Average daily earnings is an amount expressed in monetary terms and corresponding to the employee’s daily salary. This, more precisely, is the average employee’s earnings per work shift - standard 8 hours or, less commonly, 7 (with a full-time 5 or 6-day week).
This indicator is required to determine:
- the amount of one-time severance pay paid in connection with the reduction;
- the amount of benefits during the period of employment, paid for 2 months, during which the employee cannot (if he cannot) get a new job (in emergency situations, it will also be paid for the 3rd month if the employment service has not provided the person with a place of work);
It is also worth noting that average daily earnings are calculated in a special document, focused on calculating amounts due to the employee - calculation notes in form T-61.
REFERENCE. The unified form T-61 is a standard document used when dismissing an employee. It is drawn up on the basis of the dismissal order and serves as the basis for accruing to the employee all payments due in connection with the dismissal.
Another important element of compensation payments that is worth mentioning under this paragraph is average monthly earnings. It represents the average amount per month of work.
Calculation of average earnings when an employee is laid off
How is the average salary calculated during a layoff? Average earnings are a variable quantity. Consists of the following elements:
- actual days worked;
- total salary for 12 calendar months.
We all know that the number of working days in a month and the number of shifts actually worked may vary, therefore, when calculating average monthly earnings during a layoff, there are different results.
So, if there are 15 working days in January 2015, this does not mean that the employee will work all of them.
He can go on vacation this month without working a single day at all.
And, importantly, they will not be taken into account.
Payments for days actually worked assume that the following amounts will not be taken into account in the calculation:
- temporary disability benefits;
- vacation funds.
That is why it is so important that the data on the funds is consistent and consistent with the accompanying documentation.
When calculating the average salary during a layoff, the employee’s total salary for the year is correlated with another indicator that should not be forgotten - the billing period. By this we mean the 12 months preceding the month in which the employment relationship with the employee is terminated.
It is on this basis that calculations for payments in connection with the reduction are made. Next, we will talk directly about how to calculate the average monthly earnings during a layoff.
Formula with example
Before calculating the average monthly salary for a layoff using a specific example, it is worth saying that when dismissing an employee on the basis specified in paragraph 2 of Article 81 of the Labor Code of the Russian Federation, the employer cannot make final deductions for unworked vacations etc.
Now let's move directly to calculating the average earnings for severance pay during layoffs. For ease of understanding, we will give an example through which we will make calculations.
An example of how average monthly earnings are calculated during a layoff.
Fedotova Stepanida Ivanovna, due to a reduction in the number of employees, was dismissed on January 21, 2016. To calculate the average monthly salary during a layoff, a calculation note was drawn up, which indicates the billing period from January to December 2015.
The total number of payments for this period is 350,000 rubles, of which 15 thousand are vacation pay, and 10 thousand are temporary disability benefits.
In July, the employee went on vacation for 14 days, and in September he was away from work for 8 days due to illness.
What is the average daily earnings of S.I. Fedotova?
From the above, we understand that the employee’s actual earnings do not include vacation pay and disability benefits. Therefore, to calculate the average salary during a layoff, we perform the following action:
350,000 – (15,000 + 10,000) = 325,000 rubles – funds actually accrued to the employee.
Actually worked days mean the time during which the employee was at the workplace and performed his labor function. In total, there were 247 working days from January to December 2015. But, since there is a certain condition in the example, you need to:
Subtract 24 days from 247 (10+14). Then we will get the actual time worked - 223 days.
Now we calculate the average daily earnings obtained by dividing the total earnings for the billing period by the actual time worked:
325,000 / 223 = 1,457 rubles.
According to this calculation of the average monthly earnings during a reduction, the average daily earnings are 1,457 rubles.
IMPORTANT. An organization may also have a different billing period. Because it may not always be 12 months.
This affects how the average retrenchment salary is calculated.
Often an employee simply does not have time to work when he is fired during a layoff.
Then the period starting from the actual employment of the employee and ending with the month preceding the month of dismissal can become the calculated period.
Now you know how average earnings are calculated when staffing is reduced.
Remember, the correct calculation of average daily earnings determines how accurate the payment of average earnings will be when an employee is laid off.
During the economic crisis, many enterprises lay off their employees to optimize operations. In this regard, for most people, both for the heads of organizations and for their employees, the question of what severance pay should be paid in the event of a layoff and how to calculate it is very relevant.
