • trainee
  • Honorary office
  • Voluntary interns in the first three months
  • Compulsory interns
  • Long-term unemployed in the first six months after cessation of unemployment

Remuneration models: billing of wages and salaries

There are a number of different options for paying employees. This must be done under all circumstances contractually regulated be. Some of the models are tailored to specific sectors of the business world and are therefore not suitable for every company.

Here the responsibility lies with the company management to decide which model suits the respective company.

Remuneration models: lump-sum salary, commission payment & income-dependent salary

In this case, the actual working hours are irrelevant. The amount of the monthly payment to be made by the employer is negotiated in advance. This is then paid as a lump sum in months when there was less work or the employer is not completely satisfied with the employee's performance.

This means an additional payment to the monthly salary. This type of remuneration can be found particularly often with sales representatives. This is the payment of a fee for each successful conclusion. The amount of the sum is calculated as a percentage.

  • Salary depending on the company's income:

This can lead to enormous fluctuations. The employee hardly has any financial security here.

Remuneration models: time wages, piecework wages and premium wages

At the Time wages will only the hours actually worked taken as a salary basis.

That is with Piecework wages different, because here the worker is for paid for every piece produced. Piecework wages are also known as piece wages and are mainly used for continuous flow work.

At the Premium wage the worker gets one bonus, the specified number of products to be manufactured should have been exceeded or savings measures should have been observed.

Remuneration models: hourly wages, monthly wages and annual wages

At the Hourly wages can the sum paid to the worker at the end of the month, vary greatly. The reason for this is that every hour worked is remunerated. This can be both an advantage and a disadvantage for the employee.

The Monthly salary provides the classic payment The payment is not influenced by public holidays or vacation days. The employee gets a fixed salary every month. However, there is another form of monthly salary, thatfixed monthly salary. Here, a monthly salary is agreed between employer and employee. It comes to Deviations of the hours to be performed, in whichever direction, this will be charged in the following month.

At the Annual salary is it so that the Salary redefined annually becomes. The monthly payouts can fluctuate here. The main thing is that at the end of the year the employee was paid the salary that was agreed.

Interim conclusion:There are different fee models, each of which has its advantages and disadvantages. The monthly salary is the most common pay model, but the hourly wage is also often paid out in reality.

Variable remuneration systems: yes or no?

There are different forms of remuneration systems. Variable remuneration systems can significantly increase employee motivation. They can therefore be seen as one of the most important instruments for improving performance in the workplace.

The management should individually determine which one suits the company best. However, a clear implementation concept is essential for any type of remuneration system so that it is also transparent for employees.

What should you watch out for with payroll?

The employer is obliged to issue a monthly pay slip for each of its employees. On the basis of this, the employees can understand which components their net salary is made up of. The pay slip shows which sums of the gross salary were withheld by the employee in order to be taxed in accordance with the rules.

Pay slipsare not only necessary for full-time employees, mini-jobbers also usually receive one. Employers have to pay attention to a large number of formalities.

What is the Pay Transparency Act?

The Pay Transparency Act was passed on July 6, 2017. It aims to minimize wage discrimination based on gender. Wage transparency is intended to ensure that women and men in the same or comparable position receive the same salary.

Workers have every two years Entitlement to a salary report. The application for this must be submitted in writing.

Gross and net wages: what's the difference?

There are often small worlds between gross and net wages. The reason for this is that the employer is legally obliged to deduct taxes and duties from the gross salary and to transfer them to the relevant offices and funds. There is also talk of a withholding tax here.

The gross wage is the amount that has been contractually negotiated. It is the sum that the employee is basically entitled to based on his or her work.

The net wage is the amount that the employee actually receives at the end of the month. It is the gross wage minus all taxes and duties.

Salary taxes: income tax

The wage tax is calculatedfor each employee individually. The higher the income, the more tax you have to pay, as this is calculated as a percentage. The minimum wage tax rate is 14%. A maximum of 45% of the gross salary can be taxed.

Note:When calculating wage tax, the tax class plays an important role. In addition, tax exemptions are used.

The remaining taxable duties depend on the wage tax.

Salary contributions: solidarity surcharge

The solidarity surcharge is included in 2019 5.5% of wage tax. It is deducted from all gross salaries nationwide.

