Any hired labor, being the main activity of a person, must be paid. In other words, the end result of any work is receiving a reward for it. When finding employment, an employee expects a certain payment, agreed upon in advance and reflected in the relevant documentation.
In turn, the employer, when forming a staff, must calculate in advance the funds intended for wages and take this indicator into account throughout the entire functioning of the organization. The costs of hired personnel constitute the most important expense item for an entrepreneur.
How to draw up and approve regulations on wages and bonuses in an organization?
Let's consider how the wage fund (payroll) differs from the wage fund (wage fund), how the payroll is formed, how to plan it correctly and using what formula to calculate it.
Payroll or payroll?
Remuneration involves not only the regular receipt of wages by employees. In enterprises that care about their staff, employees usually receive not only the amounts intended to be paid according to the salary or tariff schedule, but also additional funds provided for by the internal policy and/or industry characteristics of the organization.
Thus, the wage fund includes all types of payments that the entrepreneur makes in favor of employees, that is, all expenses provided for the organization’s personnel in the planned, current or past period, regardless of the reasons for the accrual. If we compare this totality with the wage fund (WF), then the latter will be part of the payroll.
The main difference between the FW is that this fund includes only those payments that are directly related to the labor operations performed by employees and their results.
NOTE! These funds will match if the organization's employees do not receive any payments other than salaries. But in practice this happens quite rarely.
FW and payroll are calculated using identical algorithms.
How to analyze the efficiency of using the wage fund ?
Difference from FZP
The wage fund is the amount distributed for work performed among employees in accordance with the tariff rates, salaries, and piece rates established by the enterprise.
It includes:
- remuneration in any form;
- additional payments, allowances, bonuses;
- compensation in connection with working conditions.
Social benefits do not include amounts of social payments.
The wage fund is a broader concept and includes the amount of absolutely all accruals to the organization’s employees, including the wages and salaries. Unlike payroll, the salary fund includes only the amount for time worked and bonuses directly related to it.
To see what this value is made up of, see the following video:
Why is the payroll indicator needed?
The importance of payroll as an economic category, in addition to directly accounting for necessary expenses, helps in solving many management problems, such as:
- analysis of personnel costs of different structural divisions;
- adjusting the company's general expenses;
- a certain role in increasing profitability and reducing expenses;
- adjustment of product costs and, as a consequence, the company’s pricing policy;
- calculation of mandatory social payments - insurance contributions, pension contributions, etc.;
- budgeting expenses.
Composition of the wage fund
The wage fund is the totality of the wage fund and all other types of personnel costs. Includes the following categories:
- premium;
- “thirteenth” salary;
- sick leave;
- vacation pay of all types;
- business trips;
- bonuses for length of service;
- amounts for time that was not actually worked, but is legally subject to payment (for example, downtime);
- additional payments for part-time work, for odd or overtime work, for dangerous or harmful working conditions, etc.;
- employee compensation;
- expenses for providing the employee with discounted or free uniforms;
- preferential working hours for employed minors;
- medical examination costs;
- social payments;
- compensation (for example, for food, travel to work, etc.)
The wage fund does not include:
- annual bonuses;
- targeted payments in favor of employees;
- bonuses paid from special funds;
- separate pension benefits;
- reimbursement of vouchers, travel, etc.;
- gifts from the company;
- dividends;
- all types of financial assistance.
The concept of additional wages
Basic and additional wages are two types of cash accruals that make up the income of most citizens. A specialist receives his basic salary for performing his main job duties and being present at the workplace. As a rule, it is tied to a tariff or set as a fixed salary.
Additional wages are a little more complicated: they are not paid to everyone, but only to those who have some special working conditions or achievements in the workplace. For example, working in harmful or dangerous conditions, exceeding production plans, or working on weekends and holidays. The additional salary is formed from several categories of payments, which are individual for each profession.
What does the additional salary include:
- compensation for harmful and dangerous conditions;
- compensation for work in special climatic conditions;
- payments for irregular working hours, work on weekends and holidays;
- payments for combining positions;
- incentives for meeting and exceeding production, service or sales targets;
- premiums for quality work;
- incentives for long service and professional achievements;
- payments for class rank, title or special status;
- bonuses for individual professional achievements (paid in a lump sum).
Additional wages are all payments in excess of the salary and tariff rate.
Obviously, additional wages can be different for two employees in the same position. For example, if one worker exceeded the plan, and another failed to achieve the specified indicators, at the end of the month they will receive different rewards.
The conditions for calculating additional wages should be fixed in the employment contract : this way the procedure for setting wages will be more transparent, and the employee will be able to control it. Amounts, percentages and calculation procedures are written down in separate paragraphs. This approach can further motivate him to work and fulfill the plan.
In each organization, the additional wage fund is formed according to its own rules, depending on the specifics of the activity, but in accordance with the requirements of the law.
The main entries for wages - both basic and additional - are made on account 70.