Reduction
According to the Labor Code of the Russian Federation, one of the reasons for the cancellation of an employment contract is a reduction in the staff or number of employees of the enterprise.
A workforce reduction is a reduction in the number of workers in one position. For example, the reduction of three accountants out of eight. And staff reduction is the disbandment of a department or the elimination of identical staff units (i.e., for example, all engineers or all controllers). In both cases, the employer must follow the law: provide sufficient grounds for carrying out these procedures, provide the employee with all the guarantees and compensations required upon termination of the employment contract (pay severance pay when the employee is laid off, ensure a preferential right to remain in position, etc.) . P).
The reduction procedure involves the following steps:
- issuance of an order;
- notifying employees and offering them other job vacancies;
- informing the Employment Center and the trade union;
- dismissal of workers (as well as the statutory payment of severance pay in case of layoffs).
Issuance of an order
As soon as the manager decides to make reductions at the enterprise, he must issue a corresponding order. The mandatory form of this order is not established by law, but the boss must take full responsibility for its preparation.
The order to carry out reduction measures at the enterprise must indicate the date of the upcoming procedure and the changes that are expected to be made to the staffing table.
Notification to employees
After the manager has issued a layoff order, he must notify each employee in writing of the upcoming dismissal. However, this must be done no later than 2 months before the workers are removed from work.
A separate notice is drawn up for each laid-off employee, which is handed to him personally against signature. This document indicates the date and reason for dismissal.
Along with the notice of layoff, the employer is obliged to provide the employee with a list of available jobs (if any). If the worker agrees to move to a new position, the boss formalizes his transfer. The manager is obliged to offer available vacancies as they become available until the day the employee is dismissed.
Informing the employment service and trade union
In addition to the fact that employees must be informed about the dismissal directly, the employer notifies the Employment Center and the trade union of this fact. The boss two months before the proposed dismissal (and in cases of mass layoffs - three months) is obliged to notify the organization about the upcoming event.
At the same time, the trade union must be informed both about the reduction of employees included in it, and about all other dismissed workers.
Dismissal of an employee due to reduction
After two months from the date of notification to employees, their employment is immediately terminated. To carry out this stage, the head of the organization issues dismissal orders, as a rule, in form No. T-8. In this order, in the “Grounds” column, reference is made to the reduction order, and, if available, to the document in which the employee expressed his consent to dismissal before the end of the warning period.
On the last working day, the worker must be paid severance pay in case of layoffs and must be given a work book. As for the entry in it, a corresponding note is made with reference to Art. 81, part 1, clause 2, Labor Code of the Russian Federation.
Severance pay
Severance pay in case of layoff is a material payment to an employee of an enterprise upon his dismissal due to a decrease in the number of employees or staff of the organization. This type of compensation includes the average monthly salary, as well as the average monthly salary retained by the employee for the period of employment, but not more than 2 months from the date of dismissal (taking into account severance pay).
In some cases, such payments can amount to three average monthly salaries: in situations where the employee registered with the Employment Center within a period of up to two weeks from the date of his layoff and was not employed after 3 months.
Severance pay when personal income tax is reduced is not taxed according to Art. 217, clause 3 of the Labor Code of the Russian Federation. The exception is payments exceeding three months' salary.
By collective agreement or labor agreement, the amount of compensation for redundancy may be set higher than that established by law.
Benefit calculation
Since the payments in question amount to several average monthly wages, the amount of severance pay in case of reduction is calculated in accordance with Art. 139 of the Labor Code of the Russian Federation and Decree of the Government of Russia No. 922 of December 24, 2007, regulating the calculation of wages.
The average salary of an employee under any working regime is calculated on the basis of funds actually accrued to the employee and data on the time practically worked by him for the 12 previous calendar months.
The calendar month in this case is the period of time from the 1st to the 30th/31st day of the month inclusive, and in February - to the 28th/29th.
The calculation of wages includes all forms of payments permitted by the wage system, which are used by the employer in question, regardless of their sources. The average salary of an employee cannot be less than the minimum subsistence level established by law.
The amount of cash payments to employees does not depend on their age, length of service or skill level. For example, severance pay when a pensioner is laid off is calculated on a general basis.
