About gross up (BES islands)
What is gross-up?
By this we mean converting an amount to be paid out (net) back to a gross amount.
The gross amount is the amount before payroll tax, tax allowances, employee insurance and health insurance, any pension and expense allowances have been deducted. The amount to be paid out is the net amount.
What is the cost of gross-up?
This depends on the net amount. However, it can be quite expensive for an employer!
The reason is the following: Between the gross amount and the net amount to be paid out there are payroll tax, fiscal allowances, employee insurance and health insurance, any pension and expense reimbursements. For the employer, grossing up therefore means (much) higher costs than just the net amount to be paid.
This may be acceptable for a one-off payment, but if you want to agree on a monthly net salary with your employee, it can become quite expensive. That is why we always recommend agreeing on a gross salary that will arrive at approximately the desired net amount to be paid. You then state the chosen gross amount in the employment contract.
An additional disadvantage is that if the employee chooses to offset the payroll tax credit in income tax and not through the employer, you as an employer will incur even more costs.
If you still want to agree on a net salary with your employee, we would like to inform you that in some cases it is possible to use tax-friendly rewards. This means that costs are exchanged within the limits of the law, resulting in a lower gross wage resulting in a higher net wage.
How can I gross-up?
In Celery it’s possible in 2 ways to gross-up.
Option 1: Gross up a fixed net salary and enter it for the employee.
Please note: to gross up with this option, there must be no open payroll run.
Go to the employee. Here is the grossing button on the right of the screen.
With this option a fixed amount can be grossed up. If the tax and/or premiums change, you must perform the calculation again.
When grossing up, Celery includes all fixed data entered by the employee in the calculation of the gross amount. This includes the reservation of holiday pay and/or 13th month, pension premium, fixed wage codes and tax additions.
Please note that if you want to exclude a certain deduction (loan or advance) from the grossing up, set it to zero before the grossing up and return it to the correct amount after the grossing up.
Option 2: a one-off amount in the open payroll run.
The wage code 190 is grossed up by Celery. This code is often used for net compensation or bonus.