Tracking and Reporting Employee Social Security Contributions

This chapter provides an overview of social security contributions and discusses how to:

Enter payee insurance data.
Report social security contributions.

Note. Before you can track social security contributions, you must set up those contributions. Setting up social security contributions is discussed in a previous chapter in this PeopleBook.

Understanding Social Security Contributions

This section lists common elements and discusses:

Types of social security insurance.
Social insurance.
Additional insurance.
Delivered social security deductions.
Viewing delivered elements.

Common Elements Used in This Chapter

Franchise	Earnings that are exempt from social security contributions. Usually, you determine the franchise amount as a daily amount and deduct it from employees' daily earnings before calculating their social security contribution.
WAO	WAO (Wet op de arbeidsongeschiktheidsverzekering) is insurance for disability benefits. This type of insurance has been replaced by WIA from January 1, 2006.
WIA	WIA (Wet Werk en Inkomen naar Arbeidsvermogen) is insurance for disability benefits. It replaced the WAO insurance as of January 1, 2006. However, Global Payroll for the Netherlands continues to use the term WAO in field names because the contribution method has not changed.
WW	WW (Wet op de arbeidsongeschiktheidsverzekering) is unemployment insurance.
ZW	ZW (Ziektewet) is insurance for sickness benefits.
ZFW	ZFW (Ziekenfondswet) is the health insurance that was in use before January 1, 2006. It has been superceded by ZVW and should not be used in processing payroll from this date.
ZVW	ZVW (Zorgverzekeringswet) is the new health insurance that came into effect January 1, 2006.

Types of Social Security Insurance

In the Netherlands, social security insurance falls into two groups:

Employee insurance (Werknemersverzekeringen).

This insurance applies to employed people only. There are two types of employee insurance:
- Social insurance (Sociale Verzekeringen).
  
  This insurance is mandatory for all employees. Legislation governs the contributions made by employers and employees.
- Additional insurance (Aanvullende Verzekeringen).
  
  This insurance depends on the employer's industry, and it varies from company to company. For some types of additional insurance, the company's collective labor agreement determines the contributions.
National insurance (Volksverzekeringen).

This insurance applies to all residents of the Netherlands. The government pays this insurance from salary and income tax and does not impact payroll. Some forms of additional insurance are based on the national insurance.

Global Payroll for the Netherlands calculates employee and employer contributions for social insurance and additional insurance only.

Social Insurance

Social insurance contributions are determined by the following social insurance legislation:

Sickness Benefits Act (Ziektewet).

Collective labor agreements usually define the sickness benefits that employers pay. The social security agency pays some sickness benefits, such as maternity leave. There are no employee or employer contributions for this act.

In Global Payroll for the Netherlands, you use the Establishment Table NLD page to define the percentage of normal salary paid to sick employees. This PeopleBook provides detailed information about absences.

See Defining Absence Rules.

See Updating Absences.
WIA Act (Wet Werk en Inkomen naar Arbeidsvermogen)

Employees who are sick for more than 2 years can receive disability benefits. The employer pays the contribution for this insurance, and it is based on two percentages. One is a fixed percentage provided by the Social Security Authority and changes each year. The other percentage depends on the employer's industry and the number of employees who qualify for disability benefits.

Note. The WIA Act replaced the WAO Act (Wet op de arbeidsongeschiktheidsverzekering) as of January 1, 2006. Global Payroll for the Netherlands continues to use the term WAO in field names because the contribution method has not changed.
Unemployment Insurance Act (Werkloosheidwet).

Unemployment insurance provides benefits to employees who lose their jobs. Both employers and employees contribute to this insurance. The contribution is based on two percentages. Both are fixed percentages provided by the Social Security Authority. The percentages change each year.
Health Insurance Act (Zorgverzekeringswet).

From January 1, 2006 a new health insurance act came into effect as part of the Wet Administratieve Lasten Verlichting Inzake Socialeverzekeringswetten (Walvis) Act. All employees contribute to the same insurance and the contribution consists of two separate amounts:
- The premium charged by the insurance company that is the same for all employees in the organization. This flat amount varies by health insurance company.
  
  Note. Global Payroll for the Netherlands does not deliver a deduction for this flat amount. You need to set up a deduction that meets your organization’s requirements.
- A premium that is dependent on the employee’s salary.

From January 1, 2006 social insurance contributions are calculated using the VCR method (Voortschrijdend Cumulatief Rekenen). This method is based on the current pay period and the total year-to-date contributions. There are two ways to use the VCR method:

Cumulatieve Premiemethode
Grondslagaanwasmethode

Global Payroll for the Netherlands calculates social security contributions using the Grondslagaanwasmethode.

Employers report social insurance contributions in the Wage Declaration.

See Generating Wage Declarations.

Note. Global Payroll for the Netherlands delivers insurance codes and rules for social insurance. You should review the delivered rules and, if necessary, adjust them for your organization.