Period and charges included in the calculation
In cases where an employee works at an enterprise for less than 12 months, the time during which the person was registered in the organization is taken to calculate the average monthly salary and, accordingly, severance pay. If the worker has not worked even a month before being laid off, then the tariff rate or salary established for him is used for calculation.
When calculating the average salary, the following are not taken into account:
- the time when the employee retained the average wage, except for breaks for feeding the child, which are provided for by the labor legislation of the Russian Federation;
- days on which the employee was on sick leave or received maternity benefits;
- the period of failure by the employee to perform the required work for reasons beyond his control;
- the time of a strike in which the employee did not participate, but could not perform his direct duties in connection with it;
- additional paid days off to care for disabled children;
- other periods during which the worker was released from performing his job duties with full or partial retention of wages or without it.
It should also be taken into account that when calculating salary, bonuses received by the employee during the reporting period are taken into account. If these remunerations were received by a person who did not work for 12 full months, the amounts of such receipts are taken into account in proportion to the time actually worked (with the exception of those bonuses that were accrued for the practically worked period, for example, monthly or quarterly).
Additional compensation
In addition to the fact that the employee must be paid the required severance pay upon layoff, at the time of dismissal the worker is also entitled to other payments.
So, for example, an employer can, with the written consent of an employee, dismiss him earlier than the deadline established by the layoff order. In this case, the boss is obliged to pay the subordinate additional compensation, which is the average salary of the employee, calculated in proportion to the time remaining before the end of the notice period for dismissal. Such compensation does not imply that the basic severance pay will not be paid in the event of a layoff.
Along with the specified material compensation, the employee receives a salary for the period worked and compensation for unused vacation.
Severance pay for certain categories of citizens
The Labor Code of the Russian Federation and other legislative acts provide for a different size of severance pay upon layoffs for certain categories of employees that differs from the general amount.
So, for example, compensation for employees working at enterprises located in the Far North or territories equivalent to them is the average monthly earnings, as well as the average monthly salary for the period of employment, but not more than 3 months from the date of dismissal (taking into account the benefit). These employees may be paid compensation for subsequent months for up to six months by decision of the employment service if the employee applied to the specified body within a month from the date of dismissal and was not employed by them.
In situations where seasonal workers are laid off, the benefit in question is two weeks' average earnings.
Other guarantees for employees upon layoffs
At the same time, that an employee is given severance pay in the event of a reduction in staff, the Labor Code of the Russian Federation also provides other guarantees for employees in the event of a reduction. These include, for example, the priority right of certain categories of workers to remain in their workplace.
Thus, a manager, when choosing from several candidates for dismissal, must take into account that:
2. Preference is given to those employees who have greater labor productivity and qualifications. In cases where these indicators are equal, the following is left at the workplace:
- employees if they have 2 or more dependents;
- workers in whose family there are no other people earning money;
- workers who received injuries or occupational diseases at work;
- disabled military personnel;
- employees who improve their qualifications at the direction of the employer on the job.
To summarize, we can note the following:
- in the Russian Federation, the reduction procedure is regulated at the legislative level;
- The Labor Code of the Russian Federation and other regulations establish the rules by which staff reductions, severance pay and other compensation to dismissed employees are made;
- The law establishes minimum amounts of severance pay and additional payments, but a collective or labor agreement may establish other, larger amounts.
Payments upon dismissal are the final settlement with the employee upon termination of the employment contract. In addition to the salary for the period worked, upon dismissal, compensation for unused vacation and severance pay are accrued. The composition of the final payment largely depends on the reason for dismissal. Let's consider what payments an employee is entitled to upon dismissal.
Who is entitled to benefits upon voluntary dismissal in 2019?
The right to vacation (and payment of compensation for it), as well as to other types of benefits (sick leave pay, additional payments upon dismissal), is available only to those employees who have an employment contract with the employer.
Performers working under civil contracts (contracts, leases, provision of services, etc.) do not have the right to claim additional compensation at the end of the contract and payments upon dismissal, except for payment for the work done.
For other information about the peculiarities of concluding civil contracts, see the article “Contract agreement and insurance premiums: nuances of taxation” .
Employees who have entered into employment contracts have the right to take leave:
- after 6 months of work;
- or earlier - in agreement with the authorities or in the presence of certain conditions (minors, pregnant women) in accordance with Art. 122 Labor Code of the Russian Federation.
