What does the minimum wage regulate?
Before considering what the minimum wage is and what it includes in 2020, it is necessary to understand what this indicator is used for.
And also how a fixed minimum wage as a regulatory tool helps the state in ensuring the right of citizens to a specific level of income. The concept of minimum wage implies that the state provides a guarantee of wages to the employee to maintain an acceptable standard of living. The lower limit of the “minimum wage” established by the state is an administrative and economic tool for regulating not only the actual amount of citizens’ incomes, but also socio-economic issues in society.
By establishing a minimum wage, the state guarantees the employee protection from excessively low wages, which are often set by employers. It is also worth considering that federal social payments depend on the minimum wage.
The value of the minimum rate in the Russian Federation according to the Labor Code of the Russian Federation cannot be lower than the subsistence level (LM) (Article 133 of the Labor Code of the Russian Federation). However, this statement has not been followed to date. The “minimum wage” did not keep up with the growth of the monthly salary. Only since January 2021, the minimum wage and minimum wage values have been brought to a single level.
Compliance with the value of the “minimum wage” is mandatory, regardless of the method of adoption. The legislation provides for the establishment of:
- the federal minimum wage, which is adopted by the State Duma;
- subjects of the federation. The minimum wage is established by concluding an agreement between local authorities, representatives of trade union organizations and the association of employers in regions, territories, regions and municipalities. The minimum wage of a constituent entity of the federation should not be set below the national level.
What is the minimum wage made up of?
The minimum wage for an employee in 2021 is calculated in the amount of 12,130 rubles. What is included in the minimum wage in 2020, and are compensation and incentive payments included in the minimum wage?
Let's find out what payments are included in the minimum wage:
- the main part of the “minimum wage” is the salary, which is assigned to the employee according to his position and qualifications;
- allowances and additional payments that compensate for unfavorable and harmful to health and life-threatening working conditions, as well as other types of compensation that are included in the employment agreement;
- monetary rewards that stimulate employee motivation. These include incentive bonuses, additional allowances and additional payments. Bonuses are paid for achievements and production results in an employee’s work. Bonuses are given to holders of academic degrees, for length of service, etc.
If the salary is calculated only from the salary amount without accruing additional payments, then the salary cannot be set less than the minimum wage. If the salary is still below the “minimum wage,” what is included in the minimum wage when calculating wages in 2021? In this situation, the employer will have to use additional payments to bring the salary rate to the mandatory minimum wage level.
In situations where compensation and incentive payments are established for the employee in addition to the base salary, it is possible that the salary is less than the minimum wage. But the final salary, taking into account all payments, has no right to be set below the minimum payment (Article 133 of the Labor Code of the Russian Federation).
In both cases, from an accrued salary of at least 12,130 rubles, a personal income tax of 13% is withheld from the mercenary. Therefore, in fact, the employee will receive: 12,130 x 13% = 10,553 rubles, which, in fact, contradicts the principle of social protection for workers. In most countries, the minimum wage indicator is removed from the tax field.
It is worth noting that the interpretation of the minimum wage, according to the Labor Code of the Russian Federation, allows employers to manipulate when setting salaries for employees. For employees, even with specific qualifications, a rate is set below the minimum, and then, with the help of additional payments and compensations, they are brought into compliance with the minimum wage. This practice not only distorts the real state of affairs in determining the actual level of the minimum wage, but also the principle of protecting the social and labor rights of workers.
How to issue an order to establish an additional payment
Let's look at an example that explains how to issue an order for an additional payment up to the minimum wage and how to pay the additional amount correctly.
Kvanta LLC has 5 employees. Everyone works under employment contracts on a full-time basis. Employment contracts with managers establish a fixed salary and define the condition for receiving monthly bonuses: their percentage depends on the number of new contracts concluded with potential buyers during the month.
When calculating salaries, the company draws up a calculation table. Below is a table for January 2021:
In order not to waste extra time on additional calculations and their execution, the chief accountant put the necessary data and formulas into an Excel table and enters monthly only the bonus amounts (the variable part of the salary). To compare the accrued salary with the minimum wage and calculate the additional payment, a separate column 6 is provided. It shows that two employees need to be paid additionally (R.G. Perov and A.N. Surin). The calculation takes into account the current minimum wage in January 2021, equal to 12,792 rubles.
