The correct accounting and tax allocation of wage arrears depends on the circumstances of the specific case.
A salary delay is an administrative challenge for any company. Take note of how to act, whether you are a company or an employee.
It is common for entrepreneurs not to consider facing salary arrears when starting a business. However, this reality can arise for various reasons, such as cash flow difficulties , errors in payrolls , lawsuits or the discovery of circumstances that generate variable payments .
Start of marked textTWEET IT! Has your company paid wages late? Take note of the accounting and tax implications!End of marked text
Once wage arrears czechia email list become apparent, doubts mount among entrepreneurs. There is a double pressure.
On the one hand, conflicts with affected employees must be avoided or, where appropriate, resolved . The evolution of the working environment may depend on this .
On the other hand, the company faces different questions that we will try to answer throughout this entry.
When does a salary delay occur?
The Workers' Statute does not establish a specific date on which wages must be paid, but rather rules to determine this date. Specifically, it states that wages must be settled and paid punctually and in a documented manner (through the corresponding payroll ) in accordance with the agreement or customs and practices. However, in the case of periodic and regular wage obligations (such as a monthly payment, for example) the payment must not be delayed for more than one month.
How do delays affect withholdings?
You may encounter two different situations:
If the delay in payroll occurs within the same fiscal year , the corresponding withholding rate is applied according to the general procedure.
If it occurs in a different fiscal year , then the withholding rate of 15% applies.
How do delays affect payrolls and contributions?
You should not add what is normally due in the month in which the arrears are paid plus the arrears themselves. Instead, you will have to make a payroll of arrears , with its corresponding contribution, which you will pay to Social Security through the complementary payment for the increase in bases derived from the retroactive payment of salaries ( L03 ).
How are arrears recorded?
Mainly, you may find yourself facing four situations:
1. Delay in payment
In this case, the salary was correctly planned, but its payment is delayed (for example, due to treasury problems).
At the time of salary accrual, you will credit the account for unpaid wages by debiting the accounts representing personnel expenses. At the time of payment, you will debit the account for unpaid wages by crediting the treasury accounts.
2. Error or change of criteria
An error can occur for different reasons, such as not having used, or not having used appropriately, reliable information that was available when the accounts were drawn up and that the company could have obtained and taken into account.
For example, we are talking about arithmetic errors, when transferring payroll information to accounting, when assessing how it should be accounted for, etc. Ideally, it would be best to avoid them by using the most advanced accounting and labour management solutions , such as those from Sage , and by obtaining, if necessary, the appropriate accounting, labour or even tax advice .
As a result, you may have had to settle and pay a higher amount at the time . Now, therefore, it would be time to settle, pay and record the arrears.
When you correct errors from previous years, you will not use the personnel expense accounts , but rather you will charge a net worth account ( voluntary reserves ) with a credit to the treasury accounts or to reflect, if you have not yet paid, the debt to the workers.
On the other hand, you will proceed in a similar way in the rarer case in which there was not an error, but a change in the accounting criteria .
The accounting for a salary arrears varies depending on the cause that motivated it.
