wages

concept

• salary=renumeration of labour 

•  includes all economic perceptions in money and in kind received by a worker as compensation for professional labour services performed for another person 

  • renumerates work actuallyperformed 

  • renumerates periods legally treated as work

• requirements

  • contractual clause= salary must arise from the employment relationship (contract/ collective agreement) ie base salary/supplements

  • linked to effective working time= paid for work done or legally equivalent time ie paid holidays paid leave 

  • paid by the employer= owed in exchange for labour; employer pays monthly 

• crypto/bitcoin is not considered salary

no employment contract

• where no lawful contract exists there is no lawful salary

  • voluntary work

  • undeclared black work

  • criminal/illicit work

• therefore there is no labour rights

  • no minimum wage

  • no right to sue for unpaid wages under labour law

  • no social security rights

  • no protection from dismissal rules paid leave etc

• if someone is paid cash in hand off the books= illegal employment so cannot claim labour protections even though labour inspectors may sanction the employer

salary structure

• salary must give the worker economic enrichment beyond reimbursement of costs (ie expenses) 

• there are 3 main components:

  • base salary 

  • wage supplements 

  • payments in kind (including paid holidays, paid leaves, stat breaks, productivity incentives)

base salary

• core component of renumeration

• pays for the work the employee performs according to their professional category and job position 

• spain guarantees a minimum level of income through the salary minima inter professional (SMI) set yearly by the government

  • this is the legal floor ensuring substinence

  • collective agreements and indiv contracts can grant higher amounts but not lower

wage supplements

• additional amounts added to the base salary

  • they exist only if regulated in the contract or collective agreements

• personal supplements= compensates personal traits that raise the value of the employees work

  • seniority (length of service)

  • languages

  • professional qualifications 

• working conditions supplements= apply when jobs involve inconvenience or special conditions

  • night work between 10-6 for at least 1/3 of shift 

  • toxicity or danger

  • hardship

  • availability/on call

  • remote/difficult locations (not travel expenses this is not renumeration)

• company result/productivity linked supplements= variable and performance linked

  • bonuses 

  • commissions

  • profit sharing 

• the purpose is to ensure the real circumstances of work and the worker are properly reflected in renumeration 

payments in kind

• non monetary benefits that give the worker a personal economic advantage 

  • they are subject to social security contributions= irpf withholding 

  • must appear on pay slips

• cannot exceed 30% of the total salary ensuring majority is money for substance 

• the benefit counts as salary if it enriches the worker personally and substitutes something the worker would otherwise pay for- not expenses the company would have to pay 

  • private use of a company vehicle= salary in kind

  • car used just for commuting= not salary it is a work tool (employer expense)

  • health insurance (private medical life accident cover)= salary in kind as worker benefits outside workplace

  • stock options

  • housing 

  • food vouchers 

non salary items (indemnities)

• these do not enumerate work but compensate expenses, damages or costs caused by employment 

  • tax and ss exempt if within legal limits and justified

• if paid in excess/fixed lump sums unrelated to real expenses= becomes salary 

  • ie company pays all employees 300 travel allowance regardless of how far they live or whether they incur actual cost= not tied to real evidenced expenses and exceeds what some spend so becomes salary for tax and ss purposes

  • 50 pound phone indemnity even if don’t use phone for work= not linked to demonstrable work related expenditure so is a disguised salary sup

  • 200 clothing identity but employees wear normal clothes not uniform required= compensates no actual work related cost

types of non salary items

• employment related expenses

  • travel allowances, commuting costs

  • accommodation/meals for assignments

  • mileage reimbursement (use of personal vehicle)

• compensation for damage or loss 

  • replacement of tools/equipemnt

  • damaged personal items (ie phone used for work)

• company car sole for commuting

  • not salary considered an employer business need

• uniforms/safety gear

  • work necessity= non salary 

• benefits purely the employers interest

  • safety training required by law

  • mandatory medical exams

  • required work equipment (no personal enrichment)

• mobility/relocation compensation 

  • paid when employers transfer or temporarily moves worker

  • covers cost of mobility, family reunion relocation 

• termination indeminities= compensational not salary so exempt from ss

  • objective dismissal

  • collective redundancy 

  • end of temporary contract 

salary in cases of impossibility to work

employer attributable causes= salary must be paid as if work was performed

• employer is responsible for breach=workers retain salary

  • no materials 

  • workplace closure due to employers fault

  • broken machinery due to poor maintenance

  • refusal to provide necessary tools

force majeure/external causes=employer is not obliged to pay unless a cab/contract provides additional protection

• natural disasters

• pandemic/lockdowns 

employer insolvency=wages may be paid by the FOGASA with limits

fogasa= wage guarantee fund

• a public fund guaranteeing wage and severance payments only when the employer cannot pay

  • employer insolvency

  • contract terminations/suspension for force majeure (fire flood disaster)

• covers unpaid wage credits and severance/indemnities

• fogs is a substitute payer, not a primary payer= not automatic

  • worker sues employer and obtains judgement declaring debt

  • worker applies to fogasa

  • fogasa pays within legal limits

compensation and absorption of wages

• mechanisms to handle overlap between wage increases from different sources (contracts vs collective agreements)

  • to avoid double payment while protecting rights

• comparability= only similar salary items can be absorbed/compensated

  • ie seniority supplement (personal) vs bonus (productivity linked) have different purposes so are not comparable

• minimum standards= absorption cannot bring salary below the smi or minimum levels in contract/cba

compensation= worker keeps advantage 

• worker keeps everything because the new benefit is a different concept or legally cannot reduce what the worker already had

  • the new increase is for a different purpose so employer cannot reduce

    • worker earns 200 above the cba minimum wage= keeps extra 200

    • seniority bonus of 50 a month+ new CBA raise of 30= both kept different concepts (personal supplement and cost of living raise)

    • worker has 200 productivity bonus; cba introduces/requires 150 productivity bonus = worker keeps 200 (more favourable) as employers is for productivity cabs is for a mandatory minimum

absorption= new increase eats the previous extra

• worker does not gain anything new because the benefit is the same concept, so the employer can use it to cover what the worker was already receiving 

• if worker already earns above the new standard the increase can absorb their advnatage= no real raise

  • worker earns 200 above the cba minimum; cba raises minimum by 200= salary stays the same they already had this base salary advantage 

  • cba raises minimum from 1300 to 1500; the worker already earns 1500= advantage absorbed no rise as they already had this

  • worker has 100 responsibility bonus; new cba grants 100 general supplement= bonus absorbed as both supplements to base pay

  • night shift supplement of 80; cba introduced 80 night supplement= same concept already had minimum so absorbed

protection of wages

• unattachability= designed to protect the workers subsistence minimum

  • employee must retain enough to meet basic living needs so creditors cannot take the whole salary 

• amounts up to smi= fully unattachable= cannot be taken needed to live

• above smi= only a percentage can be seized (sliding scale)

  • family responsibilities adjust the attachable portion (need more to keep if raising family)

summary

• salary only exists when there is a lawful employment relationship 

• salary= base salary+ supplements+ payments in kind

• non salary items are expense reimbursements or damages not remuneration

• certain events obligate the employer to pay salary even if work is not performed (when at fault and able to)

• fogasa acts as a backup not a primary payer

• compensation and absorption ensure fair balance between inddual advantages and collective standards

• workers wages benefit from powerful protections like unattachability