Upon dismissal, the employer is obliged to calculate and pay compensation for all periods of unused vacation, regardless of their duration and reasons for dismissal (Article 127 of the Labor Code of the Russian Federation). If the vacation was taken in advance, the excess amount paid may be withheld from the final payment.
Payments to the dismissed employee must be made on the last working day, and if he is absent from work, no later than the next day after applying for payment (Article 140 of the Labor Code of the Russian Federation).
Payments upon dismissal at one's own request
If an employee terminates the contract on his own initiative, as a payment upon dismissal, he is entitled only to payment for the period worked and compensation for unused vacation.
For information on how to make calculations in this case, see the article “Calculation of compensation for unused vacation according to the Labor Code of the Russian Federation” .
If an employee has debt, including for vacation taken in advance, the employer has the right to withhold amounts previously paid in excess, but not more than 20% of the accrued salary (Article 138 of the Labor Code of the Russian Federation). If your earnings are not enough to pay off your total debt, you can take the following actions:
- obtain written consent from the employee to withhold the required amount;
- offer to deposit the amount of debt into the cash register;
- forgive the employee's debt upon dismissal.
Payments upon dismissal by agreement of the parties
If an employee terminates a contract by mutual agreement with his superiors, the question often arises: what payments are due upon dismissal by agreement of the parties?
The Labor Code of the Russian Federation establishes the employee’s right to receive in such cases only compensation for unused vacation and payment for the period worked. Information about other additional payments upon dismissal on the basis of clause 1 of Art. 77 of the Labor Code of the Russian Federation, which the employer is obliged to transfer to the employee, is not contained in the legislation of the Russian Federation. The basis for them may be an agreement to the employment contract, which may stipulate other conditions for the employee to receive additional monetary compensation upon termination of employment obligations.
Read about the need for taxation of such payments in the article “Is severance pay subject to personal income tax upon dismissal?” .
Severance pay upon dismissal due to staff reduction
If an employee has to be fired as a result of a reduction, he has the right to receive additional compensation payments upon dismissal - severance pay.
Payment of benefits in this case has a number of features:
- The amount of severance pay is equal to the average monthly earnings of the dismissed employee. The maximum period for payment of benefits is 2 months, during which a citizen can find a new job. In exceptional cases, by decision of the employment service, the payment of average monthly earnings may be extended to the 3rd month after dismissal.
- Seasonal workers are paid severance pay in the amount of 2 weeks of average earnings in case of reduction or liquidation of the enterprise (Article 296 of the Labor Code of the Russian Federation).
- For workers in the Far North and equivalent areas, the duration of such payments is 3 months. These terms, at the discretion of the employment service, can be extended for several more months (Article 318 of the Labor Code of the Russian Federation).
- If an employee has been laid off, but has an outstanding debt for vacation used in advance, deduction of such overpaid amounts is not allowed.
- If the employee was employed by an individual who is an individual entrepreneur, all possible payments upon termination of the employment relationship must be stipulated in the employment contract (Article 307 of the Labor Code of the Russian Federation). In the absence of such conditions, the dismissed person has no right to claim additional amounts.
Other payments upon dismissal
Upon dismissal, employees may be paid compensation in different amounts depending on the reason for termination of the employment contract.
You can count on dismissal payments in the amount of 2 weeks’ average earnings in the following cases (Article 178 of the Labor Code of the Russian Federation):
- refusal to move to another place of work or the absence of a corresponding vacancy if the employee can no longer remain in the same place for medical reasons;
- conscription for military service;
- refusal to move to another location due to the needs of the employer;
- reinstatement to the previous position of an employee who previously performed the duties of a dismissed employee;
- changes in the terms of the contract, which resulted in the employee’s refusal to continue performing labor functions.
Severance pay in the amount of 3 months' salary is paid to persons holding senior positions (directors, chief accountants) if the reason for termination of the employment contract was a change in the owner of the organization.
Results
Employees are entitled to certain benefits upon dismissal. Their size depends on the reason for termination of the employment contract. In case of violation by the employer of the procedure and terms of payments, administrative and, in some cases, criminal liability is provided.
This information will be useful for employers to understand the necessary procedures that need to be completed in order not to violate the labor code and not face problems, fines and lawsuits during the inspection process. According to the article of the Labor Code of the Russian Federation, the employer must pay payments to employees when staffing is reduced.
Many organizations have problems with inspection bodies precisely because dismissed employees were not offered other positions or work in other departments of the company.
