If you open the payroll and don't understand the concepts, you are not alone. Up to 76% of workers do not know how to decipher it completely, according to a study by the labor management and human resources platform PayFit. 9% directly "do not understand it at all"...
The document usually has a similar structure regardless of the company. The payroll must follow the guidelines of an official model that was born in 1994, with updates several years ago to include certain contributions from the company. By law it must include some key concepts that not everyone understands.
"The main reason is that it is not explained in the educational system. Accruals, deductions, complex concepts... Most of the parts refer to concepts that do not affect us, which is what makes it not understood. In the end people go to see your net and in the middle there are calculations and percentages that are not easy to understand," explains Salvador Fernández, director of legal and payroll at PayFit Spain. These percentages are established by law, such as personal income tax withholding, training or contributions to the Intergenerational Equity Mechanism.
With concepts that are strange or a dance of numbers that is misleading, what exactly is each thing? These are some of the concepts that generate the most doubts.
When looking at the payroll there are two big concepts in the amounts, accruals and deductions. "The accrual is the income, what the company pays us. The gross salary. There can be various concepts, such as salary, extra payments if they are prorated, certain bonuses and benefits in kind - such as the restaurant ticket -", he comments. Fernandez. Thus, the base salary and supplements would appear in the accruals.
On the deductions side, all the discounts that the company makes on the gross salary are included. The main ones are Social Security contributions, personal income tax withholdings and expenses or advances. There may also be payments in kind, such as insurance, "since the company includes it in the payroll in accruals, but also in deductions because it is paid directly to the company that provides the service."
It is a payment that is applied for the Social Security contributions made by the worker. "They go to benefits that we may receive in the future, such as pension, maternity and paternity or temporary disability," they explain from PayFit. The company also makes contributions for similar concepts.
The withholding for the Personal Income Tax (IRPF) serves as an advance of what would have to be paid in the income tax return based on the annual salary. In this way, payments will not have to be made all at once during the rent campaign, with significant disbursements. "The company is responsible for paying the advance with the payroll deduction," says Fernández.
The tax is calculated based on the annual salary - if it is higher, the tax pressure increases - and personal conditions, such as children or a disability. "What has the most influence is the salary. Like a bonus, which increases our annual salary and changes the personal income tax that is applied to the payroll," says Fernández. This can mean that the rate applied is different from month to month.
One of the latest concepts that has been added to the payroll, which is already paid this year, is an extra contribution for the sustainability of the pension system, an "extra effort" that serves as a cushion in case there are deviations in future spending. The Intergenerational Equity Mechanism (MEI) allocates 0.1% of the salary for this purpose. It is temporary and the company contributes the majority (today 0.5%).
The amount of this chapter goes to the unemployment fund so that in the event that one is left without work, the unemployment benefit is financed. One part is contributed by the worker (1.55% for permanent employees) and the other by the company.
It represents 0.1% of the payroll and goes to a common vocational training fund. With them, companies can make training plans. Even if the company does not have any program, the discount is given anyway.
The concept that most interests employees appears towards the end of the document. It is the liquid to be received, the amount that is deposited in the bank once all the concepts contributed by the worker have been deducted.
The concept of "professional guarantee fund" or "salary guarantee fund" is a company contribution to a fund that pays possible compensation in the event that a company cannot make payments. It is known as Fogasa. It is 0.20% of the contribution base.
These concepts, which are borne by the company, refer to contributions for work accidents (AT) and occupational illnesses (PD). "When we have a work accident or an occupational disease, Social Security or the mutual insurance company, if it is covered by them, pays us based on this collection," details Fernández.
The percentages vary depending on the company's sector of activity and the risk involved in the work. For example, they are higher in construction than in an office. They range from 1.5% to 7.15% together.
