In accordance with the Labour Code of the Republic of Belarus a wage is a remuneration for labour that the employer undertakes to pay to an employee for the work done taking into consideration its complexity, volume, quality, working conditions, actual hours worked and working time.
The forms, systems and sizes of remuneration paid by employers to their employees, inclusive of additional payments of stimulating and compensating character, are established on the basis of the collective employment agreement, agreement and labour contract.
A wage is a monetary compensation for the work done. To calculate the sum of such compensation different methods may be employed. In some cases an accounting unit will be taken to mean the time worked in terms of hours; in some others – it may be a product produced within the established working time. In accordance with the above they differentiate between time wages and piece work wages.
The forms of labour remuneration establish the dependence of the size of a wage on socially necessary work.
Piece-rate system of payment for labour The size of a wage depends on the number of items produced according to established rates. There are different types of piece work wage such as the straight piece rate, indirect piece rate, progressive piece rate, regressive piece rate and accord wage. Piece work wage is used mainly in case of handwork, machine-handwork or work the quantitative results of which are largely based on the degree of complexity in a team of workers (in a brigade or at site).
- The straight piece rate is paid in accordance with the established job prices, which are not to be increased or decreased, for any production unit or work of required quality.
- The piece-work bonus system is used for awarding a bonus to an employee for efficiency and achievement of the qualitative indices in accordance with the Regulations on Bonuses.
- The indirect piece rate is used to remunerate the work of employees not directly involved in the production process but whose work will anyway affect the throughput efficiency (such as fixers or repairmen, etc.).
- With the progressive piece rate job prices for the products produced above quota are determined at a higher rate. The said rate is used where non-fulfillment of urgent deliveries may entail huge fines or the sales profits from selling additional products are far higher than the expenses caused by increased job prices.
- The regressive piece rate is seldom used; job prices for the products produced above quota are determined at a lower rate.
- Accord wage is intended only to be paid for work performed in a full volume. Most often the said wage will be paid to workers engaged in building, erection, repairing, loading and unloading works.
Time wage is used in those spheres where the working standards are not required to be established and also for technicians and managers. There are two systems of time wage: the pay-as-you-talk system and the time-bonus system.
In accordance with the payroll accounting methods time wage:
* May be paid monthly and is calculated on the basis of the flat monthly rates (wages), the scheduled number of working days in a given month and the actual number of days worked;
* stipulates the pay by the day which is calculated on the established daily basic pay and the actual number of days (shifts) worked; or
* stipulates the pay by the hour calculated on the basis of the pay by the hour and the number of the actually worked hours for the settlement period.
Employees’ work is paid by using the pay by the hour system and (or) on the basis of the monthly tariff rates (wages) specified in the collective employment agreement or contract or established by the employer, while in budgetary organizations and other subsidized organizations whose employees enjoy the same remuneration conditions as employees of budgetary organizations – by the Government of the Republic of Belarus or any agency authorized thereby to do so.
Conditionally speaking, the way a wage is calculated may be presented as a step-by-step process.
Step One. Payroll accounting
The United Wage Tariff System (hereinafter referred to as “the UWTS”) is the basis for payroll accounting. According to the UWTS every category has its own tariff coefficient which shows how much higher the tariff coefficients of the second and other categories are in comparison with that of the first category.
Accrued wage includes bonuses, rises, fringe benefits, pecuniary aid, overtime premiums, payment for work on public holidays, etc.
The UWTS may not be used at non-governmental enterprises where the employers at their own discretion determine the levels of wages and specify them in employment agreements or labour contracts.
Step Two. Withholdings and deductions from wages
Withholdings may be carried out only in cases provided for by the laws. They may be obligatory and non-obligatory.
Obligatory withholdings comprise the income and pension taxes, withholdings under enforcement documents, fines and compensations in favour of third persons, withholdings in accordance with the ordinances of tax authorities, etc.
The main tax is the income tax. The size thereof is established by the Tax Code of the Republic of Belarus. The income tax prime rate equals to 12%.
The income tax is subject to standard, social and property-related tax deductions. In respect of all these deductions the size of the tax basis, i.e., the sum on which the income tax is levied, will be reduced upon submitting necessary documents.
The standard deductions are as follows: if the size of a wage does not exceed 3,350,000 Belarusian roubles a month, 550,000 Belarusian roubles are to be deducted; the sum of 155,000 Belarusian roubles a month is to be deducted if there is a child younger than 18 years old or a dependent person.
The social tax deductions cover the sums paid for getting the first higher education, or the first specialized secondary education, or the first vocational education; in the amount of not more than 10,000,000 Belarusian roubles paid within the tax period to the insurance companies of the Republic of Belarus as insurance premiums under voluntary life insurance contracts and contracts for supplementary pensions concluded for not less than three years and also under voluntary medical expense policies.
The property-related tax deductions equal to the sums actually paid by the tax payee and his/her family members in need of improved living conditions to build or to buy a detached house or a flat in the territory of the Republic of Belarus, or to repay credits advanced by banks of the Republic of Belarus or loans received from Belarusian organizations and/or Belarusian individual entrepreneurs (inclusive of accrued interest but exclusive of interest paid for default in repay (redemption) of credits and loans and/or default in interest payment on credits and loans), actually spent by them on building or buying a detached house or a flat in the territory of the Republic of Belarus. All the property-related tax deductions are specified in Article 166 of the Tax Code of the Republic of Belarus.
So, the income tax is calculated in the following way: the employer calculates wages, makes certain tax deductions and multiplies the remaining sum by 12%.
Trade-union dues make 1% of the calculated wage, and pension taxes also amount to 1% thereof.
Alimony is calculated on the basis of an enforcement document sent to an enterprise by the law enforcement officer. The sum of alimony may be fixed or may be calculated as a sum of interest added on the wage of the employee obliged to pay alimony.
Non-obligatory withholdings include withholdings of spare travel expenses, excess wage sums, deficiency service payments, etc.; they also include deductions made at the request of an employee in connection with the goods bought on credit, insurance premiums under individual insurance agreements, credit deductions, etc.
Step Three. Calculation of net payroll
By deducting all possible deductions from calculated wages, we shall get the sum of net payroll.
It should be underlined that the current state system of wage guarantees covers as follows:
- Minimum wage (in the amount of 1,395,000 Belarusian roubles);
- Tariff rate for the first UWTS category in the public sector (in the amount of 250,000 Belarusian roubles);
- Republican wage tariffs – hourly and/or monthly tariff rates (wages), on the basis of which wage levels for specific occupational-skill groups of workers employed by organizations, financed from budgetary sources and subsidized by the state, are established;
- Increased payments for work in non-standard conditions;
- Measures to support the real wage and to index it;
- Measures to limit wage withholdings and income taxes;
- State control over and supervision of the timeliness and size of wages; and
Raising employers’ responsibility for any violation of the collective employment agreements or labour remuneration agreements.