An agreement that the dismissal is due to staff reduction and not by mutual consent must be documented, have legal force and, in no case, be oral, since this deprives the employee of guaranteed compensation in case of problems finding a new job.
Women who are on maternity leave and childcare cannot be laid off; they must retain their jobs and positions in the new staffing table. When choosing employees who are not subject to layoffs, they prefer workers with higher qualifications and education.
Notice periods
After the list of dismissed employees has been established and signed. This document exists in the form of the first order. The second order announces the positions and the time frame within which these positions must be reduced and removed from the company’s staffing table.
Small business owners are required to notify employees of labor organizations and trade unions of staff reductions no later than two months before dismissal. The employee’s notice period comes into force from the moment he signs the relevant order about reduction; in case of refusal to sign, an act must be drawn up in the presence of two witnesses.
Issuance procedure
When dismissing someone, the employer must make compensation payments for staff reductions for the first month in the amount of the employee's average monthly amount on the day of dismissal. Otherwise, if this does not happen, then the employee working for the company can sue within three months from the date of dismissal to recover damages.
In the event that an organization, with the consent of the employee, terminates the work contract earlier than the terms described in the order, the employee may receive monetary compensation equivalent to the average salary, calculated in proportion to the period remaining until the day the employee is fired, according to the decree. In this case, a written agreement must be drawn up.
Payments to an employee upon reduction of staff are paid only to workers who have entered into contracts for a period of more than two months, unless otherwise provided for in the employment contract (you can find out what payments a pensioner is entitled to upon reduction).
From the moment of dismissal, the employer must pay his employee the average monthly salary within two months. If from the moment of dismissal the employee is registered with the employment exchange within two weeks, then the employer is obliged to pay compensation also for the third month.
The employee is required to provide documents proving that he was not employed in order to receive compensation payments when the employee is laid off.
Unlike an employee who was laid off, for whom the position held was the main job, a part-time employee does not receive compensation in the amount of the average monthly payment for the amount of time the employee was employed, but only a one-time payment in the amount of the average monthly salary.
Calculation of payment and compensation for layoffs
The average salary not only includes the amount of paid labor of the employee, regardless of sources, but also bonuses that are determined by the remuneration system of a particular employer (read about how an employee’s salary is calculated, and from here you will learn how the salary is formed and what additional charges and deductions there are).
Calculation of average earnings does not provide for periods during which the employee did not work, was on sick leave or on while maintaining wages (we talked about how to calculate vacation pay upon dismissal in).
For calculation it is taken the entire salary amount for 12 months and is divided into working days, excluding, weekends. For example, a company employee is fired in June 2014. This means that to calculate the average salary for compensation, the period from June 1, 2014 to May 31, 2014 will be taken.
If a person worked in a company for less than a year, then it is calculated based on the days that have passed from the date of hiring until the end of the year. For example, an employee went to work on May 6, 2013, and was fired on January 1, 2014, then the calculations run from May 6, 2013 to December 31, 2013.
It must be taken into account that the average salary cannot be lower than the average salary calculated based on annual calculations. That is, if a company wanted to calculate for a separate period of time during which the employee was on the company’s staff, then when comparing with the annual average salary, if this figure is lower, then it is the annual one that is taken into account.
Factors affecting the calculation
When calculating payments when an employee is laid off, the following bonuses and subtleties should be taken into account:
- Remunerations, bonuses and other labor bonuses are calculated no more than one unit for each indicator for the mentioned month.
- If premiums, bonuses and rewards extend over a period of more than one month, then they are calculated in the amount of the monthly amount for the subsequent month of payments.
- Plus, annual remunerations accrued for a certain length of service and length of service, or based on annual results, are taken into account.
- Bonuses and awards that were calculated in direct proportion to the employee’s professional time and did not amount to the entire established working period are calculated according to the accumulated amounts upon receipt.
- Severance pay is equal to the result of multiplying the employee's days worked in the initial month after the employee was fired by the average salary per day.
For the first month that the employee was registered with the company, severance pay is paid as compensation for the layoff salary. The second and third months as compensation, also based on the number of days in the listed months, multiplied by the average salary per day.
In this case, individual entrepreneurs may not pay severance pay, since their amounts are already established by the concluded employment contract. The average working salary is calculated based on the days the employee worked, not calendar days, that is, excluding holidays and weekends.
