Features of providing severance pay
178 art. The Labor Code of the Russian Federation establishes that a laid-off employee can count on the provision of certain guarantees in the form of severance pay:
- For the first month from the date of termination of relations with the employer due to layoffs (entitled to each laid-off person, payable on the last working day);
- For the second month, if employment does not occur at the time of its end (the absence of a new job should be documented by providing a work book (you need to make a photocopy of the document) in which there are no new employment records, the benefit is paid at the request of the employee provided after the end of the 2nd month month, the application is drawn up in free form, addressed to the head of the company);
- For the third month, if a new job is not found even with the help of the employment service (you must have a written decision made by this service, compliance with the conditions for registering the employee with this service within 2 weeks from the date of termination of relations with the employer is required).
The deadlines for paying amounts for the second and third months have not been established, and therefore the former employee and the company management should independently agree on when this obligation will be fulfilled - this may be the nearest payday or another date.
The above type of payment is due to a laid-off person for the period of new employment due to his lack of work due to forced dismissal.
If a part-time worker with a main job is to be laid off, then he is not entitled to severance pay, since he has a job, and the laid-off person does not need employment.
If the part-time worker does not have a main place of work, then in case of layoffs at the part-time job, it is necessary to issue severance pay in the standard manner (up to 3 months from the date of termination of work).
Severance pay in case of layoff for the second month
The amount for the second month is compensation for layoffs. Its value is equal to the amount of severance pay. It is paid only if the person has not yet found a new job. A prerequisite for this is registration with the employment service and searching for employment options.
If there are currently no vacancies corresponding to the specialty of the person who has been laid off, there is the possibility of receiving compensation - a second payment. To do this, it is necessary to notify the previous employer about this situation through the labor exchange.
You cannot receive payments or refunds for the third month. At the same time, there are a number of features that are significant for the dismissal process. They must be taken into account when making reductions. In case of dismissal by agreement, the amount of all payments is determined by the amounts specified in the agreement.
This document may also stipulate that upon dismissal the employee does not receive any payments at all.
Amount of severance pay
This payment is assigned in the amount of average monthly earnings , the amount of which is influenced by the time that the employee actually worked and the payments that he actually received. Moreover, for all three months the procedure for determining monthly earnings is the same.
To calculate these values, 12 calendar months preceding the month in which the reduction was documented are taken.
To calculate this value, you need to calculate the average earnings per day, and then multiply by the number of working days for the employee in the month for which the payment is made. That is, the amount of severance pay is affected by the specific month of calculations and the number of working days in it.
Amount of severance pay and payments for the period of employment in 2019
Severance pay is a special type of payment that is due to employees after termination of an employment contract with the employer and other cases of termination of cooperation. Not every employee can receive such payments, since this requires fulfillment of certain conditions. This includes:
- Liquidation of company;
- staff reduction;
- if an employee refuses to be transferred to work in another area;
- the presence of medical conditions that prevent the performance of duties;
- loss of performance;
- refusal to work due to changes in working conditions.
The severance pay for layoffs in 2021 is equal to the average earnings for one month. If an employee worked part-time and was laid off, no payments will be made.
Severance pay is taxable. In this case, personal income tax is paid according to a special scheme. Only that part of it that is three times the average monthly earnings is subject to taxation. For the regions of the Far North, six times the average monthly income is taken into account.
In general, according to the Labor Code, payments are made on the day the employee quits. If the employee did not work on that day, then the benefit is transferred the next day after the employee made a request to make a payment.
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The period for receiving benefits during employment depends on the reason for dismissal. It may also be specified in the employment contract. two months are paid if the former employee did not find a job and applied to the employment center during the first month. For regions of the Far North, the period for such payments increases to three months .
Formula for calculating severance pay
Severance pay is calculated as follows:
VP = SDZ * RD, where
- SDZ is the average daily earnings;
- RD - the number of working days in the month that follows the day of calculation.
How to calculate average earnings? Its value is determined by the formula:
SDZ = D / T , where
D – income for the billing period;
T – the number of days during which the dismissed employee worked.
When determining the amount of income that allows calculating severance pay upon dismissal, wages paid for the entire duration of the payroll period, including bonuses, are taken into account. The billing period is 12 months .
This does not include certain payments:
- vacation pay for annual leave;
- transfers based on sick leave;
- other cases when in fact the employee did not work.
If a month is partially worked, then earnings are determined only for those days when the employee performed his job duties.
Calculation formula for cumulative accounting of working hours
Some enterprises keep cumulative records of working hours when it is impossible to comply with the working hours in accordance with the law. Accounting is carried out based on the results of a certain period, which can be a month or a quarter.
In such cases, severance pay is determined by the formula:
SCHZ * RV, where
SWA is the average hourly earnings;
RF – standard working hours for the month following dismissal.
Average hourly earnings are determined as follows:
SCZ = ZP / KCH, where
ZP – employee’s income for the billing period;
KH – the number of hours that were actually worked by the employee during the billing period.
The calculation period is 12 months before the month of dismissal. If the dismissal is carried out on the last day of the month, then this month is taken into account in the calculation.
