When an employee joins or leaves during the year, is the AOV/AWW premium based on their actual wages?
No. Celery does not use the actual wages. Instead, Celery applies a monthly maximum.
What are AOV and AWW?
AOV is the general old-age pension insurance. AWW is the general widows’ and orphans’ insurance. Both premiums are taken from the employee’s wages, up to a maximum wage per year. Wages above that maximum are not charged.
The rule Celery follows
On 25 June 2009, the Board of Appeal (a tax court) ruled on this. When an employee joins or leaves during the year, the employer never has to deduct more than 1/12 of the maximum yearly premium per month.
Why this matters
The Tax and Customs Administration’s manual says something different. It says the employer should calculate the premium over a full year when the employee joins or leaves.
An example:
- An employee starts on 1 July and earns XCG 15,000 per month.
- The Tax and Customs Administration expects premiums over XCG 90,000, the total wages from July to December.
- The Board of Appeal ruled that the employer should only deduct 1/12 of the maximum yearly premium each month.
Who is affected?
Only employees whose yearly wages are above the maximum. For employees below the maximum, nothing changes. Their full monthly wages are always charged.
What this means in Celery
Celery calculates AOV/AWW premiums according to the Board of Appeal ruling. You cannot choose to calculate these premiums on actual wages above the maximum.