Additional Insurance

Regulations for additional insurance vary according to the employer's industry. Global Payroll for the Netherlands enables you to define contributions for additional insurance to suit your organizational requirements. The system calculates the additional insurance for contributions that only the employer pays. These contributions do not appear on the payslip.

Here are some examples of additional insurance:

Pension (Pensioen).
Pre-pension (Pre-pensioen).
General Surviving Relatives Act Gap (ANW-hiaat verzekering).
Disability Benefits Act Gap (WAO-hiaat verzekering).
Schooling Fund (Scholingsfonds).
Fund for Factory Committee (Fonds voor Ondernemingsraad).

Note. Global Payroll for the Netherlands includes sample data for additional insurance. Use the samples as a starting point to create your own additional insurance codes and rules.

Delivered Social Security Deductions

Global Payroll for the Netherlands delivers a set of deductions for social security contributions with the following naming conventions:

Deduction	Description
SOCAFDnXXXyy	The total contribution (Afdracht) that includes both employee and employer contributions.
SOCINHnXXXyy	The employee's contribution (Inhouding).

Where:

n is 1 or 2 to represent the contribution percentage 1 or 2 defined on the Insurance Premium page.
XXX is the insurance code defined on the Insurance Code Table NLD page.
yy is NT (Normaal Tarief) or BT (Bijzonder Tarief).

Note. For the health insurance contributions, Global Payroll for the Netherlands does not deliver a deduction for the flat amount charged by the health insurance company. The implementation of this contribution varies from company to company. You need to set up a deduction that meets your organization’s requirements.

Viewing Delivered Elements

The PeopleSoft system delivers a query that you can run to view the names of all delivered elements that are designed for the Netherlands. Instructions for running the query are provided in PeopleSoft Enterprise Global Payroll 9.0 PeopleBook.

Entering Payee Insurance Data

This section lists prerequisites and common elements and discusses how to:

Enter social insurance information.
Enter additional insurance information.

Prerequisites

Before you can record payee insurance information, set up the following information:

Sector and risk codes.
Insurance codes for social and additional insurance.
Contribution percentages for each insurance code.
Insurance groups.
Establishment social security and absence information.
Employee information, such as personal and job data.

Global Payroll for the Netherlands uses information you set up in PeopleSoft Enterprise Human Resources to calculate social security contributions. In particular, make sure you define:
- Date of Birth field on the Biographical Details page.
- FTE and Workdays/week field on the Job Data - Job Information page.
- Employee earnings.

Common Elements Used in This Section

Contribution Method

For a selected insurance, the Contribution Method defines whether the payee is insured and who makes contributions. Select the contribution method from these options:

No Premium: The employee is not insured for this insurance. The system does not calculate contributions or print information on the payslip for the insurance.

Employee/Total: The employee is insured and contributions are made by the employee and employer. The system calculates both the employee and total contributions, but the payslip shows the employee's net deduction only.

No Employee/Total: Used for insurance that is paid by the employer only. The system calculates the total contribution but does not include any information on the payslip for this insurance.

No EE/Employer: Used for conscientious objectors. Such employees are not insured and therefore do not pay contributions. However, the system calculates the employer contribution for the insurance because employers are obliged to pay contributions for conscientious objectors. The payslip doesn't include any information about this insurance.

Private Health Insurance: (for ZFW insurance only). Select this method if the employee has private health insurance. Employees whose salary is above the limit set for the Health Insurance Act (Ziekenfondswet) must pay for private health insurance.

Note. As of January 1, 2006, the Health Insurance Act (Zorgverzekeringswet) came into effect. From this date, the ZFW insurance is no longer valid. It is replaced by the ZFW combined health insurance.

Pages Used to Enter Payee Insurance Data

Page Name	Object Name	Navigation	Usage
EE Social Insurance NLD	GPNL_EE_SOC_INS	Global Payroll & Absence Mgmt, Payee Data, Social Security/Insurance, Maintain Social Ins Data NLD, EE Social Insurance NLD	Enter payees' social insurance information.
EE Additional Insurance NLD	GPNL_EE_ADTL_INSR	Global Payroll & Absence Mgmt, Payee Data, Social Security/Insurance, Maintain Addl Ins Data NLD, EE Additional Insurance NLD	Enter payees' additional insurance information.

Entering Social Insurance Information

Access the EE Social Insurance NLD page.

Social Insurance Details

Use Establishment Data	Select Yes if you want the default social insurance group for the payee based on the Establishment data. Otherwise, select No.
Social Insurance Group	Select the payee's social insurance group. The social insurance group defined for the payee's establishment appears by default from the Establishment Table NLD page.