Salary taxes: church tax

While a church tax of 8% is levied in Bavaria and Baden-Württemberg, the value in all other federal states is 9%. Church tax is payable by anyone who is a member of a religious community that is allowed to receive church tax. In Germany, for example, these are the Catholic Church, but also Jewish communities.

Social contributions: payments into the solidarity system

People in jobs that are subject to social insurance pay into various funds. In the solidarity system, this money is allocated to those people who receive a pension or are dependent on sickness or unemployment benefits.

The fact that the taxes are compulsory is justified by the fact that the current employees also benefit from the same benefits if they find themselves in such a situation.

Note:The social security contributions are paid half by the employee and half by the employer.

Wage social security contributions: health insurance

The health insurance contributions currently amount to 14.6% of the salary. So there are 7.3% each of the employer and the employee to be paid to the cash registers.

For so-called Multi-jobber, i.e. people who have more than one job that is subject to compulsory insurance, have their own regulations that must be observed for payroll accounting and the payment of social security contributions.

Wage social security contributions: pension insurance

Every employee is obliged to pay into the pension insurance. This guarantees that he will continue to be entitled to money after his working hours. The employee has to pay 9.35% of the income into the pension fund. A total of 18.7% go into the pension insurance, since the employer also contributes his part with the monthly salary payments.

Wage social security contributions: long-term care insurance

Every employee who has health insurance is also insured for long-term care at the same time. A total of 2.55% of the salary is retained for long-term care insurance. For the employee this corresponds to 1.275%, since the employer contributes 50% to the taxes. In view of the gaping pension gap in old age for many people, this amount is regularly part of the public discussion.

Social wage taxes: unemployment insurance

The employee pays 1.5% of his salary to unemployment insurance.Here, too, the employer makes half the same contribution as the employee. Overall, the unemployment insurance contributions are exactly 3%. Should the employee lose his or her job, unemployment insurance will step in and help the unemployed find a new job.

Interim conclusion:So a distinction is made between salary and social security contributions. In addition to wage tax, the wage tax also includes the solidarity surcharge and church tax. Social security contributions are defined by health, pension, long-term care and unemployment insurance.

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Required by law: the payroll

When creating pay slips, it is important to follow a fixed pattern. None of the mandatory information may be missing, all formalities must be strictly adhered to. The period for which the wage is paid is also important.

So that all pay slips are prepared according to the same scheme, writes the Trade Regulations determine which data the document must capture.

Mandatory information in the pay slip:

  • Name & address of employer & employee (complete)
  • Tax identification number (ID) of the employee
  • Employee's insurance number
  • Period of payroll
  • Signature or company stamp
  • Start of employment

Furthermore, it is differentiated how the net salary is made up.

Therefore, the following information is noted:

  • The gross wage
  • Social security contributions (employees)
  • Taxes (wage and church tax)
  • Contributions to company pension schemes
  • Cash benefits
  • capital accumulation benefits
  • Personal prints
  • Tax allowances
  • Surcharges
  • Allowances
  • The net wage

How long do you have to keep the pay slip?

There are no legal requirements, how long a pay slip is to be kept. But it is advisable to them File carefully and ready to hand when needed to have. For example, landlords have the right to have their payroll shown for the past three months in order to satisfy themselves that the prospective tenant is able to pay the rental costs. Pay slips are also indispensable for granting credit.

Tax class: what is it?

The tax class determines the Determined amount of deductions from gross wages. It also indirectly determines the amount of the solidarity surcharge to be paid and the church taxes. Decisive for which tax class an employee is assigned to, is the marital status.

Tax classes can be changed under certain circumstances. In this way it is possible for the taxpayer to save money.

What tax classes are there?

Employees are divided into tax brackets I to VI.

Assignment of tax classes:

Single; Married people for whom the partner is liable to tax to a limited extent; Married people who are permanently separated; Widowed; Divorced

Single workers with children

  • Tax class III:
    • Married,
      • only one of whom works;
      • who do not live permanently apart and are not in tax class 4;
      • whose spouse has chosen tax class 5; Widowed
  • Tax class IV:

Married, both work

Married persons whose spouse has chosen tax class III; Married people who do not live permanently apart and are not in tax class 4

Employees who receive salaries from more than one employer

How does the division into tax brackets work?

