Applying for a job and wondering what salary to ask for? But salary is usually not one unchanging number. It can be set in different ways and also be variable. It’s a good idea to know in advance how your employer handles remuneration so that you speak the same terminology at interview.
The vast majority of employers try to motivate their employees in some way. The work itself – its meaning and prestige, a pleasant and inspiring working environment and, of course, pay can help them to do this. Pay can be designed with regard to the type of work, how the work is scheduled and also, for example, linked to company achievements. In addition to the classic monthly salary, various modifications are thus offered, such as rewarding for the processing of a certain task, or linking part of the salary to the company’s profit or a certain project. It is up to the employer to consider what will be the most mutually interesting form that will help them attract quality, motivated employees.
Employees of the state, municipalities or contributory organisations have it fairly straightforward when it comes to setting their salary, as the basic rate is governed by tables. Subsequently, however, the amount of salary can be modified in certain ways by means of personal assessments or bonuses.
Employees of private employers receive a salary. However, these terms are commonly confused and it is easy to come across someone who informs us of their ‘salary increase’ even though they work in the private sector.
You can read more about civil servants’ salaries and grades in our article.
We distinguish:
Wages need not be understood as a single amount, but also as the sum of various components that can also have an incentive effect.
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Within a particular worker’s [tag id=222]wage we can therefore distinguish:
This is the wage to which the right has accrued according to the employment contract, internal regulations and the wage (salary) assessment. It is therefore fixed and paid on a regular basis.
The variable wage component varies each month according to changing circumstances. The variable component of pay is further subdivided into an entitlement component and a non-entitlement component:
If you are interested in what you are entitled to as an employee, what are the legal obligations regarding remuneration and which benefits are beneficial for employees and employers, read the related article.
The wage can be unilaterally or bilaterally fixed (agreed). This in turn affects the way in which the wage is increased or decreased.
It is obviously more advantageous for the employer to determine the wage unilaterally. According to the Labour Code, wages must be agreed, fixed or determined before the work for which they are to be paid commences. At the latest on commencement of work, the employee should receive a written wage determination, which usually specifies the method of remuneration, the date and places of payment of wages.
As an employee, you will appreciate it if the wage is agreed by bilateral negotiation, i.e. an employment contract or a collective agreement. Wages can be agreed in an employment or collective agreement.
When negotiating wages, it is important to clarify whether the wage is gross or net. We have provided a more detailed explanation and calculations of both wage options in our article.
As noted above, the key to changing the wage is how the wage was determined. If the wage was agreed by agreement, the employer cannot unilaterally reduce it, unless the employee has started to perform work that is classified in a different job group. A reduction therefore requires the consent of the employee (in the form of an amendment to the employment contract) or the trade union that negotiated the collective agreement.
In the case of unilateral determination, the wage may be reduced, for example, if the complexity or difficulty of the work changes or if the employee’s performance deteriorates.
However, there may also be situations where the wage has been determined in a combined manner, for example, the fixed part of the wage is regulated in the employment contract and the variable component of the wage (typically the personal assessment) in the wage assessment. In such a case, the employer can simply decide to reduce or abolish the variable component of the wage, while the employee’s consent is needed to change the fixed part of the wage.
Various deductions from wages , whether voluntary or involuntary, can also affect the level of wages. We take a closer look at these in our article.
The terms nominal and real wages are sometimes used in the context of wages. While a nominal wage represents a specific monetary remuneration, a real wage tells us about the value of the wage, i.e. what the wage can really buy for the employee. This of course changes, for example, due to inflation. High inflation can then cause real wages to fall, although nominal wages, for example, may remain the same.
Simply put,the minimum wage is a certain basic amount that every worker should be able to reach. But its meaning is much broader. The concept cuts across different areas of law and can apply to almost anyone. How is it determined and what is the difference between the minimum wage and the guaranteed wage?
Employee motivation depends not only on the meaning of work and the working environment, but also on a suitable wage. Employers can choose between different forms – from monthly pay to piecework pay or profit-sharing pay, which is linked to the company’s profits. The wage consists of a fixed component, guaranteed by the employment contract, and a variable component, which includes, for example, overtime pay or non-profit bonuses.
In the public sector, salaries are governed by tables, whereas in the private sector, pay is often negotiated. Employees prefer bilateral wage bargaining, which provides greater certainty, while employers prefer the option of unilateral fixing. Wages are also influenced by inflation – while nominal wages represent a given amount, real wages reflect their purchasing power.
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