Salary increase in 2021
The increase in employee income depends on the internal regulations in force at the employer.
In particular, the procedure and frequency of indexations are prescribed in the Regulations on the wage system, labor and collective agreements, etc.
Sanctions may be applied to an employer if the wages of its employees are below the minimum wage. Therefore, the staff of such organizations and individual entrepreneurs can expect good news about salary increases in 2021. But in any case, the accountant needs to communicate the changes to employees
Employers are required to index wages starting in the new year. Lack of indexation is considered a violation of labor laws. This was stated by Deputy Head of Rostrud Ivan Shklovets on the air of the Simplified magazine program “Changes 2021. Time to ask questions” (see video below). At the same time, the legislative increase in the minimum wage should not be understood as indexation. That is, indexation is carried out regardless of the increase in the minimum wage.
“The result of indexation should be a real increase in workers’ wages, and not just on paper,” said Ivan Shklovets.
Salaries need to be indexed in 2021 to the level of consumer price growth according to Rosstat. Moreover, if the company is in a difficult financial situation and has indexed wages by an amount less than the inflation rate, then the labor inspector will take this into account when conducting an inspection. However, a difficult financial situation in itself is not a reason to refuse indexation.
Legal grounds for increasing wages in Russia in 2021
The employer is obliged to index wages according to the increase in consumer prices (Article 134 of the Labor Code of the Russian Federation). The frequency and procedure for increasing staff income is described in labor or collective agreements or in local regulations. In 2021, according to Rosstat, the consumer price index was 4.9%. This is the minimum percentage of salary increase in 2021.
Courts may forgive the absence of an annual increase in wages if organizations or individual entrepreneurs ensure an increase in staff income through bonus payments or through linking them to the implementation of the enterprise’s work plans. If an organization or individual businessman does not provide an increase in wages, then the employee, in accordance with Art. 353 of the Labor Code of the Russian Federation has the right to file a complaint with the regulatory authorities. The salary increase for public sector employees in 2021 follows different rules. Their income is indexed from October 1 and according to certain regulations.
Wage indexation coefficient for 2021
The salary growth rate can be calculated based on statistical values. It directly depends on the level of inflation processes over the past periods. For example, to set the coefficient in 2021, we apply the formula:
Ki = I1 × I2 × I3 / 3,
- Ki is the coefficient of wage change in 2021;
- I1, I2, I3 – price growth indices for the past quarter based on Rosstat data.
Commercial organizations can independently establish the order and size of indexation, without correlating it with statistical data. In this case, all conditions must be reflected in the collective or employment agreement. Correct wording will help avoid penalties if the procedure is not followed. For example, the phrase “Indexation is carried out subject to the availability of additional financing” is a reason to refuse a salary increase if the company’s financial result is negative.
In budgetary organizations, indexation is carried out on the basis of the relevant order. It indicates its size (percentage) based on the increase in consumer prices. This requirement is enshrined in Art. 130 Labor Code of the Russian Federation.
Example:
For budgetary organizations, salary increases are made based on the inflation rate for the past year. For 2021, it amounted to approximately 4%; it is by this value that wages should be indexed in 2021.
Organizations independent of the state. budget, has the right to set its own coefficient or apply the same as for public sector employees.
The indexation coefficient can be calculated using the previously given formula based on statistics for the past quarter.
Example:
For example, Rosstat data showed an increase in consumer prices for the first month of the quarter at 1.7%, the second – 0.9% and the third – 2.1%. Then the average value will be:
1,7 × 0,9 × 2,1 / 3 = 1,071%,
this will be the coefficient that commercial structures can apply when revising wages for their employees.
At the same time, not only the salary increases, but also other types of payments: bonuses, compensation, etc. With an increase in the minimum wage, wages are also adjusted, the amount of which is less than this amount.
The company can set not only the terms for wage indexation in 2021, but also the frequency of its implementation, once every:
- year;
- six months;
- quarter.
Thus, most organizations take the 1st of February as the date, when official figures for consumer price growth become known. They have the right to set other dates by local regulations, but, as a rule, this is the first day of the month.
How will the salary increase for employees be reflected in 2021?
According to the letter of the Ministry of Labor dated December 24, 2018 No. 14-1/OOG-10305, labor legislation does not provide for a uniform method of wage indexation for all employees. Whether there will be a salary increase in 2021 and how it will happen depends on the source of financing of the organizations, as well as on laws and regulations (for government bodies), or collective agreements, agreements, local regulations (for other organizations). The same letter from the Ministry of Labor says that an increase in staff income can be carried out both by a proportional increase in all payments provided for by the employer’s remuneration system and, accordingly, by the employee’s employment contract, and by increasing individual payments included in wages.
Depending on the procedure adopted by the employer, registering a salary increase in 2021 includes:
- issuance of an order (uniform for all or individual);
- making changes to the staffing table;
- signing additional agreements to employment contracts.