What affects its size
We found out that additional wages include all payments in excess of the salary and tariff rate. Therefore, its size is influenced by:
- features of the profession;
- working conditions at the enterprise;
- professional achievements.
We looked at an example of how two employees in the same positions receive different salaries in the previous section. This is typical for all industries: manufacturing, services, trade. If one sales manager meets and exceeds targets, and another sells less than the employer requires, their salaries will be different.
Additional wages for production workers, as a rule, are formed on the basis of two factors: harmful and dangerous conditions, as well as the implementation of the production plan. Features of accrual are presented in the next section.
Terms of formation of the wage fund
Depending on the needs of the organization, the payroll can be calculated for any period of interest, even for one day. In practice, other reporting units are more often used:
- Payroll for the year is calculated for the last calendar year period, this indicator is used to determine the entire amount of the wage fund;
- Monthly payroll is more often used for various types of reports;
- Payroll per day is used as a theoretical indicator for analyzing a company’s expenses;
- Payroll per hour will be needed for those enterprises where employees work on an hourly payment system.
An example of calculating the wage fund for a month .
Payroll structure
What does the wage fund consist of?
During the work process of any enterprise, one should distinguish between the costs that were initially included in the fund and unforeseen costs and expenses that arise during the circulation of capital.
The sources through which wages will be paid are:
- indicators of costs related to the production of goods and provision of services;
- amounts having a special purpose;
- enterprise funds classified as personal;
- obtaining targeted funding.
The costs that an enterprise allocates to pay its employees will be included in the cost of goods.
The wages and salaries include amounts accrued to employees based on the results of their work.
The wage fund consists of:
- remuneration for actually worked or unworked time. Can be expressed both in monetary and in kind terms;
- compensation;
- incentive payments;
- bonuses, additional payments, incentives;
- payments related to the specifics of work, etc.
Accrued funds for vacations will be included in the fund for the reporting months in an amount depending on the length of the vacation period in the current month. Accordingly, funds for subsequent months will be included in the next month.
The composition of the FZP is a rather complex mechanism, depending on the structure and work process of each individual enterprise.
Calculation of annual payroll
In order to calculate the annual wage fund, you need to have the following data for calculations:
- the amount of wages paid to employees according to statements;
- number of hours worked (calculated using time sheets);
- indicators of additional costs enshrined in the company’s local regulations;
- the number of employees on the list and their salaries (fixed in the staffing table);
- forms of payment accepted at the company (salary, piecework, hourly).
Universal scheme
The universal calculation scheme involves the addition of all amounts intended for personnel. In order to calculate it as simply as possible, although somewhat approximately, use the following formula:
FOTyear = ZPs-m x Chsr-sp. x 12
Where:
- FOTyear – annual indicator of the wage fund;
- ZPs-m – average monthly salary (all amounts of payments for the year, divided by 12);
- Chsr-sp. – average number of employees (the summed number of employees for each day of the month, divided by the number of days in the month, repeated 12 times according to the number of months in the year).
FOR EXAMPLE. From January to March 2020, Traditsiya LLC employed 12 people; in April, 2 more workers were hired; the staff did not change until October, when 1 person was fired, and in December, three more were hired. The average monthly salary of personnel, including bonuses, additional payments and bonuses, pre-calculated from the statements, amounted to 456 thousand rubles. First, we determine the average number of employees: (12 x 3 months) + (12 + 2 (April)) + (14 x 6 (until October)) + (14-1 (October)) + 13 (November) + (13 + 3 (December)) / 12 = 13. Let's calculate the payroll for Tradition LLC for 2020: 456,000 x 13 x 12 = 71,136,000 rubles.
When paid hourly
Payroll calculation for hourly wages is carried out according to the following scheme:
FOThour = ∑st. x RF
Where:
- FOThour – wage fund for hourly workers;
- ∑st. – the sum of the rates of hourly workers;
- RF – number of working hours.
With piecework payment
Payroll calculation for piecework wages is carried out as follows:
FOTsd. = (Vpl. x Tsed.) + K + N + Pr. + Social
Where:
- FOTsd. – wage fund for workers with piecework wages;
- Vpl. – volume of production according to plan;
- Tsed. – price per unit of production;
- K – various compensations;
- N – allowances;
- Etc. – bonuses;
- Vsots. – social payments.
FOR YOUR INFORMATION! If you need to calculate not the annual, but the monthly payroll or use another reporting unit, you need to take the corresponding indicators for the formulas, that is, do not multiply the average monthly salary by 12, but determine the average number of employees for 1 reporting month.
Don't save on payroll
Any entrepreneur strives to reduce his expenses, including through salary funds and wages. Of course, you can cut salaries, cancel compensation payments, remove bonuses, etc.
However, one should not get carried away with such a reduction. An employee has the right to expect fair remuneration. Financial motivation is one of the strongest factors influencing staff turnover, their qualifications, and the efficiency of performing work duties. A meager wage fund can provoke workers to commit crimes in order to somehow make up for the lost funds in an illegal manner.
To put it simply, the vast majority of employees work exactly as their employer pays them.
