What costs does the Company have on the employee?
Starting from the employee’s gross annual salary, we go on to calculate the cost that the company incurs on the employee.
Company labor cost = Gross wages + Social security + severance pay + Irap
1) INPS contributions.
Contributions, are partly the responsibility of the company itself and partly the responsibility of the employee
Contribution rates payable by the Company: the employee pays INPS contributions at his or her own expense, based on a rate that varies depending on the sector and the employee’s job title (blue collar, white collar, salaried). The salary on which contributions are paid cannot be less than a minimum amount nor exceed a maximum amount. These amounts are defined annually by INPS.
2) INAIL Contributions
Inail administers insurance against occupational accidents and diseases. In the case of accidents at work, it covers expenses related to treatment and guarantees payment of a daily allowance.
In return for this service, employers pay a contribution to Inal that is disbursed through premium self-liquidation. This is because employers independently calculate and settle the premium according to the calculation bases developed by Inail .
These premiums are calculated by applying to wages, a percentage that varies according to the risk borne by different work activities. A surcharge of 1% should be applied on the resulting amount.
On Feb. 16 of each year, each enterprise must make advance self-liquidation of the INAIL premium for the current year by applying the percentage, on a provisional basis, to the wages paid in the previous year. Also by the same date, the enterprise must calculate and pay the adjustment for the previous year based on actual wages paid for the current year. It is possible to installment the 4 installments 16/02 – 16/5 – 16/8 – 16/11 .
The taxable salary is the same as that of the Inps. The contribution is calculated on this salary based on the coefficient communicated annually by INAIL.
Severance pay (TFR) represents a form of deferred compensation, proportional to years of service, which is due upon termination of employment in the form of severance pay or a supplementary pension (since 2006), depending on whether the employee has decided to keep it in the company, or allocate it to a pension fund.
Since January 1, 2007, employees can choose whether to pay their severance pay into a Pension Fund or leave it with the Company.
For those who leave it in the Company, the severance pay will be paid to INPS if it is a company with more than 50 employees otherwise the shares remain in the company. In the case of companies with fewer than 50 employees and for the portion of severance pay related to employees who have chosen not to opt for a pension fund, the company will set aside the severance pay; in other cases, the severance pay is liquidated to INPS or the chosen pension fund.
The portion to be set aside is equal to annual salary / 13.5. 0.5 percent of this sum is allocated to INPS . The accumulated total set aside is revalued annually.
The revaluation of the severance fund is made on the previous year’s severance fund. This fund is revalued by a fixed rate of 1.5% to which 75% of the increase in the ISTAT index is added. Revaluation impacts the company only in cases where the Severance Fund remains in the company.
The IRAP cost affecting the business cost of subordinate labor, we can break it down into 2 components:
1. Non-deductibility of Labor Cost for IRAP purposes: labor cost is non-deductible for IRAP purposes. This leads to an increase in taxes attributable to labor costs, which consequently go to affect the overall cost of Labor as far as the Company is concerned. Law 201/11 (Monti Maneuver), provides for a series of regulations (effective 2012), which will significantly reduce the burden of ìrap. As for the nondeductibility of labor costs, there is provision for the deductibility of a lump sum amount of 4,600.00 euros, on an annual basis, increased to 10.600 euros for female employees as well as those under 35 years of age; for permanent employees employed in Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia and Sicily, the deductible amount is raised to 9,200.00 euros, on an annual basis increased to 15,200 euros for female employees as well as those under 35 years of age;
2. IRAP tax deductibility for IRES purposes: the second component of aggravation on labor cost, relates to the irap component paid on labor cost and indedicable for IRES and Irpef purposes. Here, too, the “Monti Manoeuvre” has provided tax relief, in that from 2012 the IRAP portion referring to labor costs net of deductions due can be taken as a deduction from IRPEF and IRES.