A sample order for additional payment up to the minimum wage can be downloaded here.
Incentive accruals
Why is incentives included in the minimum wage? The conditions for accrual of incentive payments are set out in local regulations of enterprises and organizations or collective agreements between the employer and employees. If bonuses are paid monthly, then the accrued amounts are constantly added to the minimum payment. However, the payment of incentives is not an obligation assigned to the employer, it is his right.
Are annual, quarterly, or one-time bonuses included in the minimum payment? In practice, this issue caused certain difficulties, since it did not receive an accurate interpretation in the Labor Code of the Russian Federation. Based on the ruling of the Supreme Court of Karelia No. 33-2448/2018 dated 06/05/2018, it was established that such payments are also subject to inclusion in the minimum wage component.
Let's see what other charges are included in the minimum wage. Compensatory additional payments for work on night shifts, weekends and holidays are calculated at increased rates and, accordingly, are accrued above the minimum wage. However, if this work is carried out within the framework of established duties and fixed standards of labor and working hours, then compensation is accrued within the “minimum wage”.
Additional payment for harmfulness refers to a compensation payment, which is determined by the work regime and special working conditions of employees (Article 129 of the Labor Code of the Russian Federation). Since this payment is a component of wages, it is calculated within the limits of the minimum wage.
Features of calculating the minimum wage
Despite the strict definition of what elements the minimum wage consists of, in practice a number of features related to the calculation of official profit for a working person must be taken into account.
Bonuses
The Labor Code leaves employers the opportunity to independently regulate the procedure for providing wages, taking into account the mandatory requirements:
- monthly income cannot be lower than the minimum wage;
- Money is paid at least twice a month.
As for bonuses, these are additional allowances that can be one-time or periodic (monthly, quarterly, annual, holidays). Regardless of what type of bonus is awarded to the employee, it is included in the amount of the minimum wage.
Example:
The workers received a one-time bonus on New Year's Eve. The goal is to thank employees for an effective working year. The bonus amount was 7,000 rubles and was taken into account in the amount of the minimum wage.
Nights, weekends, holidays
According to the requirements of labor legislation, if an employee is involved in official work on weekends and holidays, as well as when working night shifts, the person’s activities must be paid additionally. This is a regular compensation payment associated with the lack of normal rest.
The resolution of the Plenum of the Supreme Court of the Russian Federation established that such compensation payments should be included in the amount of the minimum wage, but their provision should be universal and fair for all participants in the labor relations of a particular enterprise.
Harmfulness
When applying for a job, a person must be warned that work activity will be associated with harmful conditions. Also, the parties to the contract must stipulate the amount of wages accrued for such work. In addition to the salary, the amount of the bonus is negotiated, which is also included in the minimum wage (fixed 11,280 rubles).
Overtime work
Judicial practice shows that courts in different regions make different decisions on such issues. Thus, there is a practice when overtime hours were included in the minimum wage, since this time relates to the officially worked period. A person is at work, performing his labor functions.
On the other hand, there are precedents when overtime work was not included in the minimum wage. The court reasons its decision by saying that a person’s working day has long been completed and he deserves a good rest, but is forced to work, so such an additional payment should be an incentive that exceeds the minimum wage.
Regional coefficient
The introduction of the regional coefficient is due to the special climatic conditions that workers in a particular region have to face. Also, an increasing coefficient may be introduced due to a particularly high pricing policy in the territory of a subject of the Federation.
In order to eliminate contradictions and disputes, the Constitutional Court of Russia provided clarifications regarding the regional coefficient and the minimum wage. Thus, it was decided not to include increasing factors in the minimum wage. That is, the minimum wage is calculated first, and then a fixed bonus is added. This is due to the fact that work in special climatic conditions is associated with constant harmful or dangerous working conditions. Therefore, such employees should receive more income than workers in similar areas in other regions.
