Hourly wages in 2021 in the employment contract

Hourly wages: pros and cons June 22, 2014, 00:00 | Katya Kozhevnikova

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Politicians have long been conducting careful conversations about the fact that Russians should be transferred to hourly wages. Of course, this is just talk for now. But who knows when they will decide to move from words to action. Let's figure out what this means for hired workers and who ultimately benefits from this.

In fact, hourly wages already exist in Russia. This is one of the subtypes of the tariff system, which takes into account either the result of the employee’s work or the time spent on it. Hourly wages are typically used in areas where it is difficult to bring workers into the standard eight-hour workday. Teachers, trainers, lawyers, salespeople and many others are often paid “by the hour.”

What about paid vacations, sick leave and other social guarantees? This does not depend on the type of payment, but on what kind of agreement is concluded with the employee. Hourly workers can work freelance and full-time. For freelancers, no additional payments are provided - only payment for hours worked. But those who work on staff should receive vacation and sick pay in the same way as their salaried colleagues. The calculation goes like this: in the accounting department they take the employee’s salary for the year, divide it by the number of working days and get the “cost” of one working day. Based on this figure, vacation pay and sick leave pay are paid. If such an employee is asked to work on a holiday, his work must be paid at double the tariff rate.

A difficult point concerns non-working holidays. Salaried employees are actually paid. For example, in January, when there are only one or two working days, employees receive the same salary as in other months, because each working day becomes “more expensive”. What about hourly workers? If in January they receive a salary only for the hours worked, they will have to go on a strict diet after long holidays. According to Article No. 122 of the Labor Code, such employees must be paid additional remuneration for non-working holidays. But the amount of these payments is regulated by contracts, orders and other internal documents of the company. That is, it actually remains at the discretion of the employer.

Some applicants see their advantages in the system “how much you worked, how much you earned.” There is no need to sit in the office “from bell to bell,” even when there is nothing to do there. The employer must pay for all overtime and delays. In theory, minimum wages should increase as a result of the introduction of an hourly system. According to the recommendations of the International Labor Organization, the minimum wage for an hour of work should be $3, while the UN recommends paying no less than $4 per hour. In Russia, if you divide the minimum wage by the number of hours worked, it comes out to less than one dollar.

And yet, according to surveys of recruiting portals, more than half of Russians would prefer to remain salaried. Firstly, it is stability, because the salary does not change depending on the amount of work. Secondly, this is greater security, because with hourly wages, the employer can reduce the number of working hours and, accordingly, wages to a minimum. So during crises, such workers are the most unprotected. World statistics show that countries with hourly wages have higher unemployment rates.

It turns out that hourly wages are a universal remedy that can serve both good and evil. It all depends on how much the accompanying laws will change in terms of protecting the rights of employees.

How do you feel about hourly wages? Do you think this system is more beneficial for employers or employees?

Katya Kozhevnikova , etoya.ru

What types of remuneration systems are there and when are they used?

For each group of workers in an enterprise and even for each specific person, the payment system for performing labor functions may vary. Let us highlight the following types of such systems:

1. Time-based - an employee’s payment is directly dependent on the time he or she works. In this case, the employee is set an hourly or tariff rate and salary.
2. Piecework - the amount of earnings depends on the amount of work performed. Piece rates must be approved here.
3. Commission - when it is established, the employee receives a commission (percentage) on a certain indicator, for example, 5% of the store’s daily revenue.
4. Variable salary system - an employee's salary is subject to periodic review, for example once a quarter or month. Such a review can be influenced by such an indicator as the completion of the planned amount of work.
5. Chord - involves establishing a relationship between the amount of an employee’s salary and the package of work he performs in accordance with the chord assignment for a specific period.

The payment system is approved either in a local regulatory act at the enterprise, for example in the regulations on remuneration, or in a collective or labor agreement.

If you have access to ConsultantPlus, go to the Ready Solution and find out the features of payroll calculation in each wage system. If you do not have access to the legal system, get a trial demo access for free.

❗ Application cases

The specified mode of settlements with personnel is applied in those areas of activity that are focused on the quality of work, and not the quantity of goods manufactured or services provided. It encourages employees to constantly improve and improve their skills. The time-based form of remuneration is practiced when determining the earnings of management staff, office employees, and production service workers.

The time wage system is mainly used in the following areas:

1. Activities in the areas of maintenance and repair of production equipment.
2. Areas where it is difficult to quantify the work performed or where such a procedure is impractical.
3. In areas where employees work on assembly lines.
4. In production segments where the work of a specialist is regulated by a rhythm or life cycle.