What days are included in the calculation?
The calculation period does not include periods of time when the employee:
- I was on unemployment benefits or on maternity leave.
- He received a salary, but was de facto on vacation, on sick leave, or for another reason.
- Couldn't work because the company did not function due to reasons beyond the employee’s control.
- Didn't work due to strikes.
- He could go on vacation or get days off for good reasons, such as caring for disabled household members.
- Worked part-time.
- Did not work at the company for any other reason.
There are no taxes on severance payments or compensation.
The difficult situation in the Russian economy has led to production cuts and mass layoffs of employees. Everyone knows perfectly well that upon resigning, a former employee can count on monetary compensation for his work. In some situations, he is also entitled to special payments and benefits.
Severance pay in case of staff reduction
Most often, severance pay is paid to citizens who were fired due to the liquidation of a company or a reduction in staff. The amount of payments in this case is equal to the average salary.
Also, during the period of employment, such employees, together with severance pay, receive an average monthly payment, but the period of such payment cannot exceed 2 months.
The payment of monetary compensation equal to the average monthly salary is regulated by Article 178 of the Labor Code of the Russian Federation. Moreover, the employee does not need to collect any documents - it is enough to write the required wording in the application and refer to the correct article.
According to the law, settlements with a dismissed person when reducing staff must be made on his last day of work; if for some reason this is not possible, then the employer has one additional day.
If a former employee is not satisfied with the amount of severance pay, then both parties to the employment relationship must find a compromise as quickly as possible.
Important! If payments are delayed, the manager must give the worker additional compensation for the delay. According to Article 236 of the Labor Code of the Russian Federation, interest is accrued daily until the day the money is actually issued, taking into account 1/300 of the central bank’s refinancing rate.
In addition, if there is a delay, the employee may additionally demand payment for sick leave or vacation, as well as compensation for legal expenses if he had to go to court.
Billing period
The amount of severance pay in case of staff reduction and the average salary are determined by Article 139 of the Labor Code. But to carry out all the calculations you first need to:
- determine the start and end dates of the billing month;
- calculate the number of days or hours to be paid;
- calculate the average daily or hourly salary.
Only after the above steps can you look for the final amount of reduction payments. As a rule, accountants take into account 12 months before the end of the employment contract.
Please note that all organizations must regularly provide information to the employment center about their staffing situation and upcoming changes. Therefore, the company must notify the center at least two months in advance about the staff reduction so that it can accept all laid-off workers who need a new job.
What payments are due?
An employee dismissed due to staff reduction can count on the following compensation.
1) Severance pay, paid once at the time of termination of the employment contract. Its size should not be lower than the average official monthly salary. Some employment contracts may stipulate that benefits should be paid in an increased amount, then the employer is obliged to make such a calculation.
2) Social assistance for the period of job search, equal to the average salary at the previous job. According to the general rules, the duration of paid employment is two months, but in some cases the employment center can extend it by another 30 days. To do this, a citizen must visit the employment center within fourteen days from the date of dismissal.
In general, the structure of the calculation when laying off an employee consists of the amounts of remuneration for labor activity, which are enshrined in paragraph 2 of the Regulations on the specifics of the procedure for calculating the average salary. In this case, other compensations are not taken into account and are considered separately. In order not to get confused when calculating cash payments, we will consider this point in more detail.
When determining severance pay upon dismissal and average earnings, you should take into account only those payments that directly relate to the employee’s salary and are prescribed in Article 129 of the Labor Code of the Russian Federation:
- payment for work activity, depending on the employee’s qualification degree, quality characteristics and complexity of the work performed, as well as conditions for work activity;
- all kinds of incentive payments, for example, bonuses and salary increases.
Compensation that is not taken into account for severance pay is generally considered to be money paid to reimburse expenses associated with the performance of work or other duties provided for by the Code or local regulations.
For example, vacation pay is considered compensation expense, so it is not taken into account when determining average earnings.
Important! Compensations are usually calculated and paid on the last working day; therefore, they are not included in payments for the billing period.
Features and additional payments
Sometimes dismissal due to staff reduction occurs according to a non-standard scheme, and many employers do not know how to act in such situations. I would like to pay special attention to three important points.
There is an article in the Labor Code according to which an employee who falls ill within a month after dismissal due to staff reduction can apply to the management of the former company with a request for an additional payment due to “temporary incapacity for work.”
