- years of the accounting period
- limit amount of recorded payments
- number of calendar days in the accounting period
- maximum average daily earnings, maximum amounts of child benefits
Minimum wage increase31 October, 2017
By Elena Selezova, Senior accountant
From January 01, 2018 the federal minimum wage will be increased by 22%, from RUB 7,800 to RUB 9,489 per month. How will this affect companies? What should senior officers and accountants know? We will consider some examples and address the most pressing issues below.
1. Senior officers will need to supervise accounting departments and personnelThe calculation of benefits for temporary incapacity to work and for maternity leave will change in 2018, as well as alimonies calculated by employers and the amount of social insurance contributions. So in 2018 benefits will be calculated on the same basis as in the previous year taking into account the following changes:
It should be noted that a new procedure for determining the minimum wage will also be introduced and applied from January 01, 2019. The minimum wage will be set by federal law in the amount of the minimum living wage of the working population in Russia as a whole for the 2nd quarter of the previous year. The minimum wage will not, however, be decreased if the minimum living wage amount determined as outlined above ends up being smaller than the previous year. As a reminder, please note that the minimum wage is set on the basis of a consumer basket which is reviewed once every five years. This review is due on January 01, 2018 so the value of the new consumer basket will be calculated then.
2. Will it be necessary to raise salaries once the minimum wage is increased?
The minimum wage increase will first and foremost affect the wages of those workers whose monthly salaries are under the new minimum wage. It should be noted that salaries or wage rates may be lower than the minimum wage only when employees receive monthly bonuses and payments which in total make their income amount reach or exceed the minimum wage.
3. What should be done when employees receive a salary below the minimum wage?
When an employee’s salary consists only of a fixed salary or wage rate, employers will need to ensure that they duly execute the order for increase of such fixed payments up to the new minimum wage. An increase in minimum wage does not then always entail salary increase. The main thing is that the remuneration for work performed should not be lower than the statutory minimum wage amount under Russian law.
4. Liability for salaries below the minimum wage
If salaries are still under the minimum wage after January 01, 2018, employers could be subject to fines which for companies range from RUB 30,000 to RUB 50,000, and in case of repeated offense from RUB 50,000 to RUB 70,000. A warning could be issued to company directors or chief accountants, or they could also be fined from RUB 1,000 to RUB 5,000 in case of first violation and from RUB 10,000 to RUB 20,000 in case of repeated violation. On top of all this, they could also be disqualified from one to three years.
5. Will HR documents need to be changed?
When employees receive the minimum wage, then when the minimum wage is increased, the wages of such employees will need to be increased. Salaries are recorded in staffing tables so staffing tables will need to be changed following the minimum wage increase. Amendments are introduced to staffing tables in accordance with orders issued by company officers or a person authorized by company officers. HR orders can be issued with or without particular forms provided under Russian law. If no employees are paid the minimum wage which would need to be raised after increase in the minimum wage, then it will not be necessary to amend the staffing table.
It will still remain important to make sure that in-house accounting departments make all the calculations in 2018 taking into account all changes.