In particular, the time-based system applies to lawyers, accountants, teachers, health workers, civil servants, hairdressers and call center employees. It is very difficult to digitize the performance indicators of these specialists. For example, it would be incorrect to pay a lawyer based on the number of contracts prepared, an accountant based on the number of orders, a personnel officer based on the number of interviews conducted, a dentist based on the number of fillings, and a cloakroom attendant based on the jackets issued. This would require a separate employee to track performance. But it is impossible to judge quality based on these criteria.

The time-based payment system is ideal for part-time workers and flexible workers. For example, teachers and lecturers are paid according to the number of teaching hours.

What is hourly wages and what are its forms?

The hourly wage system is one of the varieties of the time-based system. Here, wages are calculated depending on the amount of time worked - hours - and the established hourly rate.

NOTE! With a time-based system, salaries or tariff rates may also be set, but these are usually tied to a month.

At enterprises, depending on the specifics of production and other factors, the hourly system can take the following forms:

1. Standard hourly rate - when a fixed rate is set for one hour of work. At the same time, the volume and quality of work do not affect wages. This form is typical for the positions of security guard, operator, administrator, etc.
2. Premium hourly wage - here the volume and quality of work performed will affect wages. That is, the time worked is paid and to this amount is added the amount of the bonus, the amount of which must be indicated in the regulations on remuneration, employment contract or in other regulations or agreements.
3. Standardized hourly rate - in this case, in addition to the hourly rate, an additional payment is guaranteed for strict compliance with the conditions established by the employer. This form is convenient to use when exceeding production standards is undesirable.

Due to the 2021 coronavirus pandemic, the payment procedure has changed in a number of cases. We wrote more about this in the material “New in Payroll in 2020”.

When is hourly wages beneficial?

The benefit for employers when setting hourly wages is obvious: they only have to pay for the time worked. This type of payment is especially popular for those employees who do not work full time. Examples include:

• workers with an uneven workload involved in performing work at a specific facility;
• workers whose working hours cannot be regulated (for example, teachers who teach additional classes in educational institutions);
• employees employed on a flexible schedule;
• workers whose labor productivity is very difficult to determine.

However, this system has certain disadvantages. For example, in the absence of bonus payments, employees are usually not interested in working faster and more, i.e. production efficiency decreases. In addition, the employer needs to monitor every hour the employee works, which may require an additional employee to keep track of time, leading to new costs.

How hourly wages are reflected in the staffing table - sample

The staffing table is an internal document of the company, which collects all the information about the personnel structure, composition and number of employees, as well as the monthly payroll. When an employee is hired on an hourly basis, the staffing table must contain a corresponding note about this.

If we take as a basis the unified form T-3, put into circulation by Decree of the State Statistics Committee of the Russian Federation dated January 5, 2004 No. 1, the hourly rate should be indicated in column 5 “Tariff rate (salary), etc., rubles,” and in column 10 “Notes » register “Hourly wages” with reference to the normative act establishing the payment system.

Use the link below to see how the staffing table is drawn up for those employees for whom the hourly form is approved.

For whom will the new minimum wage be established (hourly)

Employee salaries must correspond to the minimum hourly rate if two conditions are met simultaneously:

• working part-time;
• the employment contract is fixed-term and concluded for a period of up to 3 months.

The use of the indicator in other situations is unacceptable.

It turns out that the accountant will now monitor the compliance of salaries not only with the monthly minimum wage, but also with the minimum wage for individual employees.

What features need to be taken into account in an employment contract for hourly wages - sample

When employing an employee, all aspects relating to the calculation and payment of wages are usually discussed between him and the employer, which must then be formalized in writing by signing an employment contract. In it (or an additional agreement to it), the Labor Code obliges to prescribe the conditions for hourly wages, if one is established for the employee.

NOTE! When transferring employees to hourly pay from another salary system, the employer must notify them of this no later than 2 months before introducing the planned changes. Such changes, by the way, should be reflected in orders and other regulatory documents of the organization.

It is advisable to stipulate in the employment contract:

• the amount of the hourly wage rate (salary);
• tariff category;
• the procedure for calculating wages for the month;
• bonus conditions;
• terms of payment for holidays, weekends and night hours;
• deadlines for issuing wages;
• other conditions, which may include a probationary period, social guarantees, etc.

Download a sample extract from an employment contract regarding the establishment of an hourly wage system and hourly rate from the link below.

Example of payroll calculation in 2021

What is taken into account when calculating?