This rule was approved by Resolution of the Constitutional Court of Russia No. 38 of December 7, 2021. The law does not have retroactive force, therefore employees for whom the regional coefficient was previously included in the minimum wage amount cannot claim an increase in payments. But from December 7, 2017, violation of the established requirements will be the basis for the employer’s legal liability.
What accruals are not included in the “minimum wage”
When calculating the minimum wage, those payments that are not related to the payment of the main job, in accordance with established labor standards and working hours, are not taken into account.
Part-time work refers to work performed during free time from primary job responsibilities. The payment will be added beyond the minimum wage if the number of labor hours established by the standard is exceeded (Letter of the Ministry of Labor No. 14-1/OOG-7353). The same principle applies to overtime premiums.
Regional coefficient. This indicator is established for areas with unfavorable and severe climatic conditions (Article 148 of the Labor Code of the Russian Federation) and implies an increased salary. Resolution of the Constitutional Court No. 38 of December 7, 2017 established that regional coefficients and additional payment for each year of work in the Far North and areas equivalent to it are not included in the “minimum wage” component.
This rule applies not only to the minimum wage indicator, but also to the minimum wage. If the minimum wage is already set above the federal minimum wage, northern additional payments are made based on the minimum wage, if it does not include them.
Minimum wage and minimum wage - what is the difference
Sometimes the concept of minimum wage (MW) is identified with the minimum wage, but these concepts are not the same thing. The employer must adhere to these values when determining the employee’s earnings.
The minimum wage is accepted by the constituent entities of the Russian Federation not less than the lower limit of the employee’s remuneration, which the employer does not have the right to violate (Article 133.1 of the Labor Code of the Russian Federation). The minimum wage is introduced taking into account the characteristics of the regions and corresponds to:
- socio-economic needs of the constituent entity of the Russian Federation, taking into account the size of the PM;
- mandatory for all categories of employees in a particular region with the exception of employees of federal structures;
- the minimum wage indicator cannot be used below the federal minimum wage.
The adoption of the minimum wage is not mandatory for the constituent entities of the Russian Federation; in calculating wages, they have the right to adhere to the federal minimum wage.
Minimum wage and minimum wage
In order to protect the interests of every employed person, the law establishes a minimum wage. Each employer is obliged to guarantee its employees the receipt of the established amount, but only if they work a full month. If work is performed in smaller volumes, the amount of official profit is reduced proportionally.
In 2021, the following indicators are taken as a basis:
- working out working hours for the month in full (minimum 40 hours per week, but a different duration may be established by the staffing table);
- compliance with standards (for example, manufacturing 5,000 parts per month at a factory).
The minimum wage is a state value, that is, a set amount of wages valid throughout the Russian Federation. The requirement applies equally to all sectors of employment, to public and private companies. But regional authorities are vested with the right to establish the minimum wage in force in the territory of a particular subject of the Federation.
The minimum wage in the region cannot be lower than the minimum wage.
Another feature of regional regulation of the salary of an employed person is that employers sign an agreement with the municipality on the use of the minimum wage amount. Signing an agreement is voluntary, so not all companies act on the basis of the minimum wage. Moreover, a party to the agreement can be not only a legal entity or individual entrepreneur, but also company trade unions that protect the interests of workers.
In 2021, the minimum wage in Russia is 11,280 rubles.
For violation of legislation in the field of remuneration of officially employed citizens, legal entities are held accountable within the framework of administrative and civil legislation.
Procedure for accepting minimum wage
The minimum wage indicator is introduced based on the signing of an agreement by a tripartite commission between representatives:
- local authorities;
- employer communities;
- representatives of the interests of trade union workers.
As a result of negotiations, a decision is made to accept the agreement, which is published in an official source. After reading the agreement, employers either accept the terms of the document or have the right to refuse it within thirty days from the date of publication. In case of refusal, a written reasoned refusal is drawn up with documentary evidence of each argument.
The commission considers the refusal of the employer who is invited to the meeting. The employer has no right not to attend a meeting of the collegial body.