Types of indexing
Depending on the time when the employer plans to carry out indexation, it can be divided into 2 types:
- retrospective (prices increased first, and wage increases were made “to catch up” to compensate for their growth);
- proactive (salaries are increased in advance, anticipating a price jump).
Question: Does the employer have the right to set a wage indexation coefficient of 0.1% of the increase in consumer prices? View answer
Indexation in labor and collective agreements
Letter of the Ministry of Labor dated December 24, 2018 No. 14-1/OOG-10305 reads:
- The labor legislation of the Russian Federation does not provide for a uniform method of wage indexation for all employees. The rules for wage indexation are determined depending on the source of financing of organizations either by laws and regulations (for government bodies), or by a collective agreement, agreement, or local regulation (for other organizations).
- An increase in wages can be carried out either by a proportional increase in all payments provided for by the organization’s remuneration system and, accordingly, by the employees’ employment contract, or by increasing individual payments included in wages (for example, an increase in salary (the share of the tariff in the wage structure).
Increase in wages in commercial organizations in 2021. Indexing procedure and documents
The indexation procedure must be established by the employer himself in a collective agreement, agreement, or local regulatory act - see examples below.
Wording on salary indexation in the collective agreement
Write down the indexation clause in the contract: The employer undertakes to index wages in accordance with the current legislation of the Russian Federation on the basis of data from the State Statistics Committee of Russia on the consumer price index. The employer undertakes to index wages at least once a quarter.
Wording on wage indexation in the wage regulations
Write down the indexation clause in the contract: The Employee’s salary is indexed in connection with the increase in consumer prices for goods and services. At the end of each quarter, the Employer increases employee salaries in accordance with the consumer price growth index, determined based on Rosstat data. Salary, taking into account indexation, is paid to the Employee starting from the first month of each quarter.
Responsibility for lack of salary indexation
The absence in the collective agreement, agreements, local regulations of the described procedure for wage indexation and the absence of the fact of indexation itself (letter dated December 26, 2017 No. 14-3/B-1135) is regarded as a violation of Art. 134 of the Labor Code of the Russian Federation, and therefore there is a risk of prosecution under Part 1 of Art. 5.27 Code of Administrative Offenses of the Russian Federation:
- for officials - a warning or a fine from 1,000 to 5,000 rubles;
- for entrepreneurs – from 1,000 to 5,000 rubles;
- for organizations – from 30,000 to 50,000 rubles.
And if a similar offense is committed again, the sanctions are increased, Part 2 of Art.
5.27 Code of Administrative Offenses of the Russian Federation. Previously in publications: Social payments from February 1, 2021: increase in pension (EDV), child benefits and benefits
source https://www.26-2.ru/
Law on wage indexation
The salary revision in 2021 is carried out on the basis of regulations:
- Labor Code of the Russian Federation. All issues related to indexation and compliance with social guarantees for workers are taken into account in the following articles: 22, 46, 129, 130, 134.
- Federal laws and regulations governing the mandatory increase in wages for public sector employees starting in 2020.
- Code of Administrative Offenses of the Russian Federation Article 5.27 regarding the employer’s liability for violation of the wage indexation procedure.
Additionally, salary recalculation can occur in accordance with the Constitution of the Russian Federation, decisions of judicial bodies and other regulatory documents of government bodies.
Article 134 of the Labor Code of the Russian Federation states that indexation in state and municipal institutions should occur as consumer prices for goods and services increase.
As for organizations and other forms of ownership, they can independently establish:
- conditions for indexing;
- implementation deadlines;
- calculation method.
Although the increase in wages for commercial workers is at the discretion of their employer, the Constitutional Court, in ruling No. 2618-O dated November 19, 2015, is inclined to believe that they, too, must comply with the requirements of the Labor Code in this regard. At the same time, Rostrud plans to force employers of all forms of ownership to periodically index the salaries of employees, and to impose fines for failure to comply with standards (letters No. 1073-6-1 dated 04.19.10 and No. 14-3/-1135 dated 12.26.17).
Please note that citizens working under an employment contract can count on a salary increase. This rule does not apply to civil contracts.
The Labor Code establishes that an employee who has fully worked the standard working time for a specified period must receive a salary of at least one minimum wage established by federal law throughout the Russian Federation. From January 1, 2021, the government increased it to 12,130 rubles and brought it up to the subsistence level. Therefore, those commercial organizations where the salary is set at the minimum wage level will simply have to index it.
If we talk about the frequency of changes in wages, then it is advisable to set it at least once a year based on the results of an analysis of the growth of the consumer price index. If the index falls, the employer has no right to reduce wages.
Employees retain the right to appeal to the state labor inspectorate in the event that the employer has not recalculated wages, leaving it at the same level.
