Legislative regulation of the issue
The concept of wages, as well as its components, is regulated by the norms of Article 135 of the Labor Code of the Russian Federation , which states that wages include several components.
In particular:
- salary or hourly rate;
- allowances or additional payments that are provided by law for certain categories of workers, for example, for those workers employed in hazardous work;
- incentive payments that involve bonuses, additional payments for various labor achievements or bonuses.
At the same time, salary and additional payments are mandatory components of wages, given that the conditions for their assignment, as well as the amount and timing of payment, are regulated by law, but incentive accruals are paid only based on the financial situation of the company and only if the condition for their accrual enshrined in local acts.
Also in Art. 22 of the Labor Code of the Russian Federation states that the company’s management is obliged to provide wages equal to the labor costs of employees, and for the duration of a full shift and within the scope of duties approved by the same job description and mutual cooperation agreement. And since the scale according to which the physical costs of workers are determined has not been developed, and due to the fact that many employers deliberately underestimate the level of wages, a minimum wage has been approved at the legislative level, which, in essence, acts as a guarantor of minimum material security in regarding ordinary workers.
So, in particular, Article 133 of the Labor Code of the Russian Federation states that the enterprise is obliged to pay wages not lower than the minimum wage approved by law to every worker who has worked the required hours in a month. That is, at the legislative level, based on the real subsistence level of the working population, a certain amount of material support is established, thanks to which the worker will be able to provide himself with everything necessary and below which the employer has no right to pay.
Moreover, if an employee performs his duties in conditions deviating from normal conditions, for example, in difficult climatic conditions, which is important for the northern regions, a regional coefficient is also added to the already guaranteed minimum wage in accordance with the norms enshrined in Article 316 of the Labor Code RF and in the amount approved by Law No. 4520-1.
And in accordance with Article 317 of the Labor Code of the Russian Federation, northern workers are also entitled to a bonus, calculated in proportion to the length of service in areas belonging to the far north or equivalent to it. That is, in fact, both the coefficient and the bonus for northern experience are calculated based on the accrued salary, which, in accordance with Article 135 of the Labor Code of the Russian Federation, should not be lower than the minimum wage.
Arbitrage practice
was created that made it possible to include the coefficient in the minimum wage on completely legal grounds, but subject to certain conditions. So, in particular, in accordance with Article 133.1 of the Labor Code of the Russian Federation, the constituent entities of the Russian Federation were given the right to establish the minimum wage at the regional level in an increased amount in comparison with the all-Russian one, depending on the financial capabilities and living conditions of the population, which led to an increase in the minimum wage in the northern regions by a factor.
That is, in fact, the minimum wage was initially developed taking into account northern allowances, which automatically led to the inclusion of all types of income in the agreed minimum and neutralized the previous decision on northern additional payments to the minimum amount of payment. At the same time, the court still insists on its previous decision on maintaining the proportions between the minimum wage and bonuses, but only if they are not initially included in the minimum wage.
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The issues of calculating these coefficients for additional payments up to the minimum wage are discussed in the following video:
How do these bonuses and the minimum wage interact?
Even in the process of formation, each company develops a staffing table based on the existing volume of work and the needs for employees who will perform the agreed amount of work. At the same time, when forming the terms of reference, the employer must take into account the norms of Article 195.2 of the Labor Code of the Russian Federation , which implies professional standards and ETKS, where the approximate volume of workload for each employee in the context of all positions is developed in a standard form.
Also, in accordance with Article 133 of the Labor Code of the Russian Federation, the company’s management is obliged to provide for wages not lower than the minimum wage established in Russia as a whole, as well as in most constituent entities of the Russian Federation. That is, in fact, the law provides for each worker the opportunity to receive a monthly allowance not lower than the minimum for the working population for performing duties within the limits of physical resources.
In turn, the regional coefficient has a different purpose. Thus, Article 3 of Law No. 4520-1 states that the northern coefficient applies to all types of income of citizens living in the northern regions due to the fact that the cost of living in special climatic conditions is many times more expensive in comparison with the southern regions of the Russian Federation, and Due to the northern surcharge, the ability of citizens to provide the required minimum is equalized.
For example, the range of duties of a cleaner or economist in any region of the Russian Federation will be approximately the same, as will the level of wages, but at the same time northern workers will perform their duties with a greater load due to special climatic conditions, which will lead to discrimination. That is why, for the same cleaner, a standard is provided that allows her labor costs and financial capabilities to be equalized through the application of a regional coefficient.
Approximately the same meaning is given by law to the northern bonus in accordance with Article 137 of the Labor Code of the Russian Federation, which, in essence, is financial gratitude at the state level for work experience in the northern regions. After all, working for 15 years in low temperatures with excessive physical exertion is not so easy, which is why the agreed bonus is paid to northerners.
That is, following the direct interpretation of the law, wages are remuneration for a certain amount of work performed within the standard hours per month, while the coefficient and bonus are compensation for living in special climatic conditions, implying excessive expenditure of physical strength, and material resources. And since the agreed payments have different purposes, both the bonus and the coefficient are not included in the minimum wage and are added to the already calculated wages.
Is the regional coefficient included in the minimum wage or not (is it included in the minimum wage)?