Today, two types of fees are most often practiced:

• Time-based . The first provides for a salary determined by the contract for the time worked - hour, day, month. Often a monthly rate is used. In this case, the final amount depends on the time worked during a certain period of time. It is used mainly when calculating salaries for employees on whom the amount of product created does not depend - accountants, teachers, managers.
• Piecework . Depends on the amount of product created over a certain period. Often used in factories. It has several subspecies, which we will consider a little later.

Thus, time-based wages stipulate that the head of the enterprise or other official is required to maintain and fill out a time sheet. It is drawn up according to form No. T-13 and is filled out daily.

It should note:

• number of working hours worked during the day;
• exits “at night” – from 22:00 to 6:00;
• out during non-working hours (weekends, holidays);
• omissions due to various circumstances.

Piece payment requires the availability of a route map or work order for a certain amount of work. In addition, the following are taken into account: sick leave, orders for bonuses, orders for the issuance of financial assistance.

After being hired, each accountant must keep analytical records of wages and record it in form No. T-54. This is the so-called employee personal account. The data specified in it will be taken into account when calculating sick pay, vacation pay and other types of benefits.

You can find out how vacation pay is calculated from this article.

The Labor Code of the Russian Federation provides for a minimum monthly salary of 5,965 rubles. The employer has no right to set payment below this amount. For more information on this topic, read the article - What is the minimum wage in Russia.

How does the regional coefficient affect wages?

Sometimes you need to know how to calculate salary in conditions where, due to difficult climatic conditions, increased radiation or other harmful factors, an additional factor “for harmfulness” is added to the employee’s salary.

This coefficient is also called regional, but it should not be confused with northern allowances for residents of the Far North. A similar coefficient is used in Udmurtia, Bashkortostan, Perm, Chelyabinsk, Vologda, Kurgan and other regions.

The size of the coefficient is established by the Government of the Russian Federation separately for each region.

Example:

Still the same citizen N, with a salary of 38,000 rubles. and a bonus of 15%, worked all the days in good faith, does not have a tax benefit. The coefficient for the region where our citizen N lives is 1.8. It should be used like this:

• 38,000 + 5,700 = 43,700 - salary + bonus;
• 43,700 x 1.8 = 78,660 - salary taking into account the coefficient;
• 78,660 - 13% = 68,434.2 rubles. - salary to payoff.

Calculation formula and examples

Time-based wages provide for payment of labor according to the time worked and the employee’s salary.

It is calculated as follows:

For monthly salary:

• ZP=O*CODE/KD, where

• ZP – salary excluding taxes;
• О – fixed salary per month;
• KOD – days worked;
• KD – number of days in a month.

For hourly/daily fixed salary:

ZP=KOV*O, where

• ZP – salary excluding taxes;
• KOV – amount of time worked;
• O – salary for one unit of time.

Let's look at an example:

Tatyana Ivanovna has a monthly salary of 15,000 rubles. There were 21 working days in a month, but since she took vacation at her own expense, she worked only 15 days. In this regard, she will be paid the following amount:

15,000*(15/21)=15,000*0.71= 10,714 rubles 30 kopecks.

Second example:

Oksana Viktorovna works with a daily salary of 670 rubles. She worked 19 days this month. Her salary will be:

670*19 = 12,730 rubles.

As you can see, the formula for calculating wages for this type of payment is very simple.

Should you trust the salary calculated by the accounting department?

The management of the enterprise is obliged to inform hired specialists about all accruals and deductions made that affect the amount issued in hand. The procedure for calculating wages is usually reflected in special sheets - “calculations” provided to staff.

To understand how much you are entitled to for the month you worked, ask your accountant for data, familiarize yourself with the algorithm and study an example of payroll calculation. Keep an eye out for factors that influence your final pay and plug the numbers into the formula.

Compare two results: yours and the employer's. If there is a discrepancy, ask your accountant to walk you through each step of the calculation. He will explain to you how the amounts were calculated, and it will become clear who made the mistake and whether the employee’s doubts are groundless.

Results

Hourly wages are one of the types of time-based systems, when, to calculate wages for each specific employee, a rate is set for one hour of work and the number of hours worked is calculated. In this case, the rate should be such that when working out the monthly quota, the employee is accrued no less than the minimum wage, which in 2021 is equal to 12,130.00 rubles.

All conditions relating to the calculation and payment of wages under the agreed system are included in the text of the employment contract or local regulations of the company.
That is, the employee must be familiar with the principles on which his monthly earnings are calculated. You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.