The salary increase of 5.5% raises numerous questions, such as, for example, what amounts of those that reflect the payroll must be taken into account for its calculation

The Government and the social agents have agreed to increase the minimum interprofessional wage (SMI) by 5.5%. Consequently, the monthly salary of Spanish workers with a 40-hour weekly shift goes from 900 to 950 euros, divided into 14 payments. Or, what is the same, they can claim a minimum salary of 31.66 euros per day or 13,300 euros gross per year.

For now. It is possible that, as the Coalition Executive has announced, this year there will be a new increase in the SMI, until reaching the maximum of 1,000 euros per month, with the approved SMI being applicable from January 1, 2020.

It is common, especially when there are changes, for many workers to raise doubts about whether this increase affects them and how it is reflected in the payroll. To answer these questions, it is necessary to start from a series of concepts that appear on the salary sheet.

First, what amount of money is received as base salary, that is, the fixed part of the salary that is received. In addition, it is necessary to analyze what type of bonuses or complements are included in the payroll. Only some of them are added to the base salary to calculate the SMI that is charged. In this way, and after the approved increase, the total of the base salary (with the extra payments) and the additional bonuses included must be at least 950 euros per month.

Who does the rise in the SMI affect?

The vast majority of workers are protected by a collective agreement with wages higher than the minimum wage approved by the Government. The increase in the SMI only affects, therefore, those employees who are not covered by an agreement. In these cases, their employment relationship is directly regulated by the employment contract signed with the company.

The beneficiaries of the increase in the SMI are workers who earn less than 950 euros per month or 13,300 euros gross per year (including base salary and supplements). The calculation must be made taking into account the bonuses that the agreement establishes as common, that is, they are charged by all employees without distinction.

It must be borne in mind that these figures refer to a standard 40-hour work week. If this is lower, the SMI is reduced in proportion to the hours worked.

Workers whose salary (base salary plus common supplements) is above 13,300 euros gross per year will not notice any change directly but will indirectly, by increasing the limits of compensation or benefits paid by the Wage Guarantee Fund (FOGASA), or the part of the salary protected against an embargo.

What is base salary?

The base salary is the amount that is established in the labor agreement or the individual contract as a fixed salary or agreed monthly remuneration. In the payroll it usually appears as such, base salary, but it is also reflected with other nomenclatures such as salary or salary.

Extra payments: prorated or not

The extraordinary payments are also taken into account to calculate the SMI. These are the amounts that are received independently of the monthly salary. As a general rule, they are charged in December and June, but it is possible to agree to prorate them, in which case they are received with the payroll month by month.

Salary supplements, when are they compensated?

Most of the doubts of workers about the SMI refer to which payroll supplements must be added to the base salary to calculate it correctly. Salary supplements are extra payments that are added to the monthly salary and that the employer pays for a specific reason (working at night, years in the company, etc.). In the payroll they can be reflected with different names, such as plus, premium, incentive, bonus, etc.

The bonuses that are taken into account to calculate the minimum wage are the common ones. That is, what all employees are paid equally, regardless of the conditions and personal circumstances of each one. They are also called absorbable because the employer can use them to offset possible increases in the base salary. The payroll comes to reflect them as bonuses by agreement or on account of the agreement.

However, the supplements that depend on personal circumstances (seniority, language, titles), the work done (night shifts, shifts, etc.) or those linked to the results of the company (productivity, bonus), are not taken into account in minimum wage calculation. Therefore, they cannot be used to offset salary increases.

extra-salary supplements

Extra-salary supplements, such as allowances, clothing or transportation expenses, are not included in the calculation of the SMI either. They are payments for expenses incurred as a result of work activity. However, there are some of these supplements on which there are different jurisprudential interpretations.

The National Court, in a judgment of September 16, 2019, partially annulled a company agreement because it established the compensation of the minimum wage with the transport and distance bonus, and the clothing. However, the same court issued a resolution in May 2019 in which it ruled that the productivity bonus must be added to the base salary for the calculation of the SMI. Given this disparity of criteria, it is likely that the Supreme Court will have to rule to clarify which of these supplements can be absorbed to increase the minimum wage.

Gross or net salary. In money or in kind

When we talk about minimum wage, it is gross salary for full days, that is, before the withholdings are applied to personal income tax and Social Security contributions made by the company. On the other hand, to calculate the minimum wage, the wage in money is taken into account, not the wage in kind. Examples of salary in kind are food aid and/or contributions made by the company to pension plans.

In addition, it is important that the calculation is made from an annual perspective. It must add 13,300 euros per year

Source: The Country

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