Insurance Contribution Detail

ZW Contribution Method	Select a contribution method for sickness benefits.
WAO Contribution Method	Select a contribution method for disability benefits.
WW Contribution Method	Select a contribution method for unemployment insurance.
ZVW Contribution Method	Select a contribution method for health insurance. This field is display-only if the social insurance group you selected does not include the ZVW insurance.
ZVW Code	Select the ZVW code that applies to this employee. This code is used in the Wage Declaration.
Vendor ID	Use this field to record employees' health insurance company. It is an optional field that you can use to record national health insurance or a private insurance company. Select the vendor from the vendors defined on the Vendor table.
Registration No (registration number)	Enter the employee's association member registration number. This is an optional field.
Year End Reporting Code	Select the code used for year end reporting to the social security agency. These codes are defined by the social security agency and are used in the year end interface.

Entering Additional Insurance Information

Access the EE Additional Insurance NLD page.

Use Establishment Data

Select Yes if you want the default additional insurance group for the payee based on the Establishment data. Otherwise, select No.

Additional Insurance Group

Select the additional insurance group that applies to the employee. The additional insurance group defined for the payee's establishment appears by default from the Establishment Table NLD page.

Click the Refresh button to synchronize the insurance details for the employee with the setup of the insurance group. The refresh adds or removes insurance codes depending on the changes in the insurance group setup. The contribution method is not overwritten for insurance codes that remain in the profile.

Insurance Override

Select to override the default contributions defined for the insurance code/insurance number. The system displays the Employee Percentage 1, Employee Percentage 2, Total Percentage 1, Total Percentage 2, Increase Percentage Employee, and Increase Percentage Employer fields when you select the check box.

Employee Percentage 1 and Employee Percentage 2

Enter the employee's contribution percentage for the insurance. If there are two contribution percentages for different earnings bands, use the Employee Percentage 2 field to enter the second percentage.

Total Percentage 1 and Total Percentage 2

Enter the total contribution percentage for employee and employer. If there are two contribution percentages for different earnings bands, use the Total Percentage 2 field to enter the second percentage.

Increase Percentage Employee

The system calculates contributions based on a gross base calculated for each employee. Most contributions are based on this gross amount. If the employee contribution uses a different base, enter the percentage increase to the gross base.

Increase Percentage Employer

If the employer contribution is not based on the gross base, enter the percentage increase.

Reporting Social Security Contributions

This section lists common elements and lists pages used to run social security reports.

Understanding Social Security Reporting

Employers in the Netherlands submit social security information to the Tax Authority as part of the wage declaration (Loonaangifte) that is generated on a monthly or four-weekly basis depending on your payroll frequency.

In addition, Global Payroll for the Netherlands also provides two social security reports, the SI Summary report and the SI Contribution report, that provide a summary of total social security contributions and a listing of employee social security contributions.

See Also

Generating Wage Declarations

Common Elements Used in This Section

Filter By

Specify the employees you want to include in the report using one of these options:

EmplID: Select to run the report for one employee. The system displays the EmplID field where you select an employee.

Group: Select to run the report for a group of employees defined by a group ID.

SSN: (social security number). Select to include all employees with the selected social security number. The system displays the SSN field where you select a social security number.

Pages Used to Generate Social Security Reports

Page Name	Object Name	Navigation	Usage
SI Contribution Report NLD	GPNL_RC_SOC_5PCT	Global Payroll & Absence Mgmt, Social Security/Insurance, SI Contribution Report NLD	Run the SI Contribution report (GPNLP5PCT) that summarizes total social insurance contributions for a given period. This enables employers to track increases in social security contributions.
SI Summary Report	GPNL_RC_SOC_YEE	Global Payroll & Absence Mgmt, Social Security/Insurance, SI Summary Report NLD	Run the SI Summary report (GPNLPSYE) that lists employees' social security contributions for a given period.

Use Establishment Data	Select Yes if you want the default additional insurance group for the payee based on the Establishment data. Otherwise, select No.
Additional Insurance Group	Select the additional insurance group that applies to the employee. The additional insurance group defined for the payee's establishment appears by default from the Establishment Table NLD page.
	Click the Refresh button to synchronize the insurance details for the employee with the setup of the insurance group. The refresh adds or removes insurance codes depending on the changes in the insurance group setup. The contribution method is not overwritten for insurance codes that remain in the profile.
Insurance Override	Select to override the default contributions defined for the insurance code/insurance number. The system displays the Employee Percentage 1, Employee Percentage 2, Total Percentage 1, Total Percentage 2, Increase Percentage Employee, and Increase Percentage Employer fields when you select the check box.
Employee Percentage 1 and Employee Percentage 2	Enter the employee's contribution percentage for the insurance. If there are two contribution percentages for different earnings bands, use the Employee Percentage 2 field to enter the second percentage.
Total Percentage 1 and Total Percentage 2	Enter the total contribution percentage for employee and employer. If there are two contribution percentages for different earnings bands, use the Total Percentage 2 field to enter the second percentage.
Increase Percentage Employee	The system calculates contributions based on a gross base calculated for each employee. Most contributions are based on this gross amount. If the employee contribution uses a different base, enter the percentage increase to the gross base.
Increase Percentage Employer	If the employer contribution is not based on the gross base, enter the percentage increase.