Raise the minimum wage: how it affects your payroll

The Council of Ministers has approved this Tuesday the increase in the minimum interprofessional wage (SMI) up to 1,080 euros, a rise of 8%.

Thomas Osborne
Thomas Osborne
14 February 2023 Tuesday 06:37
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Raise the minimum wage: how it affects your payroll

The Council of Ministers has approved this Tuesday the increase in the minimum interprofessional wage (SMI) up to 1,080 euros, a rise of 8%. With this new impulse, it has grown by 47% from 735 euros five years ago. It also takes it to 60% of the average salary, the continental objective, according to the Minister of Labor, Yolanda Díaz.

What will all this translate into? Who comes out winning? Is there small print and will it affect the payment of taxes?

The minimum wage establishes that you cannot earn less than a certain amount in the annual computation. Specifically, 1,080 euros gross in 14 payments or 1,260 euros gross in 12 payments.

To calculate it in the payroll, the fixed salary and the salary concepts that accompany it are combined, such as seniority or bonuses to which you are entitled according to the applicable agreement. "There are no expenses for transportation, food or diets that are not considered salary concepts," explains Cruz Rivera, labor lawyer and editor of Lefebvre.

"If there are base salaries that do not reach the minimum wage but include fixed supplements, everything is added up. That result cannot be below the SMI," says Mari Cruz Vicente, CC.OO union action secretary.

Using examples, you can have a base salary of 900 euros, below the SMI, but adding 180 euros for seniority is reached.

As of the February payroll. As the measure has a retroactive effect from January 1, the amounts not received at the beginning of the year will have to be compensated.

In the next payroll it will be necessary to check that this compensation is paid. The company will have to pay the difference between what was charged in January and what would have been charged if the SMI had been in force. In this way, whoever had been collecting the SMI will receive 80 euros for the January payroll, in addition to the February increase, Vicente details.

The main reference of the SMI, the 1,080 euros, are for a full-time worker, 40 hours. "In other cases, in which less work is done, it is prorated until it adjusts to your day, so that you never earn less than the minimum wage in proportion," says Rivera. "The salary will be applied proportionally," she sums up.

As a whole, CC.OO. estimates that it will affect 2.5 million workers. Logically, the workers who are earning less than the minimum wage, whether they earn the floor in force up to now or if they were paid something above. Also "to those who do not have a reference agreement and to those who are in an agreement below the minimum wage," says Vicente.

By specific groups, it points to domestic workers, mainly women, who do not have the right to collective bargaining. A similar case is that of field workers. Vicente assures that the measure will contribute to fighting the gender wage gap.

By autonomies, it will have more incidence in Extremadura, the Canary Islands, Andalusia, Murcia and Galicia, it was specified from the unions at the end of January.

The increase in the minimum wage brings the annual calculation to 15,120 euros, whether in 12 or 14 payments.

Workers with work income from a single payer do not have the obligation to present the declaration up to 22,000 euros.

If you have two payers, the limit drops to 15,000 euros, for example if you have received a salary for 6 months and unemployment for the rest.

In this way, someone who only earns the minimum wage will not have to file the declaration.

On whether it is going to increase taxation, from CC.OO. They alert that the regional tables will have to be reviewed and take into account the family situation. "There may be some impact," says Vicente. For example, among recipients with less than two children.

In the rises of the SMI in recent years, more than one raised their voices when they did not see an increase in their payroll. To make sure that it is applied correctly, those who were below the new amount "have to make sure that their gross salary includes 1,080 euros and the other 80 as a delay," says Vicente.

"Among those who earned something above the minimum wage or the minimum of the agreement, it may happen that they do not notice an increase because it is absorbed and compensated with other salary concepts that they have been receiving," Rivera comments in any case.

For example, someone who earns 1,200 euros can have a base salary of 1,000 and 200 for contract improvements. It may be that now they will increase the base salary to 1,080 euros and at the same time reduce the improvements in the agreement to 120 euros. "Most companies do not keep you the full amount of the voluntary improvement, they make up for it," explains Rivera. "It's perfectly legal," she adds. In the end, the scores are the same for someone earning something above minimum wage.

Starting from 12 payments, in Spain the monthly minimum is 1,260 euros. It is far from the 2,387.4 euros of Luxembourg, at the head of the European Union, or the 1,987 euros of Germany. Belgium, the Netherlands or Ireland are also above 1,900 euros, according to Eurostat data. It is also below France and its 1,709 euros.

Spain does surpass southern countries such as Portugal (887 euros) or Greece (832 euros). In Italy there is no monthly minimum wage as such.