[GUIA] Minimum Wage 2021: What will the increase be and what do you need to know?

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Payment of the Thirteenth: how to calculate?

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Currently, a lot has been said about the minimum wage 2021, because of the draft Budget Guidelines Law (LDO), which was sent by the Ministry of Economy to the National Congress and which stipulated the amount of this remuneration.

The minimum wage is essential for standardize work in the UK and its increase depends on issues such as inflation and the country's GDP the year before. And also the projections of the economy for the following year.

Important points are discussed and, therefore, in this article, we will better understand the 2021 minimum wage from the following reflections:

  • What is the minimum wage and when did it come about;
  • How the minimum wage is calculated;
  • An overview of the 2021 minimum wage increase;
  • Effectiveness of the new value of the 2021 minimum wage.

According to information from the Inter-Union Department of Statistics and Socioeconomic Studies (DIEESE), the minimum wage is the reference remuneration for more than 49 million workers in the UK.

Undoubtedly, it is an important issue for both the employer and the employee. And so, we'll clarify the most important points later on, don't miss it and get to know everything about the 2021 minimum wage.

What is the minimum wage and when did it come about?

As the name makes clear, the minimum wage is the lowest legal remuneration that a company must pay its employee.

In the UK, the minimum wage was created in 1936, but only in 1940, with Getúlio Vargas, which was regulated in a more similar way to what we know today.

The minimum wage exists not only in the UK, but in 90% of countries in the world. Some examples are:

  • Germany,
  • France,
  • Belgium,
  • Netherlands,
  • Ireland,
  • Japan.

In addition to Australia and New Zealand, which were the first countries to implement it, in the 19th century.

Rules for the payment of the minimum wage

In the 1988 Constitution of the Federative Republic of the UK, which we follow, the minimum wage is described in Decree-Law No. 5.452, of May 1, 1943, by the following text:

CHAPTER III – MINIMUM WAGE

SECTION I

THE CONCEPT

Art. 76 – Minimum wage is the minimum consideration due and paid directly by the employer to every worker, including rural workers, without distinction of sex, per normal day of service, and capable of satisfying, at a given time and region of the country, the their normal needs for food, housing, clothing, hygiene and transport.

In a more philosophical way, the ultimate goal of stipulating a minimum wage is set a work value threshold floor so that every worker has access to the minimum resources for a decent life and some financial well-being.

For this reason, it is described in detail in the Labor Law. And it is so important and much discussed every year by government cells and the population.

Obligations of the employer in the payment of the minimum wage

It is also important to remember that guaranteeing the minimum wage does not mean that the employer does not have to comply with all the employment benefits also stipulated by law.

This issue is described in Article 81, of the same Decree-Law mentioned above, by the following text:

Art. 81 – The minimum wage will be determined by the formula Sm = a + b + c + d + e, in which “a”, “b”, “c”, “d” and “e” represent, respectively, the value daily expenses with food, housing, clothing, hygiene and transport necessary for the life of an adult worker.

  • 1 – The portion corresponding to the food will have a minimum value equal to the values ​​in the list of provisions, contained in the duly approved tables necessary for the daily food of the adult worker.
  • 2nd – Food may be substituted by the equivalents of each group, also mentioned in the tables mentioned in the previous paragraph, when the conditions of the region, zone or sub-zone so recommend, respecting the nutritional values ​​determined in the same tables.
  • 3rd – The Ministry of Labour, Industry and Commerce will periodically review the tables referred to in § 1 of this article.

For this, contact with the union of each work segment is very important for the employer to correctly follow the guidelines.

Read too: Impacts of Labor Reform: Trade Unions

Regional minimum wage

In some states in the UK, there is a regional minimum wage or regional floor, as it is also called.

This salary differs slightly from the minimum wage established by the union. It is the law that all regional minimum wages must be greater than the national minimum.

All formal workers in the state benefit from this salary, which is slightly higher, except for workers who have a wage floor defined by federal law; convention or collective labor agreement and; for apprenticeship contracts.

Here are some examples of states and their definitions of regional wages:

  • São Paulo (BRL 1,163.55)
  • Rio de Janeiro (BRL 1,238.11)
  • Rio Grande do Sul (BRL 1,237.15)
  • Santa Catarina (BRL 1,158.00)
  • Paraná (BRL 1,509.02)

How is the minimum wage calculated?

Before we really understand what is the picture about the 2021 minimum wage increase, which has caused so much controversy, we need to clarify how the minimum wage was calculated so far.

The Constitution determines that the minimum wage must be corrected, at least, by the variation in inflation, measured by the National Consumer Price Index (INPC) of the previous year.

INPC was created precisely to protect the purchasing power of wages of the UK residents population.

However, in recent years, the minimum wage was readjusted considering the variation of the INPC and also the variation of the GDP (Gross Domestic Product), both from the previous year.

When GDP is negative, therefore, as in 2017 and 2018, the number should be considered zero and there is no adjustment in the value of the minimum wage, even with the increase in inflation, which reduces the population's purchasing power.

