Salary

My Labour,
My Rights

Salary

The employee shall be entitled to earnings – salary, in accordance with law, collective agreement and the employment contract. Salaries are regulated in several aspects including remuneration and amount of minimum wage (Law on Minimum Wage) and general rules for the structure and composition of salaries, as well as conditions and guarantees  for payment of salaries (regulated in the Law on Labour Relations). Main source for bargaining fon different aspects of payment to workers are the collective agreements, whereas employment contracts have subsidiary importance. Even though the Law on Labour Relations does not specify Rulebooks and Decisions on Salaries as legal sources to be used to regulate salaries, in practice, they are often used to specifically regulate the salaries.

The system and the structure of remuneration of workers as defined in the collective agreements, primarily derives from the General Collective Agreements that offer a unified formula for defining the salaries, which is furthermore transcribed into the Specific Collective Agreements. According to the formula, the amount of the salary is calculated by multiplying the amount of the lowest salary (calculation value for unit coefficient) defined by the branch or the employer’s collective agreement, by the coefficient of the work complexity of the job the employee is assigned to according to their employment agreement.

The Law on Labour Relations and the collective agreements set up three main components of salaries – basic wage, performance related pay, and allowances/other remuneration. In addition, significant components of salaries are work related compensations, and other types of compensations.  Compensations paid during leave of absence from work (compensations to salaries) in cases and in duration defined by law and by the collective agreements should also be on the list of components of salaries.

Basic wage

Basic wage (basic lowest wage) is the wage workers perform work for. It is a main component of workers’ salaries. The basic wage is defined taking into account requirements for the job position the worker has concluded the employment contract. It matches complexity of work assignments the worker undertakes and is usually defined as a result of regular work performed full time and normal work output.

Performance related pay

Performance related pay is the part of workers’ salaries related to rewarding workers for their increased individual contribution and commitment, or greater work results achieved. The criteria for defining the share of performance related pay in the salary, as defined in the Law are reasonable care, quality and the workload delivered relating to the work in the employment contract. The criteria may be extended by a collective agreement, employer’s act or employment contract.

Other remuneration/allowances

Allowances are other remuneration that increase basic wage considering work in special (more difficult) conditions, i.e. conditions different from the usual and normal working conditions.

Labour legislation and collective agreements define other remuneration for special working conditions as a result of scheduling the hours of work. General collective agreements define minimal amounts of other remuneration as a given percentage of an amount calculated per hour in the following cases: overtime work – 35%; night work – 35%; work in three shifts – 5%; work on days of weekly rest – 50% and work on days designated as holidays and non-working days defined by law  – in the amount of regular daily/hourly rate of workers and daily/hourly rate for hours worked increased by 50%. Specific collective agreements may define more favourable amounts for remuneration than the General Collective Agreement, including additional remuneration. In addition to the aforementioned remuneration, the Law on Labour Relations and the collective agreements also prescribe remuneration for years of service, in the amount of 0.5% of the basic wage for each year in service. Other remuneration (increases to the basic wage) may be given to workers also in cases where work is performed in conditions more difficult than normal (e.g. when the worker is exposed to unfavourable effects in the environment, when using protection equipment, when exposed to special dangers, and similar conditions).

Work related allowances

This type of remuneration is given in cases of, but not limited to business travel in the country; business travel abroad; field work allowance; family separation allowance; allowance when using worker’s private vehicle for the needs of the employer. Also belonging to this group of remuneration is compensation for food and transportation. In general, collective agreements allow for employers to pay such allowances either in kind (by organizing food during working hours, and organized transportation from and to the workplace) or by monetary compensatoin. Amounts calculated and paid as work related allowances are regulated by a collective agreement, and the basis for calculation and payment is the average monthly net salary per worker in the country for the past three months.

Other types of allowances

Allowances that belong to this group are of a different nature. Some of them are considered to be aid for the worker or for members of their family. Such allowances are paid in cases of continuous sick leave longer than 6 months due to an injury at work or occupational disease; death of the worker; death of a family member of the worker with whom they have lived in the same household; and severe consequences from natural disasters. Another type of allowances is  related to employee’s years of service at the employer. They are paid as jubilee reward or retirement. Yet another type are special allowances intended for certain occasions or for given periods in the year, when it is considered that workers have increased spending costs. The most significant in this group is the annual leave allowance which is paid once a year for days the worker has spent on annual leave in the amount of at least 40% of the basic wage. In addition to annual leave allowance, collective agreements usually define end of year allowance as well.