The division into tax classes is based on the private circumstances of the employee. In terms of marital status, a distinction is made here between whether the employee is single or married. In the case of single workers, it also plays a role whether they are a child have or not.

In the case of married workers, on the other hand, it is of interest whether both go to work or just one of the spouses.

The list above shows which tax class you belong to. However, if this does not provide any clarity, you can also go elsewhere Obtain information. It is possible to join the Tax office To inquire about the tax class in which you are classified.

Tip:The tax class is always indicated on the pay slip. A look at it can also provide clarity, if this is available.

Special allowances for wages and salaries

Also Special allowancesis regulated by contract. This can be either single payments or to recurring payments act. Recurring payments include, among othersAllowancessuch as the hardship allowance.

But also Bonuses fall under this term. For example, if they have been with the company for many years, the employer can pay out a loyalty bonus to their employees. Also Profit-sharing are typical special allowances. How often this is paid out depends on the company and its structure. Here the employee is given a percentage of the company's profits.

Furthermore, special allowances can also be non-monetary benefits act. This can be for example Company car, Fuel vouchers, subsidies for public transport, smartphones at company costs, training courses or discounts for employees. The non-monetary benefits can be for both the employee and the employer clear tax advantages entail.

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single payments

Typical one-off payments are, for example, vacation or Christmas bonuses. But also that 13. Salary falls under this term. This is a payout that is made once a year. The one-time payments are like any other form of salary taxable. These are shown regularly on the pay slips and are completely subject to wage tax.

Employee rights: wages and salaries in labor law

Employees have certain rights with regard to their contractually regulated wages. These ensure that the employee knows that they are financially secure even in the event of illness. The employer is legally obliged to carry out his duties in this regard.

Continued Payment Act: wages in the event of illness and on public holidays

The employer is legally bound to do so Committed, its employees also in the Case of illness continue to pay their wages. Despite a certified incapacity for work, the employee receives up to six weeks paid his entire net wage.

At the end of the six weeks, it is the health insurance company's responsibility to support the employee financially in the event of illness. Instead of the normal salary, the employee then has it Sick pay to. This amounts to 70% of the gross wage.In addition to sick pay, the employer can also provide a Sickness allowance pay.

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Parental leave law: legal entitlement to parental leave

It is also regulated by law that parents are entitled to parental leave. However, the employer is at this time not obliged to pay full salary. However, it is the employer's duty to protect his employees for the period of parental leave to be released from work.

The income on parental leave is increased by the Parental allowance secured. This can up to 67% of the income for the past twelve months turn off. The maximum limit however amounts to 1800 €. 

Note:In the event of illness, the employer is obliged to continue to pay the employee his full remuneration. This applies up to an extent of seven weeks. From then on, the employee is only entitled to reduced sickness benefits. In the case of parental leave, the employer is not obliged to continue to pay.

Equal Treatment Act: Significance for wages and salaries

The Equal Treatment Act applies to all employees without exception. It aims at one fundamental equal treatment of employees from. This is to be achieved by assigning the same salary to workers who perform the same tasks.

The following factors must not play a role:

  • Ethnic origin
  • gender
  • Religion or worldview
  • Disabilities
  • Age
  • sexuality

If an employer refuses to act in accordance with the Equal Treatment Act, he must give good reasons for this behavior. Otherwise, the consequences could be enormous. Equal pay is more than just a catchphrase here, but the demands on companies.

The gender pay gap

The gender pay gap describes this Differences in hourly and annual salaries between men and women. The gender pay gap is the difference that results from the differences in salaries.

2018 was the Gender Pay Gap value at 21%. This is an average value, which means that the difference is lower in some industries, but well above this percentage in many professions.

The gender pay gap in Germany is far above the average differences in other European countries.

What to do if the employer does not pay the wages?

If it happens that the employer does not pay the wages as agreed, the employee has several options to take action.

First, you should consider the employer, at best writtento ask for the salary within a set period to pay off. After the deadline has expired, a written labor law warning due.

