Labor law changes to become effective in 2018

By Elena Rybnikova, Head of Internal Audit, Expertise and Methodology Department

The Russian Ministry of Labor has approved some amendments that will be introduced to labor law in 2018. Employers, employee and labor inspectors are expecting specific rather than significant changes in labor law. We have listed below the main changes and describe how they will affect employers.


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Elena Rybnikova
Head of Internal Audit, Expertise and Methodology Department

Minimum wage

The minimum wage and minimum living wage are revised every year. Although a significant increase in the minimum wage is expected in 2018, it will still remain below the minimum living wage because of the current economic situation.

The minimum wage will be RUB 9,489 per month from January 01, 2018.

Local authorities set their own minimum wage in the regions taking into account what is provided in federal law. So, for example, from January 01, 2018, the minimum wage in the Smolensk and Tambov regions will be RUB 9,489 per month, while in Moscow it will be RUB 18,742.

It should be noted that a new procedure for determining the minimum wage will be introduced from January 01, 2019. The minimum wage will be set by federal law in the amount of the minimum living wage for the working-age population as a whole across Russia for the 2nd quarter of the previous year.

Read more in the article Minimum wage increase

What should employers do?

Employers will need to review their employees’ salaries by indexing them to the new minimum wage as of January 01, 2018. Employees’ total earnings, including monthly bonuses and other payments should be equal to or exceed the minimum wage. When employees receive only a fixed salary, employers will need to make sure that the rate they apply is in line with the minimum wage. If it is lower, they will need to draw up and issue an order to increase the amount of such fixed payments.

The related changes to the calculations of sick and maternity leave benefits should also be noted together with the alimony amounts calculated by employers.

Child benefits

Not only the minimum wage, but also social benefits payable to Russian citizens will be subject to indexation in 2018:


Benefits

Amount from 2018

One-off benefit upon early pregnancy registration

RUB 632.76

One-off childbirth benefit

RUB 16,873.54

One-off benefit upon adoption of a child over the age of 7

RUB 128,927.57 per child

One-off benefit upon adoption of a disabled child

One-off benefit upon adoption of related children (brothers and sisters)

Minimum monthly childcare benefit: for first child

RUB 3,163.79

Minimum monthly childcare benefit: for second and subsequent children

RUB 6,327.57

Minimum maternity benefit (for 140 calendar days)

RUB 43,675.80

Maximum maternity benefit (for 140 calendar days)

RUB 282,493.40

Sick leave benefit

Sick leave benefit will be calculated in 2018 based on what employees earned in 2017 and 2016.

The minimum sick leave pay in 2018 will be RUB 9,489 (for a full calendar month), and the maximum will be RUB 61,375.

Days off and public holidays

Russian Government Decree No. 1250 On Postponement of Days Off in 2018 has set out the public holidays for 2018.

Please note that following the postponement of public holidays, April 28, 2018, June 09, 2018 and December 29, 2018 will be working days which will be 1 hour shorter than regular working days.


Holidays

Dates

New Year

December 30, 2017 –  January 08, 2018

Fatherland Defender’s Day

February 23, 2018 – February 25, 2018

International Women’s Day

March 08, 2018 – March 11, 2018

International Worker’s Day

April 29, 2018 – May 02, 2018

Victory Day

May 09, 2018

Russia Day

June 10, 2018 – June 12, 2018

National Unity Day

November 03, 2018 – November 05, 2018

New Year

December 30, 2018 – December 31, 2018



Labor inspections

From 2018 onwards, the Labor Inspectorate will pay close attention to how employment and civil law contracts are concluded and executed.

The Labor Inspectorate will “pay close heed” to any appeals and applications, especially those from individual entrepreneurs, legal entities. It will consider the information provided by state and local authorities and will establish when employment contracts are not entered into when they should, and identify improper employment or civil law contracts.

Employers will be subject to unscheduled inspections as a result of such appeals.

State Labor Inspectorate

The Labor Inspectorate conducts scheduled inspections every year. The register of these inspections is approved by the State Labor Inspectorate and is published on the official website of Rostrud (Federal Labor Service).

How inspections are conducted will change from 2018. In particular, mandatory checklists have been developed for labor inspectors to optimize their work and reduce the time spent on inspections.

So, when a company finds its name in the register of scheduled inspections, it is now possible for the company to prepare for the inspection going through the checklist. Inspectors are indeed required to ask all the questions in the list without going beyond their scope. Rostrud has altogether approved 107 checklists for federal inspection of compliance with the Russian Labor Code in 2018. Checklists are published on the official website of the Federal Labor and Employment Service.

Key rate (refinancing rate) at 7.75% since December 18, 2017

The key rate was decreased down to 7.75% on December 18, 2017 as announced by the Bank of Russia on December 15, 2017.

The refinancing rate has been equal to the key rate since 2016. The key rate (refinancing rate) applies when calculating:

  • Compensation for delayed wages and other benefits payable to employees (Article 236 Russian Labor Code);
  • Material gains made by employees from savings on interest (Article 212 Russian Tax Code);
  • Fines for non-payment of taxes (Article 75 Russian Tax Code);
  • Interest for late tax refund (Article 78 Russian Tax Code);
  • Interest for unlawful blocking or late unblocking of account (Article 76 Russian Tax Code).

Expected changes

Salary in currency

Bill No. 276412-7 dated October 03, 2017 amending Article 131 of the Russian Labor Code by proposing to pay wages and other payments in foreign currency to Russian citizens outside the Russian Federation was adopted in its first reading at the State Duma.

Previously, the Russian Labor Code strictly required employers to pay wages to their employees only in rubles. Now, following the adoption of this bill, it will be possible to pay employees in foreign currency. Some issues still need to be addressed, namely: exchange rate differences, which are intrinsic to currency transactions, and the currency control procedure to be applied upon currency payments to employees.

Bills for the State Duma’s spring session

Hearings for amendments to Article 262.1, Article 138, Article 356, Article 357, Article 101, Article 119, and Article 236 of the Russian Labor Code have already been scheduled for the State Duma’s spring session:

  • Bill No. 303839-7 proposing a procedure for annual paid leave to employees with two or more children;
  • Bill No. 303739-7 proposing state guarantees for a minimum cash income to citizens;
  • Bill No. 269898-7 proposing to broaden the powers of the Federal Labor Inspectorate;
  • Bill No. 134447-7 proposing restrictions on working days with no fixed working hours;
  • Bill No. 83422-7 proposing to increase cash compensation for late payment of wages;
  • Other bills.