Remunerations for paid leave (remuneration to salary)

This type of remuneration is given for a time period (days, or hours) for the duration of which a worker is on paid leave of absence according to law, collective agreement or employment contract. Workers are entitled to paid leave in cases of sick leave, i.e. temporary incapacity to work (according to the Law on Labour Relations, amounts to be remunerated are up to 70% of the wage for 15 days sick leave, up to 90% of the basic wage for more than 15 days, starting from the first day of sick leave up to 30 days, and are to be paid by the employee – but, remuneration for sick leave longer than 30 days is paid by the Health Insurance Fund); for days when using the annual leave (in the amount of the basic wage); for days using paid leave for personal and family reasons up to 7 working days in the year (in the amount of the basic wage); for holidays and non-working days defined by law or other regulation and days off work (in the amount of the basic wage); for education and vocational training according to the needs of the employer (in the amount of the basic wage) and in similar cases.

The basis for calculating remuneration in the aforementioned cases is the average wage of the worker for the past 12 months. Collective agreements also define other cases for remuneration including termination of employment due to reasons related to the employer, strike and other cases.

Payslips in the Republic of North Macedonia are responsibility of employers, as regulated in the Law on Labour Relations. Employers are obligated to provide workers with payslips upon each salary payment (usually once a month), and up until January 31 of the new calendar year (once a year for the previous calendar year).  

Payslips should contain the amount of pay given, and tax and insurance for the payment period.  

Payslips allow workers to see the difference between their gross and net salary. 

Gross salary

Gross salary is the total salary made by workers in employment. Yet, workers cannot put gross salaries ‘in their pockets’, i.e. receive them on their bank accounts. In fact, gross salary consists of the salary in the total amount deducted by social security and income tax on earnings from employment. 

The total amount of social security insurance consists of the following contributions: pension and disability insurancePension and Disability Fund (PIOM) in the amount of 18.8% of the base wage; compulsory health insurance – Health Insurance Fund (FZOM), in the amount of 7.5% of the base wage; additional health insurance in case of injury at the workplace and occupational disease, in the amount of 0.5% of the base wage, and compulsory unemployment insurance – Employment Service Agency (AVRM), in the amount of 1.2% of the base wage.  

The base for calculating social security insurance is the salary in total (salary, contributions to salary and bonuses). After payment of compulsory social security insurance and after calculating personal tax relief defined in the monthly amount according to tax regulations, the base is received for calculating income tax on earnings from employment in the amount of 10%.

In summary, gross salary consists of three parts as follows: part of the salary for social security insurance contributions (28.00 %); part of the salary for income tax on earnings from employment (10%), and the rest of the salary paid to workers (net salary).

Net salary

Net salary may be derived from gross salary. Net salary is salary in the total amount, deducted by the total amount of compulsory social security contributions and the amount of personal income tax.

In practice net salary would mean a total sum of all claims for payment workers have or have received in the course of a certain period, as a result of their labour provided, i.e. work assignment completed, which are an integral part of the salary including: basic salary, performance bonus (in case of good performance), allowances to the salary (if there were any), compensation to salary (if there was any), other financial compensation for work related costs and similar parts.  

Deductions and settlements of salary payment

Deductions and settlements of salary payment may be defined as certain reductions of salary by employers in line with the law. They are not deductions such as insurance contributions and taxes, but rather certain liabilities of workers primarily of debtor and creditor nature.

Employers may retain salary payment only in legally defined cases (e.g. if the salary is subject to enforcement order carried out by certificated enforcement agent, but no more than 1/3 of the salary or, in case workers have authorized employers to retain parts of salaries for payment of personal loan installments, trade union membership fee, and similar payments).

On the other hand, employers may not use their obligation to pay salary to settle their claims towards workers. Damages employers claim from workers (e.g. damage done by workers at the workplace or in relation to work) may not be settled from the salary of workers. This settlement is only possible if workers have consented in writing.

My Labour.
My Rights
Share

The Labour Rights Campaign is implemented
by the Economic and Social Council supported by Strengthening Social Dialogue.

The project is funded by the European Union, and implemented by the International Labour Organization

partners1

The content is sole responsibility of the Strengthening the Social Dialogue Project
and does not necessarily reflect the positions of the European Union.

Share

The Labour Rights Campaign is implemented
by the Economic and Social Council supported by Strengthening Social Dialogue.

The project is funded by the European Union, and implemented by the International Labour Organization

partners1

The content is sole responsibility of the Strengthening the Social Dialogue Project
and does not necessarily reflect the positions of the European Union.