How to calculate wages using an hourly wage system

Remuneration systems (including tariffs) for employees of state (municipal) institutions are established taking into account the requirements for remuneration systems for employees of these institutions and are approved by agreement, collective agreement, local regulations, as well as federal and regional legislation. In this article we will talk about the time-based wage system and how work on weekends and holidays is paid, including for workers on a business trip.

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.

Key takeaway.

If an employee on a business trip rests on a day off or a non-working holiday, he is not paid for that day. If on his day off (holiday) he worked or was on the road (on a business trip or back), this day must be paid at least twice the amount based on the tariff rate and taking into account the incentive and compensation payments due to the employee, calculated in proportion to the time worked. The specific procedure for calculating incentive and compensation payments for working on weekends should be regulated by an agreement, a collective agreement, a local regulation, as well as federal and regional legislation.

[1] Unified recommendations for the establishment at the federal, regional and local levels of remuneration systems for employees of state and municipal institutions for 2021, approved. By the decision of the Russian Tripartite Commission for the Regulation of Social and Labor Relations dated December 29, 2020, protocol No. 13.

Remuneration in a state (municipal) institution: accounting and taxation, No. 2, 2021

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.

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.

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.

New changes to the minimum wage: prerequisites

The minimum wage is set annually and is equal to the subsistence level of the working-age population for the 2nd quarter of last year. In 2020, this figure is 12,130 rubles. (Federal Law dated December 27, 2019 No. 463-FZ). Regions can set their own minimum wage, which cannot be lower than the federal one, i.e. 12,130 rubles.

The minimum wage arose in connection with the need to evaluate the work of the lowest paid workers. Thus, the state is trying to ensure a minimum threshold of fair wages and control employers.

Control is carried out as follows:

• The Federal Tax Service pays attention to understated incomes in forms 6-NDFL, “Calculation of insurance premiums” (special control ratios have been developed for this purpose, comparing indicators with the minimum wage and industry average wages in the region);
• inspectors will send a demand to the employer to explain the low salary figures;
• tax officials send information about violations to the labor inspectorate, so employers who underestimate wages may be called to the labor commission;
• the payer also risks being included in the plan of on-site tax audits (clause 5 of Appendix 2 to the Federal Tax Service order No. MM-3-06/333 dated May 30, 2007).

Unscrupulous employers often pay workers below the minimum wage, arguing their position with part-time work. It is for such a case that the Government will establish a new minimum wage - hourly.

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.

We make an informed decision

Not all employers should choose a time-based OT system. For example, it is not worth setting an hourly rate for work aimed at results. Workers will “artificially” increase the time it takes to complete a particular job in order to get as much as possible. You cannot place an inspector over everyone, so hourly rates should only be applied to workers whose quality of work is not the main criterion. For example, this is a janitor, cloakroom attendant, incoming call operator, watchman.

An additional disadvantage is that you will have to introduce a new position into the staffing table or provide in the payroll an allowance for keeping records of working hours for employees for whom an hourly wage is established. And these are additional costs for the organization.

But time-based COT is ideal for part-time workers or those working on a flexible schedule. An excellent option for remunerating teaching staff, since the workload of each teacher is determined by the curriculum. That is, one teacher can work full-time - 18 hours a week, for example, a mathematics or Russian language teacher, but a life safety or fine arts teacher in a small rural school can work only 4 hours a week. It is these specialists who are best suited to be paid by the hour.

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.

Where to store and how much

According to paragraph 657 of the List of Standard Documents, employment contracts and additional agreements to them must be stored in the organization for 75 years.

• Svetlana Chernykh (Kuznetsova)
  2018-10-29 00:04:07

  The contract was drawn up incorrectly. Salary is a fixed amount of remuneration for a calendar MONTH (Article 129 of the Labor Code of the Russian Federation), and not per hour. The contract most likely talks about the tariff rate... You are already starting to disappoint, because... mislead people. Things must be called by their proper names. For violation of labor legislation, which regulates, among other things, the execution of employment contracts, considerable fines are provided (Article 5.27 of the Code of Administrative Offenses), and by publishing documents with incorrect wording, you contribute to violations.

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. At the same time, 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 RUB 12,792.00.

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.

Sources: Labor Code of the Russian Federation

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Calculation of time wages in 2021. Formula

The hourly rate depends on several factors. In particular, it is influenced by the employee’s professional experience, level of qualifications, complexity of functionality, level of education, and others. According to current legislation, a person cannot work more than 40 hours a week. Based on this, the minimum cost of working hours is calculated. To do this, you need to divide the minimum wage by the number of working hours per week (no more than 40 hours). The hourly wage cannot be less than the minimum wage. The final size is calculated using the following formula:

Salary = hourly rate * actual number of hours worked.

Let's look at an example. The hourly rate of a children's sports school coach is 500 rubles. The timesheet indicates that the employee worked 53 hours in November 2021. Thus, his salary will be 500 * 53 = 26,500 rubles. You need to subtract 13% tax from this figure. It turns out to be issued 23,055 rubles.

Overtime concept

In accordance with Part 1 of Article 99 of the Labor Code of the Russian Federation, overtime work is the performance of official duties at the initiative of the employer outside the employee’s working hours. Let's say a specialist's working day is from 8 a.m. to 5 p.m. The employee's presence is required from 5 p.m. Tuesday to two a.m. Wednesday to eliminate the accident. This is overtime work, which the manager will formalize by order.

If one of the employees is late on his own initiative, this is not considered overtime work.

Performance of official duties within irregular working hours does not apply to overtime work.

Part-time work by an employee is also not considered overtime.

As a general rule, overtime for each employee cannot exceed 4 hours in two consecutive days and 120 hours in one year. (Part 6 of Article 99 of the Labor Code of the Russian Federation). At the same time, the employer is obliged to keep records of the time actually worked by each employee (Part 4 of Article 91 of the Labor Code of the Russian Federation).