Variable salary ITP 2

Variable salary is classified as pensionable salary for ITP 2 in the following cases:

• commission, earnings-related compensation, production bonuses or similar
• bonuses, performance-based at individual, group or company level with earning conditions determined in advance.

Amounts not to be classified as pensionable salary,

• gratuity - an amount determined unilaterally and in arrears by the employer.

Employees with fixed and variable salary

If the employee receives both fixed and variable salary, the pensionable portion consists of

• the current fixed annual salary (including holiday supplement) and
• the average variable salary during the three immediately preceding years
  

Rules for holiday supplements

• For the fixed portion of the salary: Calculate using the monthly salary. Multiply by 12.2 to get the annual salary including holiday allowance.
• For the variable portion of the salary: Multiply the number of days of annual leave by 0.5% (e.g. An employee who has 30 days of annual leave – 30 days * 0.5% = 15%. Then multiply by the total for the variable portion of the salary.)

The report should include holiday supplements for the variable salary component, provided that the variable salary component is eligible for holiday supplement. Therefore, holiday bonuses should only be included in the calculation if the variable remuneration component is eligible for holiday supplements.

Salary audit

When it's time for your annual salary review, you must also add the variable salary - in the form of the three-year average. New variable salary is calculated on an annual basis, regardless of whether the employee's fixed salary has changed or not.

Employees with exclusively variable salary

If the employee receives exclusively variable salary, the pensionable portion consists of the average salary paid during the three immediately preceding years. The salary may not be an amount less than the state's guaranteed minimum income

If the employee receives guaranteed commission or a similar income guarantee, the pensionable salary may not be an amount less than the state's guaranteed minimum income.

Recommendation when the employee has not had a variable salary for a full three years

If you cannot do an average calculation, for example because the employee has not been working with you for three years, the Confederation of Swedish Enterprise and the Council for Negotiation and Co-operation for Salaried Employees (PTK) recommend the following:

• Year 1: Estimate and report the variable salary component (including holiday allowance).
• Year 2: Report the actual payment of variable salary components + holiday allowance (earned in year 1).
• Year 3: Report the average of the actual payments of variable salary components in year 2 + 3 (earned in year 1 + 2).
• Year 4: Report the average of the actual payments of variable salary components in year 2 + 3 + 4 (earned in year 1 + 2 + 3).
  

From year 5 onwards, report an average of the previous three years' actual payments of variable salary components. Example calculation variable salary components

From year 5 you calculate bonus in the same way as for year 4 in the example above, i.e. the average of the previous three years' payments. According to the ITP agreement, from this point, the employer is obliged to report the bonus as a three-year average.