Net wage agreement

A contractually agreed wage is usually given in the form of the gross wage. This is made up of the duties and taxes to be paid and the net wage that is ultimately left over.

Definition / explanation

The net wage agreement is an agreement stipulated in the employment contract between the employer and the employee. It stipulates a certain net wage and contractually guarantees this remuneration to the employee regardless of the tax class and the amount of social security contributions.

The employer guarantees a contractually agreed net wage. The wage tax, which is calculated on the basis of the gross wage even if there is a net wage agreement, is then paid by the employees themselves.

Weitere Abgaben wie Sozialversicherungsbeiträge, Church tax o. ä. können ebenfalls vom Arbeitgeber abgeführt werden.

Real (original) and fake (derived) net wage agreement

Original net wage agreement - If the employee agrees to pay for possible increases in wage tax or social security during the term of an employment contract by paying correspondingly higher levies, then this is a real (original) net wage agreement.

Derived net wage agreement - On the other hand, in the case of a false (derived) net wage agreement, the net wage remains variable, since changes in taxes during the term of the employment contract are allocated to the net wage paid.

In the former, the net wage for the employee remains constant, whereas in the latter it varies depending on tax and duty developments.

Summary

  • Usually, a contractually guaranteed wage is calculated as a gross wage
  • real (original) net wage agreement - the net wage remains constant, the duties for the employer may vary
  • fake (derived) net wage agreement - the net wage varies, the duties for the employer remain constant
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