Is there a delay in payment of the salary of more than two months in the room, the employee can his Refuse to work. Should the company suffer disproportionately great damage as a result of the refusal to work, this behavior would not be lawful. Also, one must contact the employer before leaving work warn. In any case, are available to the employee late payment interest towards unpaid salary. Also Claims for damages can be asserted.

The last resort to enforce the right to salary is the Lawsuit before the labor court for additional payment and all other claims. Apart from that, the employee is the termination without notice possible. Then the employer has to pay an in addition to the outstanding salary severance pay numbers.

By when do wages or salaries have to be paid out?

Until when the employer has to pay the wage or salary, is based on the contractual conditions emerge. Payment for 1st or 15th of the month.

If the employee and the employee agree on a different, moral regulation, this applies. If the employee starts his job in the middle of a period, installments may have to be paid by the employer.

What to do in the event of late payment of wages?

If there is a delay in payment of wages, the employee has different options to react to this circumstance. However, it does not constitute an official default in payment until contractually regulated time still no transaction of the money in the employee's account was made.

Furthermore, the employee can only draw conclusions from the late payment of wages if he is informed by the employer not informed in advance of a possible default in payment has been.

He has a Right of retention his work when the employer owes him a significant portion of the money. A right of restraint can only be claimed if the company is thereby granted no serious consequences, such as bankruptcy, threaten.

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Salary Negotiation: Important Tips and Advice

Before discussing a wage increase with your boss because you feel unjustly paid compared to your colleagues, you should take a close look at a few things. These may help to understand why the pay is different.

Possible factors:

  • Does the colleague work overtime?
  • What training does he have?
  • Is he on shift?
  • Does he work full or part time?
  • What management responsibility does he have?
  • What is the family situation like?

If you look at these questions and answer them honestly, you can remove some misunderstandings or perceived injustices.

When should one negotiate wages and salaries?

If you are of the opinion that you are not earning enough, you should talk to your boss about a wage increase. Before the boss is approached about a wage increase, he should be able to assess the performance a few months in advance.

Bringing up a raise directly could cause displeasure. Rather, you should get one Assessment of individual performance ask. In this way, it is possible for the employee to find out in the course of the interview whether the employer is even considering an increase in salary.

Salary negotiation: what rights does the employee have?

When deciding on a raise, it is important to consider which one Employee entitlement of his salary. The contractually fixed salary appliesnot the achievement success, but the work is rewarded.

Exceptions to this are commissions. This is paid out in addition to the regular salary. They are performance-related, so that an employee has no legal entitlement to them. He only has this claim if the work is successful.

Salary negotiation from the employer's point of view

It is advisable to use the targeted wageto be determined before the job advertisement is published. Nowadays it is not uncommon for a potential employee to go into an interview with their own salary expectations and address this aspect without a long wait.

A firm idea on the part of the employer does not immediately rule out negotiations. These should, however on a plausible and factual level occur. If a little for wage negotiation Leeway is left, employers and employees can meet in the middle of their respective ideas during the salary negotiations. So at the end of the day, both parties are satisfied.

It has been shown that Job offers with advertised salary information are much more popular have received. It offers some form of Pay transparencythat gives applicants clarity from the start. After all, if you are looking for a job, you are ultimately also interested in your earning potential.

Tip:A salary negotiation should only take place after the boss has had a few months to assess the worker's work. Only then would it make sense to have a conversation about a raise.

In which occupation is there a particularly high salary?

The fact that different professional groups get an enormous amount of salary is nothing new. Especially in the medicine the amount that flows into the employee's account at the end of the month is particularly high. Head physicians and senior physicians earn an average of € 8,500 a month, surgeons a total of € 7,000.

But everyone else too responsible and labor-intensive professions you are rewarded with a corresponding salary. However, this is often related to a working week that is significantly longer than 40 hours. Senior positions In the banking industry, an average of € 6,500 is paid; lawyers receive € 6,000.

IT also offers excessively good earning potential, and specialists are desperately looking for specialists. They have practically free choice of job. Industrial engineers and business IT specialists can expect an average of at least € 6,500. But there are hardly any upper limits. Even really good salespeople have very good earning potential.

Author: editorial staff personal knowledge