By law, the employer must notify employees of the liquidation of the enterprise 2 months in advance, while any employee can leave his workplace without waiting for the closure date. True, in this case he is not entitled to any compensation.
There are opposite cases when the employer himself wants to dismiss the employee ahead of schedule - then the amount of cash payments will be greater than the standard, since a one-time payment will be added to them, which is the average salary from the moment of dismissal until the liquidation of the company.
Taxes on payments upon dismissal due to staff reduction
Payments for layoffs are a kind of social protection measure for the working population, and according to Article 178 of the Labor Code they are classified as “guaranteed”, therefore personal income tax and insurance contributions are not paid from them.
Severance pay reduces the income tax base in the “salary expenses” section. According to accounting rules, monetary compensation for layoffs is expensed for the usual type of activity, and the accrual of benefits is recorded D20 K70.
Benefit calculation and payment procedure
To calculate severance pay, an accountant or other person with the necessary rights and knowledge uses a simple formula: the number of days or hours worked in 1 month after dismissal (from the next day after dismissal) × average daily or hourly income.
Average monthly earnings is the minimum limit for dismissal payments; If the employee has fully worked the established temporary norm during the billing period, then he is guaranteed compensation, at least in the amount of one minimum wage. This threshold is set individually in each region and increases annually.
For some employees, working hours are calculated by day; in this case, payments should be calculated using the following formula: the employee’s salary for the days he worked in the calculation period: the number of days actually worked during the calculation period.
Important! In the calculation of severance pay, according to Government Decree No. 922, it is also necessary to add bonuses and other material rewards.
As noted earlier, an employee who has been laid off due to staff reduction can receive monetary compensation from the former employer for a maximum of three months:
1) For the first month, severance pay is paid along with the calculation upon dismissal.
2) Compensation in the second month can only be received by providing the employer with a work record book, confirming that the employee did not get a job. If a citizen finds a new job, he will only be paid for the period of unemployment.
3) Not all former employees can count on the last third payment - for this they need to be registered with the employment center for three months, but still not find a new job. Payments to an employee are carried out only if they have a work book and a certificate from their central employment register, which indicates the date of registration and confirmation of non-employment.
Important! People who worked in the regions of the Far North belong to a special category entitled to receive payments even after three months from the date of dismissal.
Payment calculation example
The easiest way to understand the nuances of calculating cash payments upon dismissal due to staff reduction is to use a specific calculation example. Each employer can use it in the future as a sample, simply substituting their data.
Let’s assume that Sergei Vladimirovich Ivanov worked as an engineer and received 20,000 rubles monthly. He was fired on January 12, 2017 due to staff reduction. Moreover, the manager notified the staff of the upcoming dismissal 2 months in advance, in accordance with the requirements of the law. While the dismissed employee was looking for a new job, he was paid compensation from his previous position.
On the day of his dismissal, Sergei Vladimirovich received severance pay for the pay period from January 1, 2016 to December 31, 2016. Please note that in the collective agreement and other documents of the organization there is no information about the use of a different billing period.
During the calculation period, he worked 247 days, and the amount of payments during this time amounted to 240,000 rubles (20,000 within 12 months).
By law, severance pay for staff reduction is calculated for the month starting from the date of dismissal, that is, from January 13, 2017 to February 12, 2017. In this case, he had 23 working days in a month.
The average daily salary will be:
240,000 rubles: 247 days = 971 rubles 66 kopecks
971.66 x 23 = 22,348.18 rubles
After his dismissal, citizen Ivanov immediately received a work book and registered at the employment center; in the first month he unsuccessfully looked for a job, but received financial assistance in the form of severance pay.
On March 2, Sergei Vladimirovich was able to get a new job, so in 2 months he had 11 days of incapacity for work, which must be compensated by his former employer. The payment in the second month will be:
971.66 x 11 working days = 10,688.26 rubles
Important! To confirm days of incapacity for work, a citizen must provide a work book in which there are no entries for the calculation period.
Finally
In essence, severance pay and average earnings help a dismissed citizen live while looking for a new job. The manager is obliged to carry out all calculations, guided by the rules prescribed in the Labor Code of the Russian Federation. Any deviation from norms or formulas leads to erroneous calculations.
If the mistakes are not in favor of the former employee, then he can contact the Labor Inspectorate with a complaint and create additional problems for the former employer.