Please assist; we are a manufacturing company with personnel being members of a union. Union membership fees include benefits. One of these benefits is pension fund, calculated on basic remuneration.
Do I calculate on basic income less short time or basic only? Our payroll software, payroll consultants and Union indicate that calc should be based on basic only, however, if short time is ignored and high, net pay might turn out negative due to pension calculated on fixed basic pay. Does TAX regulation indicate the correct procedure?

Brenda:

If this is still an issue, pension, as a compensation issue, is normally an item of negotiation, so I would ask: What does the union contract say?

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Originally Posted by AtlantaTaxExpert

Brenda:

If this is still an issue, pension, as a compensation issue, is normally an item of negotiation, so I would ask: What does the union contract say??

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Thank you for the reply, there is no clear indication as per the union contract as far as short pay is concerned. All indicators only refer to "basic pay". If personnel join a Union, they need to pay a monthly membership fee (the employer is obligated to deduct and pay over) that includes benefits such as "sick pay fund", "income protection", "Pension fund" etc. I was hoping that the TAX act might elaborate more on how short pay should be treated. Is there perhaps a pension fund contribution rule to minimum wages, 1) exempted or 2) 100% company contribution? Regards Brenda

Your consultants and the union say to use basic pay ONLY to calculate the pension contribution. This is in keeping with both tax law and pension law (to my knowledge) unless extra pay (overtime) is added as part of a negotiated contract with the union.

Thank you for your quick reply, what do I do with the deficit if the pension contribution exceeds net earnings (Basic less short pay)?