An example of calculating severance pay in 2021
The company where Alexander Lebedev works began the liquidation process and informed employees about this on August 1, 2 months before the dismissal, as required by law.
The severance pay due to Alexander upon dismissal is calculated as follows:
- Alexander's annual salary, with a salary of 35,000 rubles per month , amounted to 420,000 rubles . In addition, he was awarded a bonus of 12,000 rubles . The number of working days over the past year is 247 days , of which 7 days the employee did not work due to illness. Based on this, average daily earnings: 432,000 / 240 = 1,800 rubles .
- Since the reason for the dismissal was the liquidation of the company, Alexander is entitled to benefits for the 2 months following the dismissal in the amount of the average salary. Thus, the amount of severance pay will be: 1800 rubles * 42 days = 75600 rubles .
- The amount received is less than three months’ earnings, so personal income tax will not be assessed.
Calculation procedure
Calculation formulas
Severance pay = average daily earnings * number of working days in the month for which the payment is made.
Average daily earnings = salary for the billing period / number of days worked in this period.
Thus, to calculate severance pay, it is necessary to determine the following values:
- Billing period;
- The number of days that the employee actually worked;
- Total salary;
- The number of days recognized as working days in the month for which benefits are paid.
Calculated period of severance pay
The 12 calendar months preceding the month in which the employee is laid off are taken. For example, if an employee was laid off in May 2016. The estimated time period will be taken from 05/01/15 to 04/30/16.
Actual days worked
The calculation takes into account the working days when employees actually performed their work functions.
Time spent is not taken into account: (click to expand)
- On annual leave;
- On a sick leave.
Total salary
You should sum up the employee’s salary accrued to him in each month of the billing period in accordance with the remuneration system established for him.
Not taken into account:
- Vacation pay accrued for annual main leave;
- Payment based on certificates of disability.
If the month is not fully worked, the salary should be determined corresponding to those days when the employee actually performs his work functions. To do this, the salary is multiplied by the number of days of the month that the employee actually worked and divided by the total number of days in this month recognized as working.
How is compensation calculated?
Upon dismissal by agreement of the parties, the employee is required to calculate the following payments:
- wages in accordance with days worked in the last month;
- compensation for unused vacation days.
In this case, severance pay is not included in the list of mandatory compensations, which are calculated in accordance with Art. 178 of the Labor Code of the Russian Federation, however, part 4 of this article determines the possibility of accruing both additional payments and increasing the amount of severance pay in cases not provided for by law. They are issued to the employee if this is established:
- internal regulations of the organization;
- employment contract;
- additional agreement.
To calculate severance pay, the sum of such indicators as:
- fixed amount;
- one or more official salaries;
- average monthly earnings.
If everything is clear on the first two points, then calculations will be required to pay benefits on the third point.
Average earnings
The procedure for determining the average monthly and average daily earnings is specified in Art. 139 Labor Code of the Russian Federation. To do this, use the formula:
VP= AverageDnZp*KRD , where:
- VP is the amount of severance pay;
- SrDnZp – average daily earnings;
- KRD - the number of working days in the month following dismissal (or for another period specified in the contract).
In turn, to determine the average daily earnings, data on the employee’s income in the organization for the last year is taken.
Amounts paid for:
- days of planned, additional or student leave;
- days of temporary disability;
- business trips;
- as well as any types of financial assistance from the organization.
Average earnings are calculated using the formula:
Average Salary = OD/CODE , where:
- OA is the total estimated income of the employee;
- CODE – number of days worked during the reporting period.
When calculating, days when the employee was on vacation, sick leave or on a business trip are skipped.
Upon termination of an employment contract with the organization's managers (chief accountant, director and his deputy), severance pay is usually paid in the amount of three average monthly earnings.
According to paragraph 3 of Art. 217 of the Tax Code of the Russian Federation, severance pay in the amount of less than three average monthly payments is not subject to income tax. And also, insurance premiums are not transferred from this income (subclause 2, clause 1, article 422 of the Tax Code of the Russian Federation, subclause 2, clause 1, article 20.2 of the Federal Law No. 125-FZ). For workers in the Far North, the amount should not exceed six average monthly payments.
Payment of severance pay on this basis is included in the organization’s expenses and is not taxed. However, if the accrual amounts are excessively inflated, it will be necessary to provide evidence of the appropriateness of such payments to tax officials.
Example of calculating severance pay
An order to lay off storekeeper A.A. Bulkin has been prepared. The date of his dismissal is 05/25/2016. 05/27/2016 Bulkin registered at the employment center as an unemployed person. As of August 24, 2016, Bulkin was not employed due to the lack of a suitable workplace, despite the assistance of the employment service in finding employment.
The remuneration system prescribed for the position of storekeeper includes only the payment of a salary of 40,000 rubles. From November 2, 2015 to November 29, 2015, he was on basic leave, for which he was accrued vacation pay. From December 15, 2015 to December 22, 2015, he was on sick leave, for which he provided the corresponding certificate from the medical institution.
Bulkin worked a 5-day work week.
The employer’s task is to calculate severance pay for 3 months after dismissal (Bulkin provided all the necessary documentation).