The resolution of the Constitutional Court of the Russian Federation “In the case of checking the constitutionality...” of December 7, 2017 No. 38-P contains a clear answer to the question of whether the regional coefficient is included in the minimum wage. According to the text of the document, the current norms of labor legislation do not imply the inclusion in the minimum wage of regional coefficients accrued for the employee’s performance of labor functions in territories characterized by special climatic conditions.
This position is justified by the fact that the legislator guarantees (in Part 2 of Article 148 of the Labor Code of the Russian Federation) increased wages for persons working in areas with special climatic working conditions. The minimum wage is a general guarantee provided to all workers throughout Russia (Part 3 of Article 37 of the Constitution of the Russian Federation).
The inclusion of a regional coefficient in the minimum wage would entail the following situation: an employee who worked the established standard of time in a favorable climate would receive a salary similar to that which would be paid to a person working in a territory with special conditions. In this case, the guarantee of increased payment for work performed in unfavorable conditions would lose its content.
Thus, when calculating the final salary of a worker, the employer must accrue earnings in the amount of no less than the established minimum wage, and then, based on the value of this earnings, calculate the amount of the bonus in accordance with the coefficient in force in a certain area.
So, the minimum wage and the regional coefficient when calculating the amount of earnings of a person working in unfavorable conditions are calculated separately. Resolution No. 38-P states that the minimum wage is a national guarantee valid throughout the Russian Federation without taking into account special climatic and other working conditions. That is why the answer to the question of whether the regional coefficient is included in the minimum wage is unequivocal: no, it is not included.
The amount of such an allowance is determined after the salary is calculated. Thus, a worker working in favorable conditions, whose earnings are equal to the minimum wage, will actually receive a lower salary than a worker working in the Far North and receiving the so-called minimum wage for his work.
Accrual procedure
Considering that the northern part of Russia is quite vast and includes many areas with different climatic conditions, the size of the coefficients has been approved at the legislative level to balance the costs of the population.
So, in particular, on average, the surcharge for special climatic conditions is a maximum of 2, which is relevant for Yakutia, the Sakhalin region and the Chukotka District, and a minimum of 1.15 in relation to such areas as Karelia.
Moreover, according to the law, the coefficient does not apply to all accruals, but only to those that are mandatory or included in the company’s remuneration system on the basis of local regulations.
In particular, the surcharge applies to the following charges:
- salary;
- compensation payments for night or overtime work;
- bonuses or bonus system.
For other accruals that imply one-time financial assistance, as well as all cases of calculating payment at an average rate, the coefficient is not applied, due to the fact that when calculating the average wage, all payments for the year with an already accrued coefficient are taken into account.
For example, an employee has a salary of 20,000 and lives in Yakutia, while he is given a bonus of 25% and 10% for hazardous working conditions. Also, in connection with family problems, the worker was given assistance in the amount of 3,000 rubles.
Then the calculation will look like this:
- 20000 * 2 = 40000;
- 20000 / 25 = 5000;
- 20000 / 10 = 2000.
Thus, the employee’s salary for the month will be: 40,000 + 5000 + 2000 + 3000 = 50,000 rubles .
Sick leave payment
In accordance with Article 183 of the Labor Code of the Russian Federation, during the period of incapacity, the employee retains not only his job, but also his average salary in proportion to the length of service worked.
That is, if you have a total employment history of more than 8 years, sick leave will be paid in the amount of 100% of earnings, less than 8 years in 80% and up to 5 years in the amount of 60% of the average wage for each day of illness (Article 7 of Federal Law No. 255) .
In this case, the calculation of the average salary is carried out in accordance with Article 139 of the Labor Code of the Russian Federation, which states that all accruals for the year are taken into account, except for financial assistance, which implies the summation of salary, allowances, and the accrued coefficient. That is, in fact, when calculating the average wage, the coefficient is already taken into account initially, and for the entire past year, that is why the regional coefficient is not applied when calculating days of incapacity.
What incomes do regional coefficients apply to?
Payments increased by indexing by coefficients established by the government will be received by pensioners (only if they live in special territories, the additional payment is lost when moving), officially employed residents of the regions, and local residents receiving benefits. The coefficients apply to the following income:
- All payments from the employer provided for in a collective or employment agreement. Wages (tariff scale, salary). Minimum wage and all payments tied to it. Additional payments to wages (allowances for qualifications, length of service, for harmfulness, bonuses, compensation for temporary disability, if calculated based on the minimum wage, etc.). Salaries of citizens working part-time, with a flexible schedule, by season.
- Pension.
- Fixed benefits, which are determined based on average earnings on the basis of Federal Law No. 81 of May 19, 1995, Federal Law No. 255 of December 29, 2006. (pregnancy and childbirth, sick leave, child care).
Regional coefficients are not awarded
for the following types of workers' income:
- vacation pay;
- irregular or one-time financial assistance not provided for by the collective agreement or the employer’s accounting policy;
- travel allowances when an employee travels to a region not included in the list of special territories;
- compensation for temporary disability, if calculated not on the basis of the minimum wage;
- irregular bonuses;
- allowances for citizens for working in the conditions of the CS and regions equated to the Far North.
