How do you determine the wages of your employees?
Even though employers determine how much employees earn, they need to comply with some limit values. There is a minimum wage for every sector. Here are the facts.
The amount you transfer to your employee’s account every month is the gross salary. The government deducts from this sum the contributions for social security and taxes (the so-called withholding tax). What remains is the net salary.
Minimum wage based on a collective labour agreement
As an employer, you don’t have carte blanche. Indeed, many sectors have a collective labour agreement (CLA) that sets a minimum gross salary. Usually, the salary increases in line with the employee’s age and/or seniority. It is advisable to check whether a sectoral collective labour agreement applies before setting a gross salary. A payroll services provider can help you in this respect.
The guaranteed minimum monthly income
If your sector’s CLA does not mention wages or there isn’t any agreement, you still are bound by a limit value: the guaranteed minimum monthly income (GMMI). This basic wage also differs depending on the age and seniority of the employee.
There are 3 minimum wages (gross amounts):
- Your employee is 18 years old: 1,593.81 euros.
- Your employee is 19 years old and has at least 6 months of seniority: 1,636.09 euros.
- Your employee is 20 years old and has at least 12 months of seniority: 1,654.90 euros.
The GMMI is not in a minimum monthly income in the strict sense of the term, since it includes certain amounts such as an end-of-year bonus or a work placement allowance.
What about part-time or underage employees?
Part-time employees are also entitled to a minimum wage which is proportional to their hours worked. If a person works 40% of a full-time job, for instance, he or she is entitled to 40% of the GMMI.
The law also provides for a minimum wage for underage employees. They earn a percentage of the GMMI of an 18-year-old:
- A 17-year-old employee: 76% of the GMMI (1,211.30 euros).
- A 16-year-old employee or younger: 70% of the GMMI (1,115.67 euros).
Finally, there is also a GMMI for young people under the age of 21 with a student job or on a work-linked training scheme, such as an apprenticeship contract:
- 20-years-old: 94% of the GMMI (1,498.18 euros).
- 19 years-old: 88% of the GMMI (1,402.55 euros).
- 18-years-old: 82% of the GMMI (1,306.92 euros).