How do I properly arrange salary payments to employees' cards?

It is up to each employer to decide whether to pay salaries to employees in cash or on a card. However, every year more and more people refuse to pay in cash and use bank cards more often. If you've decided to keep up with the times and start paying your employees on a card, this article will tell you how to do it and what you need to do.

How to arrange a salary payment to a card?

Article 24 of the Law on Remuneration of Labor provides for the possibility of paying salaries to an employee's bank card. To do so, two conditions must be met:

• the employee must give written consent or write an application for payment of salary to the card;
• the employer pays the fee for the money transfer.

An employee may refuse to receive his or her salary on a card and continue to receive his or her salary in cash. Or vice versa, if all employees want to receive money the old-fashioned way and only one of them asks to transfer money to the card, this option is also possible and you have no right to refuse such an employee.

If all employees agree to receive money on the card, you can draw up an Order in any form to change the terms of salary payment with a list of employees who will receive money on the card and familiarize everyone with it against their signature.

If only one employee wants to receive money in non-cash form, he or she must write an application for transferring the salary to a personal card. The application must include the bank details, the card number to be transferred, and the employee's data.

Do I need to conclude an agreement with a bank?

It all depends on how many employees you will be paying salaries to the card and which bank you cooperate with. If you will be transferring money to one or two employees, you do not need to conclude additional agreements with the bank. You simply create a payment order in your personal bank account and transfer the money to the employee. If you are going to pay salaries to a large number of employees on a card, then you should contact your servicing bank and activate the Payroll Project feature.

This feature is convenient because you can create or upload a ready-made payroll in your personal bank account and transfer money to all employees in one click. You will not need to create a payment order to transfer money to the card of each individual employee.

If you decide to pay salaries to employees on a card, you should know that the bank will not send money to employees until you pay the unified social tax (22%), personal income tax (18%), and military service tax (1.5%). That is, you first calculate payroll taxes, pay them, and only then pay the salary.

Previously, there was a requirement to open payroll cards only in the bank where the employer's account was opened. In 2020, this requirement was canceled, and now employees can choose which bank card they will receive their salary on.

How is money credited to the card?

Depending on the bank where you have an account, the process of crediting money to an employee's card may differ. There are two options:

• money is immediately transferred from the employer's account to the employee's account;
• money from the employer's account is transferred to the bank's transit account and then transferred to the employee's account.

Regardless of how the money is transferred: directly or through a transit account, it will still arrive on the employee's card on the same day the employer sent it.

Important! The payment purpose must specify the period for which the payment is made, otherwise the bank will reject the payment.

Who pays the bank fee?

The Law on Remuneration of Labor obliges employers to pay bank fees. This includes two types of fees: a fee for transferring money from a current account to a card and a fee for crediting money to a card.

The employer does not have to pay a fee for withdrawing money from the card, for example, using an ATM. This is an employee's expense.

How often do you need to pay salaries?

Regardless of whether you pay salaries in cash or to an employee's bank card, the requirements remain the same:

• salaries must be paid on business days;
• at least twice a month, with an interval of no more than 16 calendar days between payments;
• if the payday falls on a weekend or a non-working day, the payment must be made before the weekend;
• it is prohibited to pay a salary once a month, even if the employee requests it.