22 December, 2021

What is included in a salary package?

Wat zit in een loonpakket

Payflip is all about smart salaries. But how does a standard salary package actually work? What is the difference between a fixed and a variable wage? And how much net is left of a wage after all taxes and social contributions?

Standard wage

The core of any salary is the employee's gross salary. When an employee asks "how much will I earn?", he or she usually refers to the gross monthly salary. This is the standard remuneration.

The minimum amount for this standard remuneration is laid down in Belgian labour law by the various joint committees in the form of bar wages. These are mainly determined by the function the employee performs and his/her seniority. Employers are of course free to pay their employees more than these minimum wages. In practice, this is done on a massive scale.

Fixed salary

Wages are the compensation for the work done by employees. Therefore, if they have performed work for you, they are entitled to wages for this work.

A fixed wage is a guaranteed wage, linked to the condition of performance. Fixed wages can have different calculation bases: monthly, weekly, daily or hourly. In practice, it is found that the most common fixed wages are those calculated on a monthly basis (white-collar workers) or on an hourly basis (blue-collar workers).

With a fixed wage, it is clear to everyone when an entitlement arises. The quality of the performance is of no importance here, what counts is the mere fact that the performance was delivered.

In addition to the monthly salary, in many cases there are other fixed remuneration elements in a salary package (which may or may not be imposed by the joint committee):

  • End-of-year bonus (or thirteenth month)
  • Holiday money
  • Meal vouchers
  • Eco-Vouchers
  • Guaranteed salary in case of illness

Variable salary

A variable wage, on the other hand, is based on the quality (or quantity) of the performance delivered. This can be of the employee himself, of the team, or possibly even of the entire company.

A variable wage can be paid to employees in different ways:

  • Bonus
  • Commission fee
  • Warrants
  • Payroll bonus
  • Profit premium
  • Stock options
  • Shift work bonus
  • Night premium
  • Hazard premium
  • ...

Variable remuneration is always paid in addition to fixed wages. As part of an employment contract, you can never just pay a variable wage as an employer. After all, at least the bara wages of the sector must be met.

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Wat zit in het loonpakket 2

Show me the money!

But what do I actually pay for such a standard wage? As every SME knows, there are a lot of costs associated with a fixed salary.

For example, if a white-collar worker earns €2,500 gross per month, this does not show the full picture, neither for the employee nor for the employer.

As an employer, you pay employer social security contributions on top of your gross salary. These NSSO contributions vary per sector and per company, but often hover around 25% of the gross salary.

In addition, there are also two important deductions made for Father State on the employee side:

  • Social security contributions for the employee - the counterpart of employer contributions (13.07% of gross pay)
  • Withholding tax on labour - advance payment on the final personal income tax bill (progressive rate on 'taxable' wages)

Illustrating this for an employee with a monthly gross salary of €2,500, a total employer's cost of €3,125 leaves only €1,802 net for the employee.

The same goes for salary increases. If you want to give your employee a net wage increase of €100, it will cost you around €175.

This turns out to be a very expensive operation as an employer. That is why there are alternatives to cash storage. Also for SMEs! In our salary guide, you can read about the options you have for going from a standard salary package to an attractive one ;)