Generally speaking, it is based on these parameters that the minimum wage is calculated. We will now go on to understand what is being programmed by the Ministry of Economy for the value of the minimum wage in 2021, which differs a little from what was presented above.

An overview of the 2021 minimum wage increase

Now that we know what it is, when it came about and how the minimum wage is calculated, it's time to understand all the controversy behind the project of Budget Guidelines Law (LDO) of 2021 presented by the Ministry of Economy to the National Congress.

The main purpose of the Budget Guidelines Law (LDO) project is to guide the preparation of fiscal, social security and investment budgets by the Public Power, including the Executive, Legislative, Judiciary and public companies and autarchies.

Every year, the Ministry of Economy presents this plan to the National Congress to stipulate what actions will be taken on top of the budget programmed for the following year.

The value of the 2021 minimum wage is part of this project, as it directly interferes with the payment of taxes by employers.

In addition, of course, to the payment of EHIC pensions (National Social Security Institute).

The proposed adjustment

This year, the project presented foresees an increase based only on the 2021 inflation, which means there won't be a real raise, that is, above inflation and above GDP growth, which was what had happened in recent years.

The last project sent by the government reduced from BRL 1,079 to BRL 1,067 the proposal for the minimum wage in 2021.

The increase in the 2021 minimum wage will be BRL 22 in relation to the 2021 minimum wage, which is BRL 1,045, if followed in this way,

The explanation of the Special Secretary of Finance, Waldery Rodrigues, is that to have a real increase in the minimum wage in 2021, above the INCP, there would have to be a drastic reduction in expenses.

“If there is any increase in this regard, another primary expense will have to be reduced. Remembering the effect that the minimum wage has on expenses: last year, R$1 more in the minimum wage, we had R$300 million more in expenses. If we have an increase above what was stated – any amount – we will have to have another expense cut”, he says.

Possible rise in unemployment

The possible increase in unemployment is also one of the arguments of the Ministry of Economy to continue in this way with the increase in the minimum wage in 2021. In defense of this premise, the Minister of Economy, Paulo Guedes, emphasizes:

“Today, if you raise the minimum wage, at least thousands and maybe millions of people will be fired. You are in the middle of a terrible employment crisis. Everybody unemployed. If you give a salary increase, you will condemn people to unemployment.”

In addition, the minister defends that the increase in the minimum wage, as it has been done so far, encourages inequality in the country, since it is a value that also serves as a basis for other adjustments.

“The big problem is that the minimum wage, which was an instrument to protect workers in the formal market, ended up becoming the basis for readjustment. A person who earned R$30,000, for example, from retirement, when you changed the minimum wage, you also had to push this structure up. You encourage inequality,” he says.

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Effectiveness of the new minimum wage in 2021

Generally, the validity of the new minimum wage starts on the first day of the year. Therefore, it is important, from now on, that the employer prepares its forecast and its HR team for this change right on the first of January.

The main updates that should be made to the employees' work cards are:

  • the date of the increase,
  • the new value,
  • the position,
  • the reason for the modification.

It is important to remember that it is also a law that a company cannot never lower the salary of a collaborator, just increase.

This law is even stricter when it comes to the minimum wage, since it is the minimum necessary to support the employee.

So if you're an employer, keep an eye out for these changes annually. Especially when there is a change of government, as the ways of administering the public budget always change.

By the way, with all this change in the 2021 minimum wage schedule, be sure to read our article How to update the salary of an employee in the work portfolio?. Thus, there will certainly be no mistakes when registering the readjustments of your collaborators.

Salary, benefits and financial health

20 million UK citizens are tied to overdrafts and at what level does your company care about the financial health of its employees?

It is likely that your employees are suffering from financial stress, especially after a year like 2021.

But what can your company do? A lot, after all, stress-related problems affect the mental health and productivity of your employees.

For some time, companies ignored the financial problems of their employees, today, however, this reality is changing. The stress generated by debts and other problems can directly impact the result of this professional within the business.

In this scenario, more and more companies are offering the salary on demand.

O HR Consultant UKy it is a application that allows employees to anticipate part of their salaries whenever they want, simply and instantly.

Believe me, the benefits for the company are also many, such as:

  • decreased turnover;
  • productivity increase;
  • attraction and retention of talents.

Read more at: Stop Ignoring Your Employees' Financial Well-Being!

Liked? So go to access our site and indicate the company you work for to be part of this new model of payment on demand.

Did you like the article? Let us know in the comments how your quest for financial freedom is going. We are available to answer any questions you may have on the subject.

Conclusion

HR Consultant UK can help if you have any questions about [GUIA] Minimum Wage 2021: What will the increase be and what do you need to know?
. Our HR consultant in London can assist you if you live in London. Suppose you live further afield thats not an issue! Visit our HR Consultants Near Me page to find the best consultancy nearest to you.
See you next time!

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