Compensation for dismissal due to staff reduction - 2021

Dismissal procedure for staff reduction: step-by-step instructions - 2021

Dismissal due to staff reduction is permitted under clause 2 of Art.
81 Labor Code of the Russian Federation. This type of dismissal for employees is a kind of force majeure, therefore other norms of the Labor Code of the Russian Federation and related laws provide for them preferences and compensation. The procedure for dismissal due to staff reduction is as follows:

1. We determine who can be laid off and who cannot, taking into account the provisions of Art. 261 Labor Code of the Russian Federation. Persons for whom additional social protection is established by law cannot be fired due to staff reduction: single parents, large families, disabled people of certain categories, etc.
2. We notify the employment service, trade union (if there is one) and the employee himself (in accordance with Article 82 of the Labor Code of the Russian Federation) about future dismissal. A notification is sent to the employment service for each employee indicating his profession, qualifications and earnings. Information is submitted no later than 2 months before the date of dismissal. If the reduction is massive, then within 3 months. The timing and forms of notifications are established by Resolution of the Council of Ministers - Government of the Russian Federation dated 02/05/1993 No. 99.

For permanent employees, the written notice period must also be at least 2 months before the date of the order.

1. We prepare documents:

• preparing a dismissal order due to reduction;
• fill out the work book;
• We make entries in personnel documents and the employee’s personal account.

Read more about individual personnel records in the article “Personnel documents that must be in the organization .

1. We introduce the order to the employee personally against signature. We issue a work book in person on the day of dismissal (Article 140 of the Labor Code of the Russian Federation).

1. We make a settlement with the employee. On the last day at work the following must be paid:

• salary for the period before the day of dismissal, taking into account all established allowances and additional payments;
• compensation for unused vacation in accordance with Art. 127 Labor Code of the Russian Federation;
• severance pay in case of layoff (compensation for dismissal) under Art. 178 Labor Code of the Russian Federation

For standard calculations upon dismissal, read the article “Calculation of compensation for unused vacation according to the Labor Code of the Russian Federation” .

1. We pay each laid-off person for a specified period of time for a new job.

Who should not be fired

To avoid negative consequences and fines, the employer must remember which employees, due to their special situation, cannot be laid off, in accordance with Article 261 of the Labor Code of the Russian Federation:

• pregnant women;
• workers with children under three years of age;
• single mothers with a disabled child who has not reached the age of majority;
• single mother with a child under 14 years old;
• other persons who raise such children without a mother.

Also, an employer cannot unilaterally dismiss an employee who is on sick leave or on vacation (Article 81 of the Labor Code of the Russian Federation).

Payment of benefits upon dismissal due to staff reduction

Payment of benefits by the employer is a feature of settlements with an employee upon dismissal due to staff reduction. The step-by-step instructions contain a separate paragraph about this, since the procedure and amount of payments will depend on the circumstances of dismissal and the further state of affairs with the employee’s employment.

1. To determine the amount of benefits that is paid on the day of dismissal:

• We calculate the average daily earnings (ADE):

Salary for the period

SDZ = ————————————————,

Number of working days in the period

Where:

wages for the period - the sum of all payments related to wages for the 12 months preceding the month of dismissal (payments that themselves are essentially compensation are excluded: vacation pay, sick leave);

the number of working days in the period is the actual days worked 12 months before the reduction (days of compensatory leave, vacation and illness are not taken into account).

• We consider severance pay (VP) upon dismissal due to reduction:

VP = SDZ × KRD,

where: KRD is the number of working days in a period equal to a calendar month after the day of dismissal.

NOTE! The ADC in the month involved in the calculation may vary greatly. For example, in December 2021 there were 22 working days according to the production calendar, and in January 2020 there were only 17. Accordingly, the amount of severance pay in December will be greater than in January with the same average earnings.

2. We pay the former employee the average salary for the 2nd month after dismissal, if he has not yet found a new job (Article 178 of the Labor Code of the Russian Federation).

Payment is not automatic. This is possible only if the employee has made such a demand and provided evidence that he is still not employed.

The 2nd calculation is made in the same way as the previous one, only the CRA is taken for the 2nd month after dismissal.

3. If a dismissed employee has not found a new job within 3 months, he can apply for the 3rd payment. In this case, he will need to provide a document from the employment service stating that he is still unemployed.

IMPORTANT! If a former employee started a new job after the start of the 3rd month from the day of dismissal, he can claim benefits for that part of the 3rd month when he was not yet employed.

4. We take into account the payments made in accounting and tax accounting:

• reflect accrued benefits in expenses: Dt 20 (26, 44...) Kt 70;
• we reduce the income tax base by the amount of assigned benefits (clause 9 of Article 255 of the Tax Code of the Russian Federation);
• We do not withhold personal income tax (clause 3 of Article 217 of the Tax Code of the Russian Federation);
• we do not charge contributions to the Pension Fund and the Social Insurance Fund from the amounts of severance pay (subclause 2, clause 1, article 422 of the Tax Code of the Russian Federation);
• we reflect the payment of benefits: Dt 70 Kt 50 (51).

What to do if payments are not paid?

If the employer did not transfer the funds on time, then he is obliged to compensate them and a penalty of no less than 1/150 of the key rate (Article 236 of the Labor Code of the Russian Federation) for each day of delay.