Calculation: (click to expand)
- Billing period – from May 1, 2015. until April 30, 2016;
- The number of days actually worked during this time = 247 – 20 – 6 = 221 days (since Bulkin has a 5-day working week, in the indicated period 247 working days are provided for him, among which Bulkin rested 20 working days in November and 6 working days I was sick for days in December).
- Total salary = salary * 9 months. + salary in November 2015 + salary in December 2015 + salary in May 2021 = 40000*9 + 40000*(1/21) + 40000*(17/23) + 40000*(18/22) = RUR 424,197.25
- Average daily earnings = 424,197.25 / 221 = 1,919.44 rubles.
- Severance pay for the period from 05/26/2016 to 06/25/2016 = 1919.44 * 20 = 38388.80 rubles.
- Severance pay for the period from June 26 to July 25 = 1919.44 * 21 = 40308.24 rubles.
- Severance pay for the period from July 26 to August 25 = 1919.44 * 23 = 44147.12 rubles.
The total benefit to be issued to Bulkin based on the results of 3 months = 38388.80 + 40308.24 + 44147.12 = 122844.16 rubles.
The amount of the payment made can be increased at the request of the employer, as well as when the increased benefit amounts are stipulated in the employment agreement, collective agreement or other internal documentation of the company.
How to calculate two-week severance pay during layoffs
This payment is assigned when the basis for dismissal is not staff reduction or liquidation of the organization, but other reasons. However, the rules for calculating two-week severance pay remain the same.
The calculation algorithm corresponds to the principle of calculating the amount during reduction. First, the average income per working day is calculated. The resulting number is multiplied by the number of days.
There are the following grounds for calculating two-week severance pay:
- the employee refuses to move to a new position due to contraindications for health reasons;
- the company does not have conditions for the transfer of an employee;
- the employee is called up for military or alternative civilian service;
- a person refuses to move to a new job associated with the need to move to another locality;
- the employee who previously held the position of the resigning employee is reinstated in the workplace;
- a person terminates an employment contract due to a change in work responsibilities;
- dismissal for medical reasons.
Please note: the employer may establish in the local regulations of the organization additional conditions for calculating a two-week compensation and increasing its amount.
Severance pay and personal income tax
The amount of the benefit paid is subject to taxation if it is more than 3 times the average monthly earnings. This event is possible if the company’s internal documentation (for example, a collective agreement) establishes an increased amount of payment for laid-off employees.
If the employer is guided only by the provisions of the Labor Code of the Russian Federation and calculates severance pay in an amount equal to 3 times the monthly salary, then personal income tax does not need to be withheld from this payment.
There is also no requirement to charge compulsory insurance contributions on the benefit amount within three monthly earnings. From the amount accrued above the specified amount, contributions must be calculated and transferred to the fund accounts.
Payment of average earnings for the period of employment
In addition to the payment of severance pay, when staffing is reduced, employees are paid the average monthly salary for the period of employment. This is stated in Part 2, Art. 178, part 3 art. 292, part 2 and art. 318 Labor Code of the Russian Federation.
Payment of benefits upon dismissal due to staff reduction is due to all employees, except those hired for a period of up to 2 months. True, there may be an exception for them if the employer has prescribed this condition in its local regulations.
What benefits are paid in case of staff reduction to employees hired for seasonal work? By law, they are required to pay only two weeks’ average earnings - in accordance with Part 3 of Art. 296 Labor Code of the Russian Federation.
Let's look at how to pay severance pay during a layoff for the second month after dismissal. As we already know, benefits for the first month after dismissal are paid “in advance” - on the day of layoff in accordance with Part 1 of Art. 178, part 1 art. 318 Labor Code of the Russian Federation.
For the second and third months (and in the Far North regions - the fourth, fifth and sixth), benefits are paid if the employee applies for it. Let's take a closer look at this point.
Legal basis for payments upon liquidation
One of the grounds for dismissal of employees at the initiative of the employer is the liquidation of a legal entity or individual entrepreneur (clause 1 of Article 81 of the Labor Code of the Russian Federation). Each employee must be notified in advance of the upcoming dismissal (in writing and against signature), no less than:
- 2 months - in the general case (Article 180 of the Labor Code of the Russian Federation);
- 1 week - for seasonal workers (Article 296 of the Labor Code of the Russian Federation).
Dismissal during liquidation is accompanied by a number of mandatory payments:
- salary not received on the day of dismissal;
- compensation for unused vacation;
- severance pay.
For more information on calculating compensation for unused vacation, see the article “Calculation of compensation for unused vacation according to the Labor Code of the Russian Federation.”
Severance pay has 2 types:
- mandatory (Article 178 of the Labor Code of the Russian Federation);
- additional (Article 180 of the Labor Code of the Russian Federation).
Additional benefits differ from mandatory benefits in that they:
- accrued in case of termination of the employment contract before the expiration of the 2-month notice period;
- requires mutual consent of the employee and employer;
- Having the same value (average daily salary) as the basis for the calculation, it is determined for a different period: the number of working days falling within the period from the date of actual dismissal to the day of expiration of the 2-month notice period.
