Wages and wage payment

Your employer must pay your wages on the last day of the wage payment period unless otherwise agreed, and the wages must be available to you on this day. Unless otherwise specified in the collective agreement, time rates must be paid on a monthly basis, and hourly rates must be paid twice a month.

Collective agreements often include stipulations on wage payment, and also specify the minimum wages paid in an industry. The minimum wages stipulated in a collective agreement are legally binding, but an employer may choose to pay more than the collective agreement prescribes.

Wages may be reduced, but they may not fall below the minimum level stipulated in the collective agreement, and they may not be reduced without the employee’s consent unless the employer has lawful grounds to terminate the employment.

The Employment Contracts Act prescribes that you must be paid a “customary and reasonable wage”, even if no collective agreement can be applied to your employment and you have not agreed with your employer on any remuneration for the work.

Wages in many industries are mainly based on the requirement of the job and the employee’s personal performance. Work may be categorised according to job requirement at the workplace. The regular wages in such cases will consist of a wage element based on an assessment of job requirement and a wage element based on personal performance. A wage element based on achieving operating targets is also paid in some industries. Wages will be paid during sick leave and annual holidays at the rates that are required by law and stipulated in collective agreements.

A pay advice note must specify the wages paid and an itemisation according to the criteria for determining the wages. Your employer will deduct a PAYE element remitted to the tax authority in accordance with your personal tax rate certificate. You must get this certificate from the tax authority and show it to your employer unless the employer has already ordered the required details through the online service of the tax authority.

Your employer will also deduct contributions for statutory pension, unemployment and sickness insurance (included in the withholding percentage shown on your personal tax rate certificate) and any agreed trade union membership subscription fee.