If an employee’s rights are violated, they contact the labor inspectorate or the labor dispute commission. But these bodies do not have the right to recover material and moral damage from the employer; they can only issue fines and issue orders that the employer can ignore.

Information

It makes sense to contact these authorities only in order to have additional evidence of ignoring legal requirements. Often, these authorities, if the issue concerns payments, immediately recommend that citizens go to court - this will save time and effort. It should be remembered that non-payment of wages is a criminal offense, so you can also notify the prosecutor’s office about this fact.

Applying to the court at the employer’s location with a claim is the most effective way to solve the problem. It is this body that has the right to collect money. It should be remembered that late interest must also be included in the claim. They can be increased at your own discretion, if there are reasonable grounds for this (money was required for treatment, loan repayment, etc.).

The procedure for dismissal due to staff reduction for temporary and seasonal workers: step-by-step instructions

This procedure applies:

• to temporary workers;
• seasonal workers.

The characteristics of such labor relations are given in Art. 59 Labor Code of the Russian Federation.

For these employees, the procedure for dismissal on this basis has been shortened and simplified:

1. We notify employees:

• temporary - 3 days before the order (Article 292 of the Labor Code of the Russian Federation);
• seasonal - 7 days in advance (Article 296 of the Labor Code of the Russian Federation).

1. We fill out the order and fill out the work book. We hand the book to the employee and get his signature on the order.
2. We pay wages for time worked.
3. We pay compensation for unused vacation. According to the norms of Art. 291, 295 of the Labor Code of the Russian Federation, such employees are entitled to 2 days of vacation for each month of work.
4. We determine the severance pay taking into account the fact that:

• it is not paid to a temporary worker (Article 292 of the Labor Code of the Russian Federation);
• a seasonal worker is entitled to a payment in the amount of average earnings for 2 weeks (Article 296 of the Labor Code of the Russian Federation), so we count it and pay it.

Other benefits for temporary and seasonal workers are not regulated by the Labor Code of the Russian Federation.

Severance pay upon dismissal due to staff reduction depends on the payroll calculation procedure established for the employee.

ConsultantPlus experts gave examples of calculating payments when laying off an employee. Get free demo access to K+ and go to the Ready Solution to find out all the details of this procedure.

Common mistakes

If we talk about typical mistakes when abbreviating, these include:

• absence (non-delivery) of notice of reduction;
• dismissal of an employee before the two-month notice period;
• failure to notify employment authorities and the trade union (if any) within the established time limits;
• failure to offer vacancies when available.

When it comes to reducing the number of employees, a fairly common mistake is failure to conduct or incorrect assessment of the preemptive right (Article 179 of the Labor Code of the Russian Federation). For example, employers often have no criteria for assessing labor productivity and qualifications at all, or these criteria are recognized by the courts as subjective.

Results

Reducing the number of employees under the Labor Code is the responsibility of any employer.
Deviation from the norms of the code may result in sanctions. Payment of compensation to employees dismissed due to staff reduction is a guarantee measure provided for by labor legislation. The employer is obliged to strictly observe the procedure and amount of all required payments. You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

How and why to prove the fact of reduction

The burden of proving the fact of layoff lies with the employer. The launch of the reduction procedure begins with a decision by the authorized person of the company to carry out the reduction.

Such a decision must be made in writing. This could be, for example, an order from the general director or a protocol of the board of directors. Based on this decision, an order is issued to change the staffing table and the staffing table is directly changed. It is these documents that will serve as proof of the reduction.

In addition, since labor disputes most often arise after dismissal due to a reduction in the number or staff of employees, the court also examines whether a new employee was hired for the same position after the dismissal. In this case, the reduction may be considered illegal (“imaginary”). From this we can conclude that the fact of a reduction can be proven by the absence of a position in the staffing table in effect at the time of consideration of the dispute.

How are calculations carried out?

Calculating the average salary during a layoff in this case implies not only the provision of a work book, but also the availability of appropriate confirmation from the employment service.

Calculation of the average salary for redundancy benefits depends on the amount of average earnings

The days when the employee was on vacation, went on business trips, or took sick leave should be excluded from the calculation period. The calculation of average earnings for layoffs should be based on the days the employee worked. If an employee has not had a vacation for 12 months, this should be taken into account when making compensation payments.

This means that all wage payments received by the employee for the year should be summed up and divided by 12. Thus, we obtain the arithmetic average, which is the average salary of the employee. This is exactly the amount of payments that a dismissed employee will receive for two months “on unemployment.”

Mass layoff

In order for an employer to understand whether he has a mass layoff, he should refer to industry and (or) territorial agreements. Part 1 of Art. speaks about this. 82 Labor Code of the Russian Federation.

So, for example, in Moscow, according to the Moscow tripartite agreement for 2016-2018 between the Moscow Government, Moscow trade union associations and Moscow employers' associations, the criteria for mass dismissal are considered to be the indicators of the number of dismissed employees of organizations registered in the city of Moscow, with a workforce of 15 or more people for a certain period of time:

1. dismissal within 30 calendar days of more than 25% of the total number of employees;
2. dismissal of employees in connection with the liquidation of an organization of any organizational and legal form;
3. reduction in the number or staff of the organization's employees in the amount of:

• 0 or more people within 30 calendar days;
• 200 or more people within 60 calendar days;
• 500 